This diagram graphically represents the size of our daily spending on servicing our debt in comparison with our daily spend on other areas. It is a sobering reminder ahead of today’s budget of why eliminating the structural deficit must be a priority. The depressing thing is that controlling the deficit will not change the daily interest on the existing debt – it’ll just stop it getting bigger and bigger. We’re going to be paying for the party in the 90s for a long, long time to come.
Tag Archives: Gordon Brown
Let’s face it: Ed Balls was to Gordon Brown as Laurel was to Hardy. His return will no doubt lead to ‘another fine mess’. This surprise reshuffle does change the calculus of Labour’s electability. When Ed Milliband decided not to appoint Balls to the role in October it was a deliberate and calculated move. It was possibly the only truly leader-like think young Ed has done since he got the gig. The reasoning at the time was surely:
- You would not want someone so intimately connected with the entire economic calamity facing this country back on point for economic policy
- You could not want someone who has had an insider view (and leading role) in using the office of Chancellor to undermine and oust a previous leader, sitting there ready for another metaphoric stab.
Well, nothings changed. Those reasons still stand. Yet here Balls is. He’s got the job he craved from the moment he realised he was out-of-the game for the last leadership shot, and young Ed will be feeling his breath on his neck from here-on-in.
To give him his due Balls is a bruiser. A political big-beast. From today George Osborne will be looking forward to his turns in Parliament with a tummy rumble. Balls knows his stats and figures and will not be easy to trip up. Worse, he’s more than capable of scoring some points through sheer statistical battery. But that’s all just fluff in the Westminster village. Balls fundamentally is the living, breathing embodiment of the leftish or centre-leftish vision of Big Government/Big State/Spend and Tax Labour. As Shadow Chancellor he will push them more so. Even with all the current national woes, when push comes to shove that positioning is simply electoral poison. The ‘squeezed middle’ – the people who count – the very people who switched to Labour in 97 and switched away from them in 2010 – those floating voters just don’t drift in that direction.
And that is the reel rub for Labour. The one man on the Labour front bench who could appeal to that ‘thinking middle’ was Alan Johnson. He was simply impossible to dislike. Even though he was struggling to catch-up with his brief, even though he talked rot – people, even me, warmed to him. For a politician that curious ‘nice bloke’ charisma is the X-factor stuff. It is priceless political alchemy. Blair had it. Johnson had it. Brown didn’t. Balls doesn’t. And so the Labour party is a weaker party this evening.
As I say, for reasons I cannot put my finger on I like Alan Johnson despite his politics. I have no idea why he has stepped down. I wish him well and sincerely hope that whatever the personal issues are they are the kind that can be put right and have a happy ending by making this move.
On Tuesday I attended a fascinating seminar at Portcullis House on the nuts and bolts of the Coalition negotiations in May. The speakers were Lib Dem David Laws and Tory MP Rob Wilson, both of whom are peddling their respective books on the subject*. For me, it was a unique chance to get a perspective from people who were ‘in the thick of it’.
A blow-by-blow account of the evening has been done by a Lib Dem blogger here and I wont try to better that. I will just summarise my take-away points:
- The Lib Dems were genuinely knocked backwards by their election showing. Nothing in their private polling had led them to expect so few seats. Before polls closed Danny Alexander (then Clegg’s chief-of-staff) was briefing his colleagues to expect 80-85 seats. He was way out.
- The Lib Dems were between a rock and a hard place. Although many of their key players would have felt more comfortable in a ‘progressive coalition’ with Labour – the Parliamentary maths and Labour’s attitude made that a no-go. At the same time if they couldn’t form a coalition with the Conservatives we would enter a period of unstable Government with another election in November. They reasoned a) they would do worse and b) a short-lived impotent hung parliament would be very damaging to their long term aspiration for PR – a system which would lead to hung parliaments as the norm rather than the exception.
- The Labour party machine seemed to have done literally no planning for the eventuality of a hung parliament. Laws had the sense they were making it up as they went along – a sense that Wilson confirmed through his interviews with the key players on their team.
