Monday, March 01, 2010 

Patriotic duty and Michael Ashcroft.

Yesterday David Cameron said that it was the party's "patriotic duty" to to win the general election. Strange then that this patriotic duty doesn't actually extend to the party's deputy chairman paying his full dues in this country, despite the Tories' then leader William Hague promising back in 2000 that he would become a "permanent resident" in order to ascend to the Lords. Here's Billy with another pearl:

This decision will cost him (and benefit the Treasury) tens of millions a year in tax, yet he considers it worthwhile.

How much has Lord Ashcroft in reality paid to the Treasury thanks to his non-domiciled status since 2000? One suspects next to nothing.

There is some truly exceptional spin going on here: it turns out that when Ashcroft said he would become a "permanent resident", he actually meant that he was only going to become a "long-term resident". This seems to be somewhat different to the assurances which were given to the Lords' scrutiny committee, which asked Downing Street to ensure that Ashcroft became a resident before he could become a peer, and indeed the statement that Downing Street issued after his ennoblement was confirmed, which said they had been given a "clear and unequivocal assurance" that he would take up "permanent residence". Either Ashcroft at the time had a completely different definition of what "permanent residence" meant, or he had no intention whatsoever of keeping his promises.

Ignore the obsfucatory nonsense being raised by the Tories about donations to Labour or the Liberal Democrat donations from non-domiciles. None of them gave such cast-iron assurances that they would become permanent residents in order to enter the Lords. Neither have they ascended to such positions of personal influence over the parties they've donated to, as Ashcroft has. Ashcroft for a time was essentially keeping the Tories afloat with his donations and loans, the latter of which were almost as large as the total amount he's donated over the years, at one point as high as £3.6m. When he isn't funnelling money to the party, then he's personally transporting the party's nobility around in his private jet, via his Flying Lion company, registered, typically, in Bermuda. Compare and contrast the treatment of Ashcroft with that of Zac Goldsmith, who also admitted recently that he was a non-dom: Goldsmith was quickly slapped down and told to become a UK taxpayer as "rapidly as can be done", while Ashcroft, despite promising almost 10 years ago that he was going to become a permanent resident is only now getting around to it, all while the Tories have been repeatedly saying in response to any questions that Ashcroft's tax status was a private matter between him and HMRC. Did Cameron know that Ashcroft was a non-dom, or did he purposefully ensure that he didn't know until very recently? Sir George Young said a month back on Newsnight that Ashcroft had the same status as some Labour peers, with Tory sources later saying that Young had "misspoke". Misspoke in the sense that he had inadvertently told the truth when he wasn't meant to.

If it hadn't been for the freedom of information request that forced Ashcroft into making today's statement, would Cameron have actually followed through on his sudden conversion to parliamentarians of both varieties being fully domiciled for tax purposes by ensuring that his deputy chairman was resident here? It doesn't seem so, to judge by his strange refusal to accept, even now, that Ashcroft's tax status is a matter for anyone other than himself. All the parties may be guilty in accepting funds from donors who are not full taxpayers, but none have elevated those individuals to such a position of power and authority in the party. It's this kind of cynicism, of double standards, of turning a blind eye, that so angers the public and turns them off politics. And who can blame them when someone like Ashcroft decides "permanent residency" means something entirely different to what everyone else does and essentially lives a lie for almost a whole decade?

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3/01/2010 10:31:00 PM | | | links to this post

Thursday, March 19, 2009 

A depressing pyrrhic victory.

The only possible way you can describe Barclays' depressing legal victory over the Guardian, Mr Justice Blake ruling that the paper cannot republish the memos detailing the workings of Barclays' Structured Capital Markets team is as a pyrrhic one. The Guardian, in its own editorial, more than sums it up when it states that all that Barclays has achieved is to shut the stable door after the horse has not just bolted, but completely disappeared from view. This is thanks to the documents being immediately mirrored by Wikileaks, where they still reside and where they can be downloaded from a server in this country, in defiance of the injunction. The terms of the injunction mean that the Guardian cannot even point people in the direction of where they can find them or "incite" others to publish; all they will have to do instead is Google for them, where they'll quickly find them.

Part of Justice Blake's justification for ruling against the Guardian was that he didn't believe that the documents had spread far enough for their confidentiality to have completely broken down. This is clearly nonsense: all those that Barclays wanted to hide these documents from have not only got them, they've been poring over them now since Tuesday, whether they be HMRC, Barclays' rivals, or anyone else with the slightest grudge against the bank. The Grauniad refers to the House of Lords ruling on Spycatcher, that you cannot put the melting ice cube back into the freezer. That is more than apt: through the ban the only people who are being denied from being allowed to see what everyone else has is those who are either without the internet or those that have never heard of Wikileaks and can't properly use a search engine.

Equally weak was Blake's second argument. He agreed that the Guardian can report on the contents of the documents, as that is in the public interest; not in the public interest is the unexpurgated publication of the documents in full, containing legally sensitive matters and other confidential information. There are some obvious flaws in this: how is the paper meant to know firstly what is considered legally sensitive and confidential and what isn't? Their lawyers' might come to predictability different conclusions from those of Barclays'. This appears to have the potential to be a slippery slope; how else can a paper know what is sensitive unless they first consult the people they are preparing to expose and give them the opportunity to halt publication in its entirety? Ideally, journalists should do this anyway, but there are certain situations where if they did on an incredibly important story, undoubtedly in the public interest, they could end up not being able to publish anyway. In cases such of that as Max Mosley, there ought to be no question of the person being informed beforehand; when it involves politicians being accused of corruption or corporations being accused of blatant and artifical tax avoidance, there is a good argument for not doing so. Furthermore, why shouldn't the general public be able to view the source material for such exposes and be able to make their own minds up where it is possible for the hacks to provide such a service? Journalists cannot always be relied upon to report accurately what is in things which they either come across, investigate or are handed to them, especially when it comes to such incredibly complex and difficult to understand matters as tax avoidance. The Guardian itself is has an example of this, having misinterpreted how Tesco was operating a tax avoidance scheme and wrongly claiming that they were avoiding corporation tax to the tune of £1bn when they were in fact avoiding stamp duty land tax on a much lesser scale.

Blake also suggested that "if the debate can flourish without the publication of the full documents, that is a highly material factor". But none of the articles in either the Graun or the Sunday Times begins to cover in anything approaching forensic detail just what is discussed and proposed in these documents; they just give a broad summary. Debate can flourish without them being freely available, but that is not truly informed debate. The best summation of what they contain was made by Alan Rusbridger in his statement to the court:

"I considered these documents to be of the highest significance in the debate about tax avoidance.

"They revealed at first hand the processes involved in structuring extremely complex and artificial tax avoidance vehicles; how lawyers and accountants worked together to exploit loopholes in government legislation; and the degree to which they are sanctioned at the highest levels within Barclays."


