Can we afford the middle classes?

In 1974, Edward Heath asked: “Who governs – government or trade unions?” Speculate as you will on whether you think the re-election of Thatcher five years later answers that question, but the relevant answer today is neither. The third choice is the complexity of the political situation, it is this which has done the most to engender the system more than the above.

For example, it is not for nothing that a repeat of Peter Griffiths‘ campaign, which featured the infamous 10-word slogan: “If you want a nigger for a neighbour, vote Labour,” is unlikely. Politics in this country has changed, and in many ways converged, particularly on issues such as race, culture, religion, gender and sexuality (though there are exceptions to this rule, of course).

In recent times, when austerity measures were not on the menu, harmony could be found between the Tories and Labour on the economy as well. Michael Gove spoke kind words (bordering on sickly) about Tony Blair’s academies, private capital in schools and what a business agenda in schools could bring to the country in the future. David Cameron, too, was derided for not being angry enough with Blair, on economic and other matters, across the room, frankly because Cameron admired Blair, as did most of the shadow cabinet at the time, which can be shown by the waves and cheers by them during his leaving ceremony. Many on the right complained that there was no real or effective opposition, whereas many on left moaned that both parties had merged as one.

Today’s political situation might have realised the conditions for proper political opposition, between the values which both parties were founded upon.

Today’s Observer runs an article which states:

Earlier this week, a report by the thinktank Reform, which is close to the Conservatives, called for a curb on “middle-class welfare”. It proposed reducing spending on child benefit, child tax credit, the winter fuel allowance for pensioners and more. Overall, it called for a £13bn reduction in state benefits.

Meanwhile, Policy Exchange, another thinktank close to the Tories, claimed that billions paid by better-off families in taxation is handed straight back to them in benefits. It found that last year £53.5bn – 32% of all benefits – were paid to families with a higher than average income.

These benefits were based on universal citizenship gifts. The NHS is not a gift afforded only to those who can’t afford it, and private healthcare to those who can, but is universal and free to all users. The child trust fund was another such example; an entitlement initiated by the Labour government free for all and free from means testing. But now it has been decided that perks such as this cannot be afforded any longer.

This will be the thing that properly sets the mainstream parties against each other again and restore them both to their foundations: Labour universalism verus Conservative cuts. And it has to do with the political situation, not political will. Who governs? It’s the economy, stupid.

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George Osborne has chosen now to cut heavily and not over time steadily. He has chosen this course to deficit reduction over tax rises as well. But in his intellectual toolbox he has peculiar justifications for doing so.

Alistair Darling, also in the Observer today, noted that:

The government is fond of referring to the experience of Canada in the 1990s, where a public sector retrenchment was matched by a private sector boom. Osborne’s seesaw in action. But that experience does not offer a route map for the UK today. It provides a warning. In Canada in the mid-1990s their major export market, the US, was growing strongly. The demand a booming neighbour provided could take the place of government spending, and did so quickly. That is far from the case in the UK today. Our main export market is Europe. Growth there is sluggish. There is a new fiscal austerity across the continent. And that is exactly the problem. Governments, even with relatively modest deficits, are taking demand out of their economies.

In a piece called Budget Blunders the BBC noted in 1999:

Philip Snowden … introduced an “orthodox” budget that cut unemployment benefit and public sector pay at the height of the Depression.

The results were riots in the streets by the unemployed, and a mutiny among sailors in the Royal Navy at Invergordon in Scotland, which virtually crippled the Fleet.

Just as it doesn’t follow that Canada could do it, nor does it follow that just because Snowdon failed that Osborne will. But the question is just how much have his calculations been born of ideology. The debate between cuts and no cuts is a non-question now, but cuts as far as possible should not affect the destitute and low paid.

If Osborne has a Snowden moment, it won’t just ruin his political career, it will ruin the lives of many undeserved people in Britain.

Budget 2010

These are my intial reactions to some of the measures made in the Budget 2010 (subject to change, does contain some humour):

Tax on bank bonuses will pay for a £2.5bn growth package.

For me this is less to do with growth, as it is to do with repaying those who have had to bail out risk – bad risk.

No one under 24 will be unemployed for more than six months, without receiving the firm offer of training.

NEETs is a serious problem in this country, that really hasn’t been helped by the push to get more people into university – which has resulted in short term internships or part time work. But perhaps there is something in the future of the latter – namely people working less hours. When I raised shorter working hours across the country, keeping the stability perks of full-time employment, in a sociology class at college 7 or 8 years ago it was treated as utopian dream – but more and more this becomes nearer to a reality – and has the backing of at least one small, but up-and-coming political party in this country with the Greens.

Alongside plans to rejuvenate frontline workers – for example nurses or social workers – efforts can be taken by the government – and are plausible, not utopian folly – to raise the minimum wage to a European living wage (not just the 2.2% increase to £5.93 per hour), and start cutting hours to make use of the newly trained workforce – to be sure fewer hours are better than no hours, which unfortunately has been the only option for some people.

Though, of course, one measure must be met with the other, which informs my discomfort with the half-baked effort of this particular measure. Will we see a day where, when after 6 months of this measure’s enforcement, we have more trained workers than jobs?