- The Conservatives had done proper planning for the Hung Parliament scenario. They were very quick to produce a document that conceded so much the Lib Dems had no choice but to take them seriously. Laws’ view was that the Tories essentially came into discussions with a ‘cut-to-the-chase’ final position. The only thing that was unacceptable in the first offer was on electoral reform (the proposal being to simply to set up another Commission to look at the subject). I pressed Laws on whether with hindsight – if the Tories showed they had wiggle room on Electoral reform, perhaps there was wiggle room on other areas had he pushed harder. He didn’t think so. I personally do wonder. Wilson made the point that for many, if not most Tories the ‘key concessions’ – the no tax on first £10k and the pupil premium were not any wrench to concede – most would have loved those policies in their manifesto in the first place.
- Laws and the Lib Dems struggled in the negotiations to figure out how to navigate so much so quickly whilst still staying within their internal party processes. When Laws observed the Conservative Party was spared these constraints with the leader being an effective ‘absolute monarchy’ William Hague knowingly shot back that the check and balance was “our monarchy is qualified by frequent regicide”.
- On the final day Brown had lost the plot so much he even offered the Lib Dems 50% of Cabinet seats.
It was a good event and the second time that I have heard Laws speak. He does impress and seems a very good counter-balance to the more loony fringes in the Lib Dem party. It underlined for me the sadness that through his wrong-doing he excluded himself from Cabinet. If you do the wrong thing for the right reasons, you still do the wrong thing. His replacement is not half as able. I noted yesterday that Cameron was asked if he wanted Laws back: “Yes, and soon” was the reply. On reflection, I could live with that.
When tuition fees were introduced in Labour’s first year in office I actually marched on Parliament in protest. At the time I had just completed my Masters and was clinging on for one last year as my University’s Student Union President (still the most fun ‘job’ I have ever had).
Every press release I sent out, every letter of protest that was written, every person who gave me the opportunity to bend-their-ear got the same message. It seemed to me to be self-evident that the introduction of student fees could only:
- Lead to lower take-up of Higher Ed across the board
- More worryingly – lead to even greater social exclusion for those from poorer backgrounds
- Lead to University closures and a diminishing of Britain’s academic standing
The only crumbs of comfort I could think of was that if students were paying they would become far more fussy and demanding which would drive up the standard of tuition.
Here’s the weird thing: I’ve never been more wrong with a set of predictions in my life. The take up of higher education went up and up. This includes an increase in take-up from people from disadvantaged backgrounds. Far from closures the number of higher education institutions and overall capacity increased. I was wrong on every count. The anecdotal evidence I have is that even my certainty that tuition standards and one-on-one teaching time would improve was off. I still find just how wrong I was quite sobering.
I obviously mention this now, because with today’s announcement that fees will increase to between £6,ooo and £9,000 per year the current crop of Student Union Presidents up and down the land are making the very same points as the once fresher-faced me.
Despite being proved spectacularly wrong on this issue in the ‘90s, to be honest I am still as nervous this time around. I can’t sit here all smug that I got through the system with fees paid for and a maintenance grant because I now have to worry about how my own two kids will afford the opportunities I had. At some point we surely must hit the tipping point? There has to be a cost that will put people off? The headline £27k for a degree before living costs does sound overwhelming.
This prompted me to dig a little deeper into the detail of what is proposed. As is so often the case the reality of the detail isn’t quite as alarming as the screaming headline – but it is still scary. The proposals have students only repaying their loans at 9% of their income at a real rate of interest when they earn £21,000, up to inflation plus 3% for those earning £41,000 or more. Any outstanding loans are written off after 30 years. If you don’t end up in employment, you don’t pay anything back. In terms of the technicalities of repayment and pressure to repay these proposals are actually a step forward from the current arrangements – though of course the overall amount to be repaid is much higher – but a step forward nonetheless. A kind of ‘no-win, no fee’ arrangement.
It is still a whopping burden though. I really do pity the kids who start life with that kind of debt, on top of already silly marginal tax rates to pay for the excesses of their parents’ generation.
Of course, Labour will oppose these moves. That’s the nature and job of opposition. There is no need to put forward an alternative, you can just yell ‘nay’. The media will ignore that it was the Labour Government (actually Mandelson) who commissioned the Browne Report in 2009 that led to these changes. In many ways this is history repeating itself. In 1996 the then Conservative Government appointed Ron Dearing to do an ‘independent’ report knowing full well the recommendations that Blair and Blunkett would inherit and which led to the first tuition fees. This time Mandelson and G. Brown knew full well what would be recommended by Lord Browne and that whoever won would have to go with it. One silver lining for the loser of this last election was always going to be not having to catch and deal with being lobbed this particular ticking grenade.