Only by examining the documents first hand do you fully understand just how Barclays' SCM team operated and operates. Blake's decision has slammed the door on one source of light, but the others remain wide open.

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3/19/2009 11:18:00 PM | | | links to this post

Tuesday, March 17, 2009 

The smartest guys in the room get hot under the collar.

It would be nice to think that with various tax havens having to promise to be rather more transparent in their operations than they have been previously, threatened with being "named and shamed" by the OECD, that the actual businesses which exploit such havens would be following a similar trajectory. The sad reality is that both will continue to get away with it just as they have in the past: they'll wait for the current mood to slowly wither away, as it will when the economy eventually recovers, and then the same old lawyers and same bean-counters will be back to doing what they do best, letting the rich and powerful get away it while castigating the scum at the bottom who dare to fiddle their benefits.

Barclays however hasn't even bothered with letting it all blow other. Despite being in negotiations with the Treasury, threatened by its toxic assets, which it wants the government to insure, it still succeeded in gaining an injunction against the Guardian, stopping it from hosting documents detailing "Project Knight", a tax avoidance scheme devised in Feburary 2007 which could have seen the bank save between £40m to £60m in a single year. This is despite the fact the scheme is not illegal, and that Barclays even says that it fully informed Her Majesty's Revenue and Customs of what it was doing. Why then is it so desperate for the documents not to enter the public domain? Is it ashamed of what it was doing, legal though it was? Barclays' lawyers Freshfields argued that the documents were property of the bank, and that could only have been acquired by someone who had breached confidentiality agreements.

Sadly for Barclays, either the documents were up long enough for someone to mirror them, or they were also distributed to Wikileaks, increasingly becoming vital against legal threats of all varieties, where they are still fully available. Not just is the proposal for Project Knight included, but also documents detailing the setting up of a "Brazilian Investment Strategy", "Project Brontos", "Project Berry II - Investment in Index Linked Gilts", "Project Faber", "Project Valiha" and a memo detailing the minutes of a meeting of Barclays' Structured Capital Markets team concerning the setting up of an office for SCM in Luxembourg. Most interesting to do with the injunction issued against the Guardian is the involvement of Freshfields with Project Faber. Normally you would imagine that Barclays would have employed a separate legal firm to deal with the media, as Freshfields is ostensibly only involved with business law advice, but in this instance they seem to have decided not to do so. This raises a potential conflict of interest because the document on Project Faber details Freshfields' legal advice on the tax risk which the project would incur, and unlike the other documents where the risks are summarised fairly succinctly, Freshfields goes into quite some detail on five specific UK risks which Faber raises. Again, there's no suggestion here that either Barclays or Freshfields has done anything specifically illegal, but it also certainly seems to be in Freshfields' interest, as well as Barclays', to stop the documents from entering the public domain.

I won't pretend that I understand much of these documents, nor probably would 99% of the other people in the country, unless we had the likes of "Slicker" from Private Eye personally explaining them to us, but Richard Murphy is another man who does and who was asked by the Sunday Times to look at them after they were first passed them but didn't publish them in full. He described Project Valiha thusly:

It is designed so the money goes round in a big circle and comes back to Barclays so that they make £99m in tax savings without taking any risk at all. The whole thing takes three days.


As for the others:

“They work on the basis of exploiting tax regulations and the laws of different countries. They don’t generate any real profit for anyone, but they do save vast amounts of tax that they would otherwise pay.”

The Sunday Times claimed that Barclays might have been saving up to £1bn in tax through the various schemes, something the bank has vigorously denied. Murphy has though commented rather further on the schemes, of which it seems there might be even more which haven't turned up on Wikileaks:

I’ll tell you what I think is going on with Barclays. In my opinion it has constructed a series of wholly almost entirely artificial transactions undertaken through a significant number of separate legal entities, most under the control of Barclays itself, but some, inevitably, owned, or controlled (and in these deals it is always difficult to define what that might mean, deliberately) by the counterparty to the transaction - in most cases banks such as Goldman Sachs, Deutsche Bank, Credit Suisse, Fortis and so on.

Those entities have been in a number of jurisdictions, the UK and the Cayman Islands being the most common, but Luxembourg also being a participant. Some have been limited companies, some limited liability partnerships.

Some of those entities, even when incorporated elsewhere are tax resident in the UK, and some are not.

Some account under International Financial Reporting Standards. Some account under UK accounting standards.

It would seem that Barclays are trying to realise profits that they have ‘manufactured’ in most cases through these immensely complex structures by arbitraging (trading off) international taxation law, company law in various jurisdictions and even accounting standards, to achieve taxation results that mean that profits are realised or sold without taxation liabilities arising for Barclays.

The result has been a deliberate attempt to defraud – by which term I mean seeking to secure a financial advantage by deception, although not (I stress) illegally.

The deception has been on three parties. The first has been tax authorities who despite their brave statements to the contrary did not, I suspect, know the full details of some of these arrangements. It would seem that some may not have been disclosed to them.

Secondly, Barclays have sought to defraud (using the above definition) the taxpayers of the UK and maybe elsewhere who have not received the funds rightfully due to them on profits declared.

Thirdly, I think they have defrauded (using the above definition) their shareholders by declaring profits which were not, in my opinion, sustainable and which were manufactured through preconceived and structured financing deals in which the counterparties played a remarkably small part in exchange for what was, in effect, a fee to allow Barclays to record realised profits by turning the manufactured profits into third-party transactions.


This seems to be the real reason why Barclays is so desperate to keep the documents out of ordinary people's hands. They realise that they are some of the first real hard evidence to emerge of just how specialist teams within the banks sought to avoid tax, and who were subsequently incredibly richly rewarded for their work, with Murphy claiming that the head of Barclays' SCM division may well have been earning an astonishing £40m a year (other sources claim it could be £75m, for which see this revoltingly sycophantic article), about the same amount as that which one of the schemes would have saved the bank. In order to offset such huge remuneration, the profits from the avoidance would have had to have been far higher, and the £1bn a year figure no longer looks as nonsensical as Barclays claim. It somewhat puts Fred Goodwin's pension, even the £3 million lump-sum we now know he received into perspective, hence why Murphy has put up a further four posts on what should be done. At the very least we need to stop apologising for and excusing tax avoidance and demand that companies, in the words of Alistair Darling, don't just adhere to the letter of the law but also the spirit of it. Great public anger over the bailing out of the banks has not yet reached boiling point, but the Barclays revelations may just push the mercury further towards the top.

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3/17/2009 11:44:00 PM | | | links to this post

Monday, February 02, 2009 

Have we got tax for you.