Help for first-time buyers by raising the tax-free threshold from £125,000 to £250,000, but raising stamp duty on residential property over £1m to 5 per cent.

I’m with John Prescott on this one – no brainer; if you don’t raise stamp for those with properties of over £1m it by causality affects the lesser off- the no-brainer is, of course, who will be affected the least.

Those earning more than £100,000 can look forward to some allowances being removed. Re-announces 1p rise in national insurance and 50p tax.

I don’t know where this potential saving is planning to go into, but the general rule remains; unless you tax the well off in spending squeezes, you hurt the poor.

New £35bn fund to help universities spin out entrepreneurial ideas

Translation: Darling causes 600% increase in sales of Edward de Bono’s Six Thinking Hats.

Child tax credit to rise by £4 a week

Noble gesture, of course, but could be better if tailored – and increased – for the more vulnerable families rather than across the board.

Cider is “under-taxed” – it will be raised by 10 per cent from midnight on Sunday. Strong ciders will be even more heavily taxed, though the Chancellor didn’t give details.

But no saving will be made, in the long term, owing to the vast increase in waging special constables to curb scrumping.

Writing in red came from the live updates of the budget report on the Telegraph

The curious week of chancellor Darling

Alistair Darling wants to cut the £175bn black hole in the public accounts by £50bn. So what’s he going to do about it?

In the midst of hard, cold economic misery, the chancellor threatens to freeze public sector pay. Even from supporting voices, such as Andrew Hutson from the Adam Smith Institute, its accepted that such a manoeuvre will save £5bn. A small price for such a deal, that affects people who, not only have done nothing to create the financial mess, but, are the most affected by it.

It has spurred on hardcore free-marketeers, who by and large support the move, as seen on the ASI website, to use this measure to their own advantage, seeing it as a way of shouting a huge told-you-so on the so-called lack of wealth creation in the public sector. For them, the public sector should stump up money since it doesn’t create as much money, and, as they will point out, is quite happy just to receive it.

Or, as Hutson states, “A freeze in pay would send out messages that the public sector needs to really earn our money rather than automatically receiving it.”

But this should stick uncomfortably in the throats of people who remember how much was provided by the government to bail out banks (which I can say with some certainty is most of us).

This brings us on to what Darling will not be doing. As the Guardian reports tonight “He (Darling) made no mention of capping bankers’ pay despite telling MPs that “irresponsible pay practices made banks take too much risk”.” And as Vince Cable said: “This [white] paper will be greeted with a sigh of relief in the City since it marks a return to ‘business as usual’.”

Another matter that Darling will not be seeing to is some severe cases of tax evasion. As Michael Meacher MP noted tonight his attempt to start a debate on tax avoidance of the super-rich was turned away by the speaker on the grounds that “the effect of the new clause would be to increase taxation”.

As Meacher further notes;

“The totality of tax avoided by super-rich individuals and big corporations has been estimated by independent research at some £25bn a year, and even by the Treasury at up to £13bn a year.”

That liberal estimate, and even the conservative one, is a substantial amount more than the £5bn that Darling wants to cut from public sector pay.

So Darling’s proposals will be celebrated by free-marketeers and bankers who will laugh off the possibility of a mere new Council for Financial Stability, and who always felt that public sector workers were getting let off anyway.

And, as Dan Roberts pointed out today;

“Appeasing the vested interests of the City will only lead to a repeat of past cycles of financial boom and bust. What is odd is it took a Tory shadow chancellor to realise this.”

Curious indeed…

An open, twitter-esque, blog entry for Mr. Darling

You don’t have to be mad to be an MP and as such it should be thoroughly frowned upon but if you are, you certainly shouldn’t lose your seat. Here here Mr. Darling.

(And I promised not to be as crass as that no good Paul Staines).

But Mr. Darling, when the opposition favour spending cuts, and half of our government, including yourself by proxy, do too, madness is the character of our times.

Unemployment numbers have risen to 2.261 million so reports the Guardian today, and you failed to back Ed Balls, the man who your boss wants your job to go to, when he supported more spending in health and education. The areas where it really hurts the Tories.

It doesn’t add up at all, with regards to, not just your predictions that the economy will heal, but, Paul Krugman’s judgement that our economy is on the mend.

At best, the job void is filled by unskilled labour, at best it fails to capitalise on an area where the opposition is at its knees, and our party will be forced to scrap its current working mantra: Labour investment versus Tory cuts.

Toby Helm, blogging on today’s Guardian, on the topic of today’s PMQ’s said;

“At successive general elections since 1997, Brown has had one overriding message that has worked pretty well: that the Tories will cut spending on key services while Labour will invest more in health and education in real terms.

Your NHS, your kids’ school etc … all better under Labour.”

Cameron, according to Helm, is already attempting to hone in on Labour’s policy on spending, so it is time for Brown to save his legacy (even as Chancellor) and refrain from cuts. I’d even go as far as to say he should facilitate plans to refrain from cuts and engage with Balls’ figures.