The Coalition have actually watered down Browne’s recommendations a bit. There is a cap on fees (albeit a quite high one), and there is more money for bursaries for the poor and early repayment levies so that the richer folk can’t get out of paying their share by paying off their loan early.
It is what it is. The choice was always either to revisit student funding or cut back on HE provision. Access to Higher Ed benefits the whole of society and so it was the right choice to revisit funding.
The changes are necessary but still depressing. All I can do is hope that the weird thing happens again and that effects of student financing policy continue to be subject to counter-intuitive economic freakery that prove me, and all those earnest fresh-faced student union presidents, totally wrong.
Well, I’ve just watched George Osborne come of age. The ‘light-weight’, ‘inexperienced’, ‘young’ Chancellor gave an assured performance that will do wonders for his poor reputation. It should also dispel some of the prejudice that still exists about the modern Conservative Party.
The spin that had been dripping out from Whitehall over the last few weeks could be summarised in one sentence: “This is going to Hurt”. The facts about the economic situation were not in question –
- For every three pounds we currently receive in tax receipts we are spending four on public services (i.e we have a significant structural deficit).
- The National Debt is already £22,400 per head.
The nation could not go on spending like drunken sailors on shore-leave. You cannot tackle the debt until you tackle the structural deficit. You can only tackle the structural deficit in one of two ways – raise taxes or cut public spending. The trouble for George Osborne is that neither is a popular thing for a Government to do. But in some ways the choice was made for him, as he put it, “We are over-spending – We are not under-taxed”. So with an impossible juggling trick demanded what is my gut reaction to what he has done today?
Well he had some pleasant surprises that may confuse those who cannot see the Tories as anything other than the ‘nasty party’:
- The increase in the tax-fee allowance was inspired and will benefit those on the lowest pay. I fully acknowledge that this was a Lib Dem policy but it is a credit to our Coalition that we really have cherry picked the best thinking from both Parties. 880,000 of the poorest working people taken out of tax. Wonderful.
- The raise in Capital Gains Tax will mean that the wealthiest in our society cannot be accused of not shouldering their share of the burden. Those who thought the Tories were all about protecting the rich ahead of helping the economy have been proved wrong.
- His surrender of forecasting powers to the Office for Budget Responsibility is absolutely the right thing to do for the country – but removes a key ability for him to ‘play politics’. The best thing Brown ever did as Chancellor was give up the power to play politics with interest rates – Osborne takes this to the logical next step.
- The acknowledgement that the banks brought about the financial crisis and the new measures to tax riskier aspects of their behaviour will be in tune with popular feeling and was the right thing to do.
- Restoring the link between state pensions and earnings.
- As a small-business owner I was delighted with the measures he put in place to give us a fighting chance of getting through the recession.
- No cuts in capital expenditure. A grown up lesson learned from the last time the Conservatives were in power in the early 1990s.
The headline will of course be about the rise in VAT. For all the above the pain had to come and this is where the punch landed. A tax on consumption does encourage individual prudence, but it also risks lowering consumer spending to the point that both retail and manufacturing are hurt. The leap of faith (no doubt supported by economic modelling) must be that the proportional pain caused by the 2.5% rise is counterbalanced by the good to the economy from the reduction in structural deficit. We need to monitor this closely and make sure the economic modelling is correct – if it backfires we shouldn’t shy away from course-correcting quickly.
Obviously, much of the pain is also going to be felt by the Civil Service when the departmental cuts have to be worked through and Councils as they struggle to work within the constraints brought about by a council tax freeze. The challenge for both Civil Service and Councils will be to deliver those reductions with the same equity and tone that the Chancellor managed today – and crucially without hitting the public perception of service delivery. Ultimately, for right or wrong, it will be that upon which the Coalition is judged.
I have just watched two hours of utterly compelling television. It was history in our living rooms. Gordon Brown resigned with both dignity and humility – I sincerely wish him and his family well and happiness for their future.
David Cameron is now Prime Minister of the United Kingdom. On the steps of Number 10 Cameron echoed Brown’s dignity and humility in stating the task ahead of him. The details of the deal with the Lib Dems are not yet in the public domain. From the leaks to the press I am hugely encouraged that we may be cherry-picking their best ideas. I have made no secret I love their £10k tax threshold idea and also that I do not think it time for the current Conservative inheritance tax plans. If these are the compromises we must make – then I may actually prefer what we are getting to what was in our manifesto! From my centre-right perspective there is the potential for us to do great things for this country now. The spirit and tone of discussions in the last few days has risen way above the usual partisan politics – if the coalition is to be successful that spirit must remain. If it does not – and I have no doubt the bulk of the money will be on it falling apart soon – then we will be back at the polls by September.
There was no mistaking the ‘One Nation’ subtext of Cameron’s words at the doorstep. I have taken a huge leap of faith in following this man. It is now time for him and the party to repay that trust.
Right now though, I have opened a bottle of something alcoholic. I am celebrating. I am thinking about all those people who put in all those hours to get a change of Government. I raise a glass to them all this evening. Tomorrow: there is work to do.
So, that is that. After weeks of campaigning we are down to one mammoth push today. The polls are inconclusive – at the moment my reading of them suggests we may not quite get the 310 seats realistically required to form a majority government. It is close and much will come down to the operation today. Will the Conservative tactic of concentrating resources in key target marginals be the difference? It is cold and calculated, but you win Parliament by winning most seats, not be winning most votes. Can the Conservatives get out all their core supporters to the ballot box? Will the huge numbers of ‘undecideds’ actually go to the polling booths? – if they do the polls may prove miles out and it is anyone’s game. All this vapid speculation will sort itself out from 10pm this evening. I’ll be at the Count at the National Indoor Arena – wishing good luck to all Conservative candidates but particularly Nusrat Ghani in Ladywood and Mother and Son Deidre and Bobby Alden in Edgbaston and Erdington respectively.
I voted by post a few days ago (for Nigel Dawkins here in Selly Oak). For me it isn’t a tribal allegience – I am a newish member and convert to the Tories. There are a couple of big themes which have led me to believe in the Cameron agenda – it is these that have convinced me:
- The ‘Big Society’ Agenda. OK – I admit this doesn’t land on the doorstep at all. But for me this is the core of the new brand of Cameron Conservatism. Thatcher famously said “There is no such thing as society” – Cameron, disagree’s wholeheartedly: “There is such a thing as society – it is just not the same thing as the state”. Somehow over time the left have claimed words like “social justice” and “progressive politics” as if that language is exclusive to them. What nonsense. The “Big Society” idea is ‘progressive politics’ in the literal sense and when implemented will lead to greater social justice. Cameron’s message encapsulates my own personal centre right philosophy.
- Avoiding our own Greek Tragedy. We all pity the feckless individuals who get credit card bills showing them overdrawn and who have interest payments they can’t afford but who keep on spending regardless. Yet a vote for Labour would be endorsing this behaviour at the nation state level. It is heartbreaking that many cuts will need to be made whoever wins the election – the caricature of the Tories somehow taking glee from wielding an axe is wide of the mark. If we don’t want to end up cap-in-hand to the IMF/Euro partners with the even more brutal austerity measures they would demand then we have to make very tough choices ourselves now. It is fantasy to pretend otherwise. The Conservatives want to avoid the bailiffs, Labour wish to wait for them.
- Michael Gove’s policies on education.
- Creating a new age in Government transparency by pushing out all government data into the public domain. It is a geeky thing and another one that doesn’t land on the doorstep – but the effect will be revolutionary in driving better government.
- David Cameron, Michael Gove, Liam Fox, William Hague , Ken Clarke
- Gordon Brown, Harriet Harman, Bob Ainsworth, Peter Mandleson, Charlie Wheelan
Not everyone will agree with the above. Different people will pick different reasons to support the Party – many people will be unconvinced and stick with what they know. That’s democracy. Here’s hoping for a decent turnout and enough people deciding that 13 years is time enough to get over their anti-Tory reservations, recognise the party has changed, and put an x in the box that will get us over that 310 seat line so we can do what is necessary to get our Society back on track.