It is, as the Guardian's leader on the subject suggests, rather easier to target benefit fraudsters and those without access to good lawyers than it is to investigate tax avoidance. The paper knows this from bitter experience: it last year accused Tesco of avoiding corporation tax to the tune of £1bn, only for it to discover after publication that it had mixed up corporation tax with stamp duty land tax, and that the real sum avoided was far less. The paper quickly admitted its mistake, but not before Tesco, running straight into the arms of Carter-Fuck, had issued not just a libel writ but also a claim for malicious falsehood, although Justice Eady, the bête noire of the tabloids, subsequently threw it out.

The other reason for the Guardian to be extra careful when reporting on tax affairs is that it has also publicly admitted to be involved in avoiding tax itself, or rather that its parent company, the Guardian Media Group, has admitted such. This came about through GMG's alliance with Apax Partners, a private equity group, when it purchased the magazine publisher Emap. Quite rightly, some are therefore suggesting hypocrisy on the Guardian's part to be so apparently outraged about tax avoidance when the newspaper itself also does it. In the paper's defence, it's one of the few companies that has openly admitted some of its tax arrangements, although how much of this was in relation to the Tesco affair is unclear, while Richard Murphy, of Tax Research UK, examined all the other large media groups and found that the Guardian paid the largest percentage of corporation tax of the lot. As Richard Brooks also points out, it would be far worse if the paper's own tax arrangements stopped it from investigating "the tax gap", or even worse, if it affected its stance on it. Hypocrisy can be alleged, but it seems doubtful that the News International papers will be investigating tax avoidance any time soon, just as the Sunday Times every year mysteriously excludes Rupert Murdoch from its rich list.

Richard Brooks' involvement is one of the signs of how seriously the paper is taking its investigation, presuming of course that Brooks is the same Brooks that also works for Private Eye and who has been one of the heirs to Paul Foot's throne. That Private Eye subsequently discovered that Tesco was indeed avoiding corporation tax, as the paper had alleged, doubtless helped.

Undoubtedly, as we plunge head first into a recession, the tax receipts, taken for granted during the boom, become ever more important and should become ever more scrutinised. Peter Mandelson's famous quote, that New Labour was relaxed about people becoming filthy rich, often leaves out its second half, that this was fine as long as they paid their taxes. Half the reason why it was left off is not just so it can be used to beat Mandelson and Labour with, but also because the government itself became fabulously relaxed about companies and the individuals behind them not paying their fair share of tax. The Treasury might each year during the budget plug a few of the loopholes which are discovered by the bean-counting firms and mercilessly exploited, but the real tale, as always, was shown in the honours list, which year after year was resplendent with the burghers of industry who saw it as their duty, both to shareholders and themselves, to reduce their tax burden. Probably the most egregious example was the knighthood awarded to Philip Green, the man behind the Arcadia group - this was despite him taking £1bn out of the company to pay himself, which he funnelled to his wife in Monaco, therefore avoiding having to pay any tax whatsoever. The other gob-smacking incident was the selling off of tax offices to the company Mapeley, which is based in the tax haven of Bermuda. According to the National Audit Office's report on the deal (PDF), this saved Mapeley in the region of £55 million that the taxpayer would otherwise have had paid back to into the public purse.

The completely secretive nature of the deals, as well as the highly complex nature of the avoidance schemes exists not only between the companies and those that draw them up, but also between HMRC and the companies. HMRC, possibly out of embarrassment, possibly out of the desire to keep the missing taxes due a secret, refuses to give a figure for how much they're being left out of pocket each year, although estimates range wildly from between £3.7bn to over £20bn. Part of this secrecy is because HMRC deals directly with many of the companies over exactly how much tax they intend to pay - individuals such as Mohamed al-Fayed have long had agreements with HMRC over the exact figures. This is of course in stark contrast to how other taxpayers who get into arrears are treated, and to how the aforementioned benefit fraudsters are subject to the equivalent of a 10 minutes hate every so often. Both rip off the public purse, but only one enters the public eye, while further establishing the idea that most of those claiming to be sick are in fact not.

Some will console themselves with the idea that although undoubtedly avoiding pay your dues is a bad thing, that the money would just be squandered anyway. The argument would be a lot less alluring if this government wasn't so determined to do the equivalent of pouring money straight down the drain, as it continues to do on the various disastrous IT projects, on ID cards and on the Olympics, to name but a few such schemes. At the same time, there are always other things which many of us would like to see extra money going towards, not least at the moment a more generous benefits scheme for those temporarily out of work, or additional funding for retraining. It could be used to pay off the extra debt we're taking on more quickly, so as not to mortgage another generation of ordinary workers. As could be expected, it has been those ordinary workers, such as those protesting outside Lindsey and walking out in solidarity across the country, regardless of the involvement of the far-right and the nature of some of the slogans used, that are now being hit hardest when it was unrestrained global market fundamentalism which created the mess and which has been bailed out. The least those responsible can do is pay their fair share - and closing down the tax havens and the avoidance schemes has to be one of the conditions of the recovery and subsequent re-regulation.

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2/02/2009 11:21:00 PM | | | links to this post

Thursday, November 20, 2008 

Those Conservative economic travails.

This must be a truly strange time to be a supporter of the Conservative party. To enter cliché for a moment, all the chickens have finally came home to roost. The man who promised an end to Tory boom and bust has succeeded in abolishing boom, while the prospects for the bust look increasingly ominous. The economy which he boasted was among the best placed to deal with the global downturn is in actual fact one of the worst placed to deal with it, according to the IMF and the European Union. Unrelenting, the Labour party believes that the solution is to borrow more to fund the tax cuts to stimulate the economy. As Larry Elliot has pointed out, this is a direct contradiction of what Gordon Brown formerly believed. At the weekend the same man attended a conference which he claimed would back up his solution to the downturn; it did nothing of the sort, and predictably only agreed to more or less meet again. Gordon Brown, by rights, ought to be finished.

Instead, it's the Tories themselves that look as though they're the ones in need of some sort of a stimulus. By contrast to Brown, who seems unaccountably at the moment to be walking on water when he should be sinking like a brick to the bottom, they're the ones looking washed up. Nothing they do at the moment can get a look in, or when it does it's almost immediately knocked down for its flaws. Take their hastily cobbled together policy on tax breaks for employers, which was dismissed almost universally as being the kind of tax con which the Conservatives have so often accused Labour of pulling. This week's panic was, with it looking almost certain that there will be at least £15bn worth of tax cuts in Monday's pre-budget report, the minimum needed for it to be minimally beneficial, to declare that they would, despite everything which they've previously said, not stick to Labour's spending plans for at least the first year should they win the next election. In any event this was always a false promise, but such was the apparent anxiety within the party over the floundering response to Gordon Brown's sudden found decisiveness that red meat had to be tossed to those who have always wanted tax cuts before anything else.

Even this though leaves the party looking contradictory, or at least at first glance it does. On the surface it looks like a standard, fiscally conservative measure: you can't borrow your way out of a crisis, so don't try. Instead, spending cuts will have to be found. Yet the Tories are still committed to spending the same as Labour on the NHS, the police and on education, whilst refusing to say where the cuts would be made. Even abandoning ID cards, as they promise, will not immediately summon up the £20bn that they are forecast to cost once they are fully introduced. The figures simply don't add up. As a consequence, the Conservatives are again being accused of being the do nothing party, and it's an insult that for the moment appears to be sticking.

Some of this is undoubtedly thoroughly unfair on the Conservatives. An element of their plight at least is that the media has become bored of the prospect of the Conservatives sleepwalking towards victory at the next election, and with Brown's sudden self-proclaimed saving of the global economy, they have a new horse to get behind, even if it's the same one they were previously saying was only fit for the glue factory. Also influencing it though is that despite all the plaudits mystifyingly bestowed upon George Osborne, such as politician of the year, they have been absolutely hopeless on the economy ever since the run on Northern Rock. Their immediate tactic was to portray the potential nationalisation as a return to old Labour, which could have worked if they had a realistic alternative policy. Gordon Brown took fright, which is partly why they dithered and dithered and made things worse by not doing it sooner. The problem was that the Tories didn't have an alternative, and that everyone got so fed up with waiting for them to come up with one that Vince the Cable suddenly emerged as the politician who knew what he was talking about, given pride of place as the first man to turn to for analysis which ought to have been coming from the real opposition.

The other reason though is that they like Brown and New Labour truly believed the rhetoric. They honestly thought that the economy was now an area of consensus, that growth was natural and endless, and that it was social policy on which they should concentrate. A nasty and pernicious social policy it is, calling a society broken when is isn't and which their solutions for fixing are the opposite of what is needed, but a policy it was, and one which the conservative press especially were fully behind. They may have made some murmurings on personal debt, but they offered no substantive opposition to the government on its spending and borrowing plans, and as Labour has rightly pointed to, they even proposed loosening the regulation on mortgages. Their belief, like Labour's, was that we didn't need to worry about not actually making anything, it was making London the city in which to do financial business which mattered most. In fairness, many of us became caught up in this fantasy: that neoliberalism, despite all the evidence to the contrary, could deliver, and that through almost indiscernible redistribution, played down at every opportunity, that the proles would not become too upset at being continuously shafted. The latter it seems can still be contained, for now, but it was neoliberalism itself which has come in for the mightiest of shocks.

From being 28 points ahead at one point in the craziest poll, the Conservatives are now down to just 3 points in front, within the margin of error, in the mirror craziest poll. Unlike New Labour prior to 97, whenever things aren't going their way, the Conservative approach seems to be to panic. Last year, during Brown's brief honeymoon, there were murmurings of defenestrating David Cameron, such was the concern that the change in leader would affect their fortunes. Luckily, Brown succeeding at shooting himself in the foot not just once but on numerous occasions, first through a dismal conference speech, then over the election which never was, then the obsession with 42 days, then the 10p tax rate etc etc, coupled with Osborne's moment of supposed genius, the raising of the inheritance tax level to £1m. This time round Osborne himself is the casualty, not helped by his dalliances with yachts and trying to win in an unpleasantness contest with Peter Mandelson.

The really strange thing is that the Conservatives have arrived at the right policy in the circumstances in a completely Byzantine way. Although their claims that we are among the most heavily indebted nations in terms of GDP is bogus, even if you include the nationalisations, PFI and pensions, they are right that we should not be further adding to those figures without explaining fully and comprehensively that this means taxes are going to have to rise significantly, or that spending is going to have to be cut considerably to return at some point to equilibrium. After a crisis that was caused by private-sector debt, the public-sector should not be seeking to emulate it. If we are going to have tax cuts, then we should be funding them appropriately by either cutting the ludicrous number of databases we are planning or which are in use, abandoning ID cards, getting rid of Trident and not replacing it, not "investing" in aircraft carriers, by getting out of Afghanistan and Iraq now and by raising the top rate of tax on the richest considerably. It was our indulgence of them that led to this mess, and while our politicians should more than shame the blame, they should also help to pay for it, by also closing down the loopholes that allow so many to evade tax altogether. The party that again seems to be leading the way is the Liberal Democrats, who are flat-lining in the polls and have more problems it seems than the Conservatives. That, sadly, is modern justice.

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11/20/2008 11:41:00 PM | | | links to this post

Tuesday, May 27, 2008 

Of bank holidays, churnalism, and tax cuts.

Ah, bank holidays. Carefree days to share with the family while the heavens open outdoors. Or, alternatively, if you're a churnalist, a rather less carefree day struggling to fill up your newspaper. How about a story about a cat that's the only employee left at a Japanese railway station? Purrfect! Another middle class white teenager dies after an atypical drunken argument which happens across the land every weekend tragically gets out of hand? Time to restart the "Broken Britain" campaign in typically hysterical fashion! And, if you're the Grauniad, you can fill up the pages and your Comment is Fatuous blog site with all the news that's fit to flush from the increasingly tedious Hay-on-Wye book festival it just happens to sponsor.

If you're really, really desperate, you can even get an MP to write a comment piece for you. And lo, the Daily Telegraph comment editor saw it, and it was good, for he had managed to get Denis MacShane, from that bunch of socialist money thieves known as the Labour party to write an article calling for a smaller state and a cut in tax. Never mind that MacShane has always been on the right of the party, thought that the Iraq war was a fantastic idea and still thinks so, but this can be presented as a Labour MP speaking the unspeakable.

Or something. As it is, MacShane has produced an article almost as irritating as the Hay festival. In all his glory, MacShane tries to present the opinion that the poor should pay less tax as though no one on the left has ever said it, just as err, everyone realises that the tax credit scheme is hugely wasteful, costing a bomb and even then not working as efficiently as it should be. The answer has been obvious for quite some time: abolish the damn thing, raise the personal allowance significantly so that the poorest up to the middle-earners pay either very little or no tax at all, and fill the gap by raising the top rate of the very richest, taxing the non-doms, by ignoring the demands of the CBI, by not raising the inheritance tax threshold beyond the entirely reasonable £500,000, and imposing windfall taxes when companies such as oil firms make obscene profits because of the current oil bubble.

MacShane isn't finished there however. No, he also wants to target the waste in local councils, of the corpulent spending on press officers and consultants, on the ministers flying off on their jaunts. It doesn't matter that under Blair, who MacShane defended to the hilt time and again, this sort of spending got completely out of hand; he instead shrugs this off by saying that he doesn't know of a single minister "who doesn't privately despair of the waste of money" on the above. Why not publicly instead of privately despair? MacShane hasn't even mentioned the biggest and most egregious of the wastes: the private finance initiative, which has been used by Brown to keep so much of the spending and borrowing off the balance sheet.

If MacShane was hoping for a decent response from Telegraph readers he was wrong, as the Telegraph censors even less than the Grauniad (quite rightly, given some of the comments left for dear old Denis) and they let rip with both barrels, even if most of them are deluding themselves thinking that the new Blairites in the Conservative party are going to offer anything different whatsoever other than piecemeal cuts here and there while Whitehall remains just as bloated, if not more so, as the trend is for ever more spending on consultants and PR experts, not less, especially while the Conservative fightback is being helmed by ex-News of the Screws editor Andy Coulson. You can of course take completely the opposite view to MacShane and not be necessarily wrong either, as Bob Piper and Stan Rosenthal say:

What on earth is an ex-Labour minister doing writing an article for a right-wing newspaper that feeds into right-wing propoganda about the tax system?

Probably because dear old Denis is actually pretty right-wing himself.

Let's not kid ourselves though - this was partly to fill a gap after a slow news day and partly some of the thinkers outside the cabinet being let off the leash to suggest that there might be changes afoot. MacShane's offering is in fact probably more likely to be pursued than the course of action suggested by Compass for example, as to do as they suggest would have the tabloids and Telegraph in even more of a rage, even if it might, just might win back some of the support lost. And again, who knows, considering that the hauliers are throwing their rattles out of their collective pram again, while completely ignoring that even if tax makes up around 70% of the cost of diesel/petrol it's the oil price that has led to it spiralling to nearly £1.30 a litre, which the government seems ever more likely to give in to, tax cuts or the cancelling of rises could yet be back in vogue.

MacShane isn't the only way helping with the churning, as Dave Osler notes, with the Guardian bigging up a piece in Prospect by a former Blair speech writer who thinks that (yes, I realise it's just an example) if asthma patients want to spend their money on double-glazing, then they should allowed to be. It's a quite superb idea, it must be said, and shows where all the new thinking is coming from, and it isn't on the "old" left, that's for sure. Collins rounds it off by saying that the Blairites are increasingly impressed by David Cameron, which couldn't be because he's prepared to go the distance Blair couldn't, and that the real difference is "between the liberal and the authoritarian, not left and right". It doesn't seem to matter that by any scale, the new Blairites are just as authoritarian, if not more so than new Labour, as evidenced by boot camps for the unemployed, promises of zero tolerance and limits on immigration. If elected they'll probably have to stick with abolishing ID cards, although again, considering how much Labour have already spent on them, they (and us) might be stuck with them, but I don't believe for a second that they'll stick with their opposition to extending detention without charge once they don't have to pretend to give a fig about what Liberty thinks.

If the "new" new left is dead, then the new new new left is sure going to take some beating. Especially on bank holidays.

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5/27/2008 11:12:00 PM | | | links to this post

Wednesday, April 09, 2008 

Tory wolf in Labour clothing part two.

This letter in today's Grauniad says everything my post yesterday failed miserably to do:

Both my husband and I are to have our income reduced due to the removal of the 10p tax rate. I am disabled and receive incapacity benefit and an occupational pension (both taxed). My husband works full time for a low wage. He hasn't had a pay increase in nine years. Our children are grown up and we are below pension age. We are not entitled to tax credits. We are on the brink of poverty. And this from a so-called Labour government. I despair.

Josette Morgan, Potton, Bedfordshire

Justin has more of much the same.

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4/09/2008 08:45:00 PM | | | links to this post

Tuesday, April 08, 2008 

Beware the Tory wolf in Labour clothing.

Beware the lesson of the Tory wolf in liberal clothing, writes La Toynbee. As it happens, she's talking about how the centre-right in Sweden, after getting into power on a programme of policies not much different to that of the centre-left, have turned out to be rather more right-wing than they promised, the implication being that no one must vote for that nice Mr Cameron, as despite his message, he'll undo all of Labour's hard work in abolishing poverty and establishing total equality.

I exaggerate slightly. The headline could however just as easily be about Brown. Toynbee strangely doesn't mention in her column something rather more important to the average low-paid worker who's most likely to actually vote Labour, but Brown could be that Tory wolf in Labour clothing. What else to say of someone who, through abolishing the 10p starting rate of tax, has just redistributed mainly from single workers without children earning under £18,500 to those earning over £35,000 a year, who gain under the tax changes introduced in his last budget?

It's important to set the background to how this change came about. This was back shortly before Brown was to inherit the Earth - or at least the Labour party leadership. His stewardship of the economy was not yet as threatened or criticised as it is now, but it was starting to come under some strain, and he didn't have much room for manoeuvre. He needed something that would grab the headlines, but that wouldn't smack the most crucial constituencies, the cliched hard-working families, pensioners, or the City. It might not have had anything to do with it, but the weekend before a number of newspapers called for tax cuts, with the News of the Screws almost begging for some sort of slash. The 10p top rate, introduced by Brown himself some years previously, was the obvious contender. The reasoning was that due to the introduction of tax credits, those on low pay who would have otherwise have been whacked had something of a fall-back, while the only real major losers would be those under 25 without children who couldn't claim them and part-timers who didn't work enough hours to qualify.

The signs that this wasn't thought through properly, or that it was, and Labour either didn't care or thought that the majority wouldn't care, are fairly clear. If there's one thing that New Labour has always been aware of, it's the polls, and time after time they show that around the only remaining demographic that supports the party consistently and in spite of everything is the 18-24-year-olds. How could they have not noticed it regressively targets them if the Treasury hadn't been frantically searching for the proverbial rabbit to pull out of the hat?

Regardless of that, the giving with one hand and taking away with another didn't fool hardly anyone else in any case. The most grateful headline the budget received was the Sun's "reasons 2p cheerful", which was rather mitigated against by the following day's headlines elsewhere on Brown's "tax con". Questions have been asked of why the Labour MPs now concerned and angry about the change didn't recognise it sooner and speak up - the reason why they didn't because at the time they didn't care as they had no reason to think it was going to affect them personally. Even if the local elections were coming up again, the losses were thought unlikely to be as severe as previously, especially considering Blair was on his way out and acting as a lightning conductor for discontent. With him gone, Brown was bound to re-energize the party and re-engage with the public itself. This was exactly what happened - until the Northern Rock crisis broke out, Brown fluffed his opportunity to call the election last autumn, and the economic weather significantly turned with the credit crunch, still now reverberating and having a chilling affect across the board.

Backbench MPs are concerned now because a tax change they thought they could bluff their way through has come home to roost. However much the Supreme Leader and Alastair Darling chunter about how we're in an excellent position to deal with the lack of liquidity in the financial markets, with inflation low, the lowest paid are the ones feeling the pain of the price of food especially rising. Then, just as things are getting worse, they get further stabbed in the back by Labour taking away the 10p rate. Taking into conjunction with other matters that Labour has dismissed or poo-pooed, such as the closing of post offices and now the most dramatic fall in house prices since the dark days of 1992, and it's little wonder that the Labour MPs are so worried. Even though the Conservatives continue to offer very little of any substance or great difference, they see the upcoming local elections as the precipice they may be about to fall off. They remember the almost wiping out of Tory councils back in the local elections of the mid-90s, and fear it's about to happen to them. The only major council Labour still controls in the south outside London is Reading - and it's under great pressure.

This was not how it was supposed to happen. If Brown had gone for the election back in October, then Labour would now most likely still be in power, albeit with probably a further reduced majority, and while all the above issues would be of concern, they'd have the four or five years to once again turn it around. Instead Labour is increasingly hemmed in from all sides, but Brown himself doesn't either seem to recognise this, or if he has, he's not showing it. I personally couldn't care less about house prices falling, especially seeing if I'm ever going to be able buy one at some point in the future they're going to have to drop a lot further, but when it's possibly the number one issue for the middle classes it seems to be asking for it to refer to the drop as "containable". That doesn't even come close to the apparent contempt he feels for the very individuals he's shafted with the removal of 10p rate however, who have to realise that he's taking the "difficult long-term decisions" and that in a few months they'll see the results - I'm sure they'll appreciate that when their pay-checks come in.

Quite why the Labour MPs are complaining however, as opposed to why are they complaining now is the better question. It's with a piece of everything else Labour has done of late. When John Hutton does the greed is good routine just as the banking sector has brought the Western economy to its knees, when concessions over the non-doms are made almost as soon as the City howls, when Caroline Flint continues to spout about evicting those on benefits from council houses and when the entire cabinet seems to have decided to out Blairite the worst excesses of the Blair years across the board, they ought to have realised by now that Labour stopped caring about its base a long time ago. Instead of letting them eat cake it urges them to eat tax credits, even if they mask the problem rather than anywhere near address it, are incredibly difficult to claim in the first place and there continues to be huge problems in the administering of the scheme, leading to both under and over payments. Rather than offering the change he promised, Brown has been a continuation of the same without the undoubted political nous which Blair had. You might remember that David Miliband said on Question Time that a year into a Brown prime ministership some might feel nostalgic for Blair and want him back; someone more perceptive might have instead said that a year in and everyone would be saying that nothing had changed. The "tragedy" has been that they would have been proved right.

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4/08/2008 07:27:00 PM | | | links to this post

Saturday, October 13, 2007 

Bribing the middle classes Labour style.

After such a tumultuous, ignominious week for Labour, you would have thought that they would have retreated, taken stock, figured where they'd gone so hideously wrong, and moved on from there. No such luck. For some reason, Andy Burnham decided to give an interview to the Torygraph over how he believes that there's a "moral case" for the tax system to "recognise commitment and marriage".

If these were, as the Treasury has been furiously spinning, either Burnham's own views or related to comments about inheritance tax, the former would be fair enough while the latter would deserve to be vigorously challenged. As it is, especially considering the week we've just been through, there's only one prism through which this will be viewed: yet another attempt by Labour to shift onto the Conservative's traditional ground.

It's even more questionable when you consider two highly pertinent facts. Firstly, that Brown in one of his few memorable and entirely correct passages of his speech to conference, denounced the Tories' proposed £20 a week bribe to married couples:

"I say to the children of two-parent families, one-parent families, foster parent families; to the widow bringing up children: I stand for a Britain that supports as first-class citizens not just some children and some families but supports all children and all families."

Secondly, the time when such recognition of marriage would be wholeheartedly welcomed has long since passed. Just after the Tories first made their plans known, the audience on Question Time was almost unanimous in both picking holes in and making clear the inherent unfairness in such a scheme. Around the only people who did celebrate it were the moralist, right-wing newspapers: the Mail, Torygraph and Sun all saluting the discriminatory scheme, it has to be said not just on the grounds that it encouraged the establishment and "stability" of the family unit, but also because of the pound signs in their eyes: £20 a week simply for being already married! £1000 a year! When you consider that a married couple, simply for having tied the knot will be getting more back a month than the average person on income support will get in a week on which they have to live on, it only emphasises what an iniquitous and dubious use of taxpayers' money this would be.

Even after all of this, Brown and his acolytes seem blind to the dangers of trying to appease someone who holds the equivalent of all the cards. The Daily Mail, regardless of Dacre's friendship with Brown will never be brought onside, no matter how many of the Conservatives' clothes Labour decides to wear. To go to the Mail itself with this latest shamelessness would have been too brazen and obvious. Instead, Burnham chose the next best place to drop the latest sign that under Brown Labour will be just as opportunistic and shape-shifting as the party was under the helm of Blair. Then again, why should we expect anything else? Today's interview with Cameron in the Grauniad shows that he doesn't care about Labour's cross-dressing, as he knows full well that it only makes him and his party look all the stronger. Labour is only hurting itself, and the Tories are understandably overjoyed.

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10/13/2007 08:03:00 PM | | | links to this post

Monday, October 01, 2007 

The charge to the right.

For those of us who hoped, however desperately or naively that Gordon Brown really would bring a change, however small to the Labour party, last week was the evidence that showed if anything, Brown is prepared to push the political centre ground even further towards the right. However much we may loathe his motives for doing so, it was an astute political move, if nothing else. The success of last week, or at least the success as the press and the Labour party itself saw it, was to put the Conservatives into a hole: where do they go when Brown is so shamelessly stealing not just their territory, but even some of their policies?

If yesterday and today are any indication, it's the response that comes naturally: go even further right. Of all the people who you could choose to talk on foreign affairs, only the rabidly right-wing would decide on a figure as divisive or discredited as John Bolton, one of the architects not just of the Iraq war, but also of the whole neo-conservative movement. You wouldn't have known that from listening to him though, as he's now apparently embarrassed about his previous dalliances with the Project for the New American Century, to which he was a signatory to at least a couple of letters, even if he didn't sign its statement of principles. No, rather than a neo-con, he's a Goldwater conservative, and he doesn't share the "Wilsonian" views of the benefits of democracy that some of his fellow neo-cons do.

That's probably for the best, as he had either just or was about to call for the overthrow of the democratically elected president of Iran, wistful of the time when the "the US once had the capability to engineer the clandestine overthrow of governments". Nothing really new there, as after all, Donald Rumsfeld himself had previously mused on the overthrow of the Shah, who he considered to be a fine man, except for the torture, repression and all the rest, whom the CIA had maneuvered into place after Mossadegh was deposed. According to Bolton, Iran's nuclear program has gone beyond the point of no return, and "limited strikes", while not an "attractive" option, are better than the alternative. The UN, he said, to applause, is "fundamentally irrelevant", unlike for instance, a former UN ambassador with a mustache similar to a former Russian dictator's.

Away from the calls for even more bloodshed and dropping of bombs in the Middle East, this week, again according to the media, was make or break for the Conservatives, the Scum for one suggesting that David Cameron's task was close to "mission impossible". Labour's bounce, especially when the Conservatives had yet to have their own shindig was always going to be possibly overstated, and no betting man would have put down his money before at least seeing how they performed.

While we'll have to wait until Wednesday for Cameron's own attempt to galvanize both his own troops and potentially the public behind him, if Brown does call an election, he'll find it difficult to top today's naked attempt to blind the public with tax cuts that the vast majority will never actually pay. If the message of Brown's speech was at times puritanical, nationalistic or even jingoistic, then George Osborne's theme was aspiration, that most bourgeois of desires, that the vast majority of us grow out of once we realise that it's only available to the better off. Osborne's promise today to raise the inheritance tax threshold to £1 million was, however indirectly, an indication that the Conservatives have no real intention of trying to change that.

Before he came to it though, it was time for a whistle stop tour of all Gordon Brown's failures. He holds, according to a former civil servant, a "very cynical view of mankind", which according to Osborne is the "antithesis of our age". Forgive me for defending Gordon Brown, but I think he might just have something there: the current state of the world hardly suggests otherwise. Give me cynicism over "sunshine winning the day". Next he was responsible for Northern Rock, somewhat more plausibly, but wasn't this ever so slightly rich coming from the party responsible for the disaster on Black Wednesday, and only weeks after John Redwood, shortly to be praised by Osborne, suggested that all the red tape regulating mortgages be abolished, just as the disaster of the sub-prime lending in America took out a bank that had thought that the age of easily available liquidity would last forever?

That part of Redwood's report was strangely not mentioned, although his other recommendations, Thatcherite to the core and in direction contradiction to those in the quality of life review from Zac Goldsmith and John Gummer, were praised to high heaven. Osborne doesn't just believe in low taxes, he wants them every day of the year, not just December the 25th, in a vacuous soundbite to end all vacuous soundbites. Before the inevitable announcements though, it was back still to whacking Gordon Brown over the head; he doesn't just not get it, he also doesn't understand the new economy, whereas Osborne believes in the collective wisdom of free people, which is apparently how Google, Facebook and MySpace work. It seems that Tila Tequila is a Conservative too, as the people have chosen her as their representative from MySpace.

Finally, drearily, Osborne got to the meat, and you really wish he hadn't, so thin and so laughable was his argument. Rather than it being the huge rise in house prices, or the lack of housing stock, vastly depleted by err, the Tories' selling off of the council houses being chiefly responsible for young families finding it hard to get on the property ladder, it's in actual fact all down to Brown's stealth taxes, and the whopping £1,600 that those buying for the first time have to pay in stamp duty. Well, fear no more, because the Tories are going to abolish stamp duty for all first time buyers' on houses sold under £250,000. Their dream of making a tax cut look better than it actually is your dream too, or something. Aspiration, aspiration, aspiration!

That though was nothing compared to the next fiction to be served up. John Redwood's report had proposed abolishing inheritance tax, and it was widely briefed that there was going to be an announcement this week that it was going to become firm policy, and Osborne certainly wasn't going to disappoint. He was cannier than Redwood though: abolishing IHT completely could easily be portrayed as giving the ultra-rich a free tax cut, giving Labour more than enough to target. Instead, Osborne's ploy was to readdress IHT and make it only target the super-rich, as it was initially meant to. The applause as he announced that the threshold would be raised to £1 million was deafening: you almost expected him to take a couple of bows, so delighted were the Tory faithful at such wonderful news. You could almost see the pound signs reflecting in their eyes, the vast majority safe in the knowledge that they could pass down all the privilege they'd either earned or inherited themselves with no worries that the evil taxman would be taking it from them.

Too bad that the sums on how it was to be paid for simply don't add up: just how many non-domiciled Britons are going to sign up for the status when it costs £25,000 a year? Answer: not many. And wasn't there an inherent contradiction in the policy? Hadn't Osborne just moments ago said how the very rich, those it is still going to hit, already avoid inheritance tax? Where do the aspirational fit into all this? Aren't those who inherit their parents' former abode with no payments to make less likely to achieve for themselves when they have a cash cow courtesy of the luck of being born, or even due to the luck of whom their parents were born to? In reality, inheritance tax has become a bogeyman for middle England which is all too easy to take out and win major kudos for doing. Never mind that even the Tories agree that it currently only affects 6% of estates, and that Labour is already going to raise the threshold to £350,000, it's still enough to scare the journos on the Mail and Express with their well-off parents, the most likely factor behind the clamour for its abolition and resulting inching into the consciousness of the nation at large. There has always been a case for raising the threshold even further, to £500,000, or £750,000, respectively double or treble the average price of a house in south-east England, so it really does still hit the rich, but £1 million is the equivalent of abolishing it while not doing so. Paul Linford thinks Gordon might go one better and abolish it completely, but we shall see.

At the same time then as declaring themselves the party of aspiration, the Tories intend to still further rob from the ultra-rich to give to the reasonably well-off, entrenching their position while further damaging the already limited ladder of social mobility. In fact, they're not even satisfied with that: in order to destroy the iniquity of single mothers being better off alone through the tax system than if they're living with a partner, they intend to get the long-term sick on incapacity benefit on their bikes through the private sector to pay for it, and that's without even considering the blatant bribe of £2,000 a year to married couples, those weak links that are hard done by as a result of our hideous welfare state helping the unwell and out of work which thinks nothing of those that tie our society together, as Iain Duncan Smith so effortlessly identified.

It'd almost make you want to vote Labour, until you remember that new Labour in the age of change under Brown is the soft Conservative option. I used to think that those who complained about politicians being all the same weren't paying enough attention: turns out they were right.

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10/01/2007 07:55:00 PM | | | links to this post

Monday, September 10, 2007 

Scum-watch: McCann sycophancy and scummy mummies.

A relatively quick breeze then through today's Scum leader column:

KATE and Gerry McCann must have thought the nightmare couldn’t get worse after their daughter Madeleine vanished.

...

First, there was the apparent lack of interest from the bungling Portuguese police. Then came the vile rumours about them in the local press.

While there could certainly be something to be said about the slow reaction from the Portuguese police in failing to close or notify the Spain/Portugal border, to call it a lack of interest is nothing short of a slur. They conducted searches throughout the area of Praia da Luz, interviewed everyone involved and shortly declared a man to be a suspect. It was only then that the trail went cold, which isn't exactly their fault. The very nature of the McCanns' media campaign could be just as responsible, resulting in the kidnapper going to ground and keeping Madeleine locked away from wherever anyone could see or find her. It was always a difficult decision to make, and we may never know whether it was the right one.