In order to save his legacy of avoiding cuts, he needs to cut you, Mr. Darling, out.

Balls is right (I admit now), Labour in-fighting gives Tories political highground

Alistair Darling, one half of the duo who quashed city analysts’ predictions on the longevity of financial recession, has clashed with Ed Balls over spending in the health and education departments.

Fair?

Those independent economists (bless them) referenced in the Telegraph article today have said that whoever wins next election will have to squeeze public spending in order to pay back the 700bn borrowing prgramme.

But on CiF and during an interview with Radio 4′s World at One Balls spelt out his reasons for wanting to go ahead with spending, along with why fighting within the Labour ranks is hurting the party, and giving the Tories a free ticket to political highground.

But Balls in the interview was clearly more cautious than some have now made out – like Liam Byrne for example, who said;

“We are going to decide how the growth in public spending is divided up much closer to the time. Looking into a crystal ball and understanding what the economy looks like in the year of the Olympics, I just don’t think is possible right now.”

Balls boldly stated that the moves on spending, to outdo Tory plans on 10% spending cuts;

“will depend upon what happens to the economy and to unemployment and debt interest. But I think that with tough choices we can see real rises in the schools budget and the NHS budget in future years.”

These careful claims are justified, but why have they not been backed by the Chancellor’s department?

Does Darling not believe his own part in the claim – now with Paul Krugman agreeing that Labour are the right party to fix the economy, and Jose Manuel Barroso limiting his focus on America, which by his predictions has not seen the worst of the recession yet – that the UK has the best chance of a quick economic recovery in europe?

Or is it something a little deeper; does it have anything to do with the fact that, as shadow schools secretary Michael Gove questioned, Balls is the man Gordon Brown wanted to make chancellor, [and] Alistair Darling [is] the man he was too weak to move?”

Certainly with TUC’s predictions recently that job losses will continue, now in the public sector – previously resisting the pressure by economic downturn – public spending should be bracketed as important as debt relief – since that debt has been largely public sector relief, its time to focus on how to avoid public sector collapse and more economic misery for working families.

And on a more strategic level, cuts in the public sector is where the Tories are at their most vulnerable; George Osborne and Kenneth Clarke have both said that cuts are inevitable, and Andrew Lansley, the shadow health secretary, has said that to commit to Balls’ needs would mean cutting other departments’ budgets by 10 per cent (earning his pseudonym Mr. 10% by Liam Byrne).

The party must stay focused, cut out the deadweight and the weak, work out how to marry financial repair and public spending to curb job losses and economic misery for working families, and show the Tories that cuts will not cut it with the country’s economy.

In better times, think of Keith Bobbin

What a turn up, the recession might be coming to an end. City said three years, Brown and Darling said one, and as things look, the latter two may be right. Perhaps this was why Brown stayed on, against all odds; he knew deep down. 

The end of national and international turmoil in the economy may well help steady many finances, but it won’t do anything to help ousted Labour councillor Keith Bobbin. He loses his £15,000 allowances after losing to Tory Sandra Hillier in the Essex County Council elections, by only 96 votes (I did my bit by voting for him last Thursday).

To make matters worse, as a consequence of his seat loss, he has to now join the dole.

He is said to have fallen out of love with politics and plans to stand down as ward councillor for Pitsea North West next election. Certainly this would be enough to make one fall out of love with politics.

Back or Sack for Darling

David Cameron, who last year told Gordon Brown to sack Alistair Darling for the handling of Northern Rock, is now asking Brown to “back [Darling] or sack him”.

Taking advantage of Brown’s indecisions on Darling, Cameron, in an interview with Sky News is jumping at the point that if Brown seems not to be backing Darling, then it appears their eyes have not always been on the economy, which I yesterday predicted.

This emerges as bloggers and journalists wonder whether this waning support for Darling is tactical before a reshuffle, noting Brown’s avowed support for Ed Balls in the treasury.

Brown has said that he does not want to stand down as PM, even after an expected election trumping on Thursday, reminding the public that he wants to stay focused on the rebuilding of the economy.

But strategically, with the dubiousness of the decision at the same time as the backing of Balls, Brown will not be able to gain support for ridding Darling, who caused fluctuations of support in the early days of the credit crisis, and later with the promises that the Brown/Darling duo could spur on stability way before city analyst’s predictions.

Certainly this will be fodder for attack, seen today in Cameron’s interview.

It seems that the only strategy, if Balls is to get the post, is for Brown to move over too, and prepare for a left-leaning Labour front team to take on Cameron’s Tories in the general election, expected next year.

News today has included the resignation of Jackie Smith as Home Secretary and three more sudden stand-downs; Patricia Hewitt’s retirement, Beverley Hughes standing down for family reasons, and David Chaytor’s leave.

Close ally to Brown, Tom Watson MP, has also decided to resign his position as minister, though he will continue to advise Gordon Brown on election strategies.

Reshuffling has not taken place yet, but already the face of our party is changing. And for better of for worse, a fresher, more progressive cabinet might just allow us a fighting chance after the drumming we – as all main parties – are about to receive this coming Thursday.

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