by Samuel Dale
I laughed when I first heard yet slowly but surely the true horror of Ed Miliband’s gaffe has began to sink in.
When our leader forgot to mention the deficit during his 80 minute conference speech in Manchester he handed the Tories a free rein on the economy.
Tory minister has tripped over Tory MP to claim, fairly, that Miliband does not care about the UK’s debt mountain and deficit.
Of course, the gaffe could only gain traction because Labour has failed to rebuild its economic credibility in the last four years.
The lack of a credible alternative on reducing the deficit has allowed the Tories to develop a completely ridiculous and undeserved reputation for sound economic management.
Britain might be splintering into a four or five party system but on the economy it is still a two horse race between potential prime ministers and chancellors. It’s a zero sum game; one party is up, the other is down.
Since 2010, George Osborne has drastically missed his deficit target, lost the UK’s AAA credit rating, increased public debt by trillions and made huge gambles on the tax revenues.
He has also overseen a collapse in living standards, years of stagnant growth and a shameful under-investment in infrastructure.
To give some under-reported examples of his recklessness: Raising the income tax allowance threshold to £10,000 combined with slow wage growth has seen income tax receipts plummet by billions.
In addition, the changes to stamp duty last week and pensions next year create huge tax uncertainties as well, recklessly populist tax cuts in the pursuit of votes.
Then, of course, there are £7.2bn of unfunded income tax cuts for lower and middle earners promised after the election.
It is a shocking economic record combined with undeliverable future promises. But Labour has wasted four years building up a credible alternative so it can not so much as dent the Tories.
Instead it has allowed them to make promises on income tax, stamp duty and reform pensions. All of these are reckless policies for tax revenue and yet Miliband can’t do at thing about it.
The true cost of his lack of economic credibility is that it has allowed the Tories to spend their own undeserved political capital on the economy on reckless policies.
Labour has flirted with some gesture cuts by freezing child benefit for an extra year in 2017, cutting the winter fuel allowance for higher earners and a public sector pay freeze. None of them, even together, come close to a serious agenda for spending reductions.
Labour MPs like to argue that any new spending, such as the £2.5bn investment fund is paid for by a mansion tax and other taxes. But it’s not enough. Miliband has not had the stomach or inclination to make really tough spending choices in the last four years.
Forgetting the deficit in his conference speech summarised his economic mess perfectly. It gave the Tories a soundbite and confidence to spend their political capital wildly.
Worse still, there could be more to come. Osborne could promise to abolish inheritance tax or think of more goodies for high-voting pensioners, for example. In the run up to next May do not be surprised to see Osborne throw billions more at crucial voting demographics of pensioners, homeowners and Ukip voters.
Make no mistake, these reckless tax cuts could swing the election. Osborne and Cameron can only make them because they know that no matter how much they promise, Miliband and Balls will always be less trusted on the economy. And for that Labour only has itself to blame.
Sam Dale is a financial and political journalist
Tags: economic competence, Ed Balls, Ed Miliband, George Osborne, Samuel Dale
1. The loss of the AAA rating was as a result of Labour emptying the coffers when in office. Osborne could do little about it.
2. labour left a complete mess that everyone knew was going to take years to put right yet Labour have fought austerity measures at every opportunity.
3. The UK has the fastest growing economy in the G7
4. Tax cuts for the proles, whatever next? It’s our (Labour / state) money not those who actually earned it. / sarc
5. Wage increases are now going above inflation.
6. High tax 50% bracket lost the treasury £7 billion. Any more good ideas ?
The problem with attacking the Tories is that Labour have no credibility or policies of their own. That’s why the public trust Osborne. You cannot grasp the fact that those who work hard, save, buy their house are aspirational and want a better life for themselves and their families, and should not have their hard earned taