By Dan Cooke
In other news this week, concerns were raised about standards of governance in the Republic of Bullingdonia.
The ruling party, with a strong traditional base in the south east of the country, imposed a shock 12% tax hike on the country’s oil and gas industry. This is overwhelmingly based in the state’s northern province where the governing party recently won only one of all 59 constituencies in the recent general election.
Critics charged that, while the government of Bullingdonia claimed to be promoting growth, the levy would undermine the competitiveness of one of the country’s leading industries and that the lack of consultation on its introduction would undermine the certainty needed for international investment. While the ruling party argued they were fulfilling a manifesto commitment to a “fair fuel stabiliser”, it was pointed out that such plans never previously envisaged a levy on the oil industry.
The move led to renewed calls for secession by the party which currently controls the devolved government of the territory primarily affected. Its leader declared “it’s our oil”.
Other observers reprised broader questions about the narrow tribal base of the ruling elite in Bullingdonia, in which 16 government ministers went to the same school as the prime minister. The party was elected on the slogan “we’re all in it together”. However, mass demonstrations were expected in the capital this weekend by opponents of its austerity plans, thought to disproportionately affect groups who do not support the regime.
The above is, as Peter Snow used to say, “just for fun”. But it should be a source of national embarrassment that our government can so easily be compared to a banana republic.
It is bad enough that our rulers have been exposed as having made elections promises, such as the original “fair fuel stabiliser”, without a clue whether they could meet them (and, in this particular case, with many warning them it would be impossible to do so). But it adds insult to injury that their instant response to such failing is to find another victim on spec to pay up the missing money and spare their own blushes.
George Osborne’s love for a rabbit out of a hat has led him astray before, when he announced the end of child benefit for top rate tax payers without consulting colleagues and without seeing the problems. Oil companies are altogether less likely to attract public sympathy, but this precipitous raid raises just as many questions about the quality of government driven by budget day tricks.
Oil may be at record prices but gas is not, yet almost half the production impacted is gas production. Even where oil prices imply higher profits for some, they also imply higher costs for the North Sea industry in attracting internationally mobile talent and facilities when there are higher investment returns elsewhere. The mature North Sea fields, of course, require higher levels of investment than many others. But it is a critical national interest that such investment takes place, given the massive contribution of the UK oil industry to the total corporation tax and balance of trade.
Do these arguments preclude any rise in the tax burden on UK production? The industry will always say so and others may disagree. But they must at least justify a consultation before imposing a levy targeted at a single industry in this way. When Labour raised the supplementary charge on oil and gas production in 2006 this was after a year-long consultation on a series of options. And it culminated in a reform that improved tax credits for investment as well as raising the rate.
While the SNP has blown the nationalist trumpet on this issue, Labour has been quiet, afraid of backing an unpopular industry. But while today it is the oil companies experiencing the smack of casual and capricious government, we cannot know whose turn will be next for a “ragging” by the Bullingdon boys. So it’s time to stand up – not for big oil – but for good governance.
Dan Cooke is a Labour activist and lawyer.
Tags: budget 2011, Dan Cooke, fair fuel stabiliser, George Osborne
There is a place called non urban England,as well as the Celtic fringe.The end result in May,2010 was NOT LABOUR 70 percent,Labour less than 30 percent.Is a ‘Bullingdon boy’ a legal persona?’Res ipsa loquitur’,we lost the election by a mile.
l dont think that its right to abuse people for their upbringing, or school that they went to, just as we would not stand for race/sex abuse. Some labour voters could well feel that, as a Lawyer, Dan Cooke has also had a good education & is not in what could be classed as a ‘working class’ job.
By all means slate the policies, but the ‘class warfare’ days should be left retired along with John Prescott.