Now, after receiving dubious forensic reports, they are being treated as “suspects” in the case.

Naturally, if this case had involved terrorist suspects, someone accused of abducting a child or almost anyone else in this country, it seems unlikely that the Scum would be referring to forensic reports against them, compiled by the British Forensic Service, as dubious.

No wonder the McCanns were anxious to be back in the bosom of supportive relatives and friends.

But they would be more reassured if detectives in Portugal concentrated on trying to find Maddie.

In their pursuit of the McCanns they seem to have forgotten even to go through the motions of hunting the kidnapper who might still have the four-year-old in his clutches.


Uh, that was what they were doing up until they first apparently started to suspect the McCanns themselves, wasn't it? So believing of the McCanns, not willing to accept for a moment they just might have something to do with Madeleine's disappearance, the Sun's left with trying to accuse the detectives of not continuing the search for her. The reason they're no longer going through the motions appears to be obvious: they no longer think that she has been kidnapped, concluding that she's dead, either at the hands of her parents as the result of an accident or otherwise. It's one thing to accuse them of "bungling"; another to suggest that they've given up completely.

Onwards:

ALL pregnant mums are to get £120 of YOUR money in the hope they will spend it on healthy food.

Christ, MY money? I'm broke as it is!

Yet wealthy “yummy mummies” don’t need the cash, and already put food under the microscope.

“Scummy mummies” at the bottom of the heap will just spend the hand-out on booze and fags.


Lovely. Considering the very fact that the Sun itself is a caricature, it's not exactly surprising that it's using them in such a crude way here. It does however though say something about the Sun itself: a supposed working class publication, one of its biggest hatreds is of its very readers', condemned as "chavs", "yobs", "scroungers", leftie trade union dinosaurs and now as "scummy mummies". The very fact that the paper of choice amongst such people is likely to be the Sun has never entered into it. Even so, it's quite true that Alan Johnson's idea is a complete and utter clusterfuck, an obvious bribe, as others have expanded upon.

It does however bear comparing to another recent bung; the Tories' policy commitment to recognising marriage in the tax system. Both are aimed at achieving similar supposedly laudatory measure, in the case of the "health in pregnancy" grant narrowing the disparity between the rich and poor in health terms, while the Tories' pledge is in encouraging commitment in relationships and promoting the family as a way of tackling Britian's "broken society". Both are also completely spurious arguments, based on politics and narrow interests. The difference is that Labour's is meant to help the poorest: the Tories' on the other hand, despite all the bluster, is so opaque that an 8-year-old could see through it, an open bribe at middle class families already married. It's interesting then to note that while the Sun (and numerous other right-wingers) fully supported the Tories' idea, it completely rejects the Labour one, even though they're both idiotic. Could it be possibly be something to do with which class each is aimed at? No, that couldn't possibly be it; only the left indulges in class warfare.

While the cost to the taxpayer would be £120 for each pregnant woman, the Tories have raised the figure of around a £20 a week saving for married couples. Do the math: that's a lot more money to those who really don't need it courtesy of the fiscally sound Tories than it is from the stealth taxing, wasteful Labour.

As the Scum says:

It is this sort of expensive gimmick that drives taxpayers crazy.

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9/10/2007 11:59:00 PM | | | links to this post

Friday, August 17, 2007 

A less than glorious Tory inheritance.

In a way, it's almost encouraging to see the Tories finally producing something resembling a policy, or at least one that the press and people in general will be able to latch onto. It's too bad that rather than supposedly moving on, Cameron is still just as obsessed as his predecessors at bribing the middle classes, rather than improving the lot of the majority.

Of course, we shouldn't be surprised. Despite Cameron declaring himself a liberal conservative, desperate to consign the image of the nasty party to history, he's made the strange decision of ordering two of the most important policy reviews of his premiership to be conducted by yesterday's men. First we had Iain Duncan Smith, the disastrous former leader with his recommendations on how to mend Britain's "broken society". His solutions were all too familiar: get the single mother back into work as soon as possible, regardless of the effect on her own family, offer tax breaks to married couples and clamp down ever harder on those noxious illegal substances. Today we're treated to John Redwood's report, titled "Freeing Britain to compete", and it follows more or less the same lines; while its length doesn't quite touch Duncan Smith's 6 volumes, it still fills up 211 pages.

The attention grabbing recommendations then come as little more than a damp squib. For years we've witnessed the Daily Express and Mail complaining about the inequity of inheritance tax, nicknamed the "death" tax. In recent years they have started to have something more of a point: with the housing market getting more and more out of control, ever more estates have started to fall under the £300,000 threshold, which itself was raised recently. This though has never been an argument for the complete abolition of the tax, it's been one for redirecting it once again at those it was meant to fall upon: the ultra-rich and the handing down of the vast amounts of cash and property which their children have often done very little to either earn or deserve. While Labour is meant to be raising the threshold within the next year to £350,000 and according to official figures it still only touches 6% of estates, the best way to counteract the calls for complete abolition is to raise it to at the very least £500,000 and maybe to even £750,000. While this may encourage even more of those it's likely to hit to evade it, this would still lift the grievance held by some in middle England, and make it harder for journalists with their own well-off parents to make their readers' feel sorry for the awful plight, one of the main factors behind the calls for its end.

The other pledge aimed directly at the middle classes is the proposed raising of the 40% higher rate of income tax, which currently kicks in at £34,600. There again might be a case for raising it slightly, but it's worth remembering that the average yearly wage remains mostly static at around £22,000. This is why the case for a higher top rate of tax for those earning £100,000 a year or more has always been so persuasive, some would say easy to support, but there is of course nothing in this report at all suggesting that the ultra-rich are getting away with it, with the poor paying disproportionately more in tax those at the very top of society. Indeed, the report also recommends that those hard-done by large businesses getting an even further cut in corporation tax, already announced by Brown to be cut from 30p to 28p, with Redwood suggesting a 25p rate.

Perhaps the report's main prerogative is set out in the "Our vision" section, one full of holes apart from its typically Tory rhetoric :

A more enterprising Britain will be a more caring Britain: as incomes rise, so tax revenues rise and charitable giving flourishes.

But this is a fallacy based on the trickle down theory: in the last 20 years we've seen the rich get richer while the poor have remained poor. Rather than Britain becoming more caring in that time, we've almost certainly seen it become crueler, and you don't have to just point to the rise in deception and unethical behaviour in popular culture to reach that conclusion. Besides, should we really take advice from a committee that comes up with such laughable solutions to the problems of the rail network, when it was the Conservatives themselves that brought it to its knees through privatisation? Maybe we really did need that reminder from the BBC of one of John Redwood's previous most notable achievements.

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8/17/2007 08:28:00 PM | | | links to this post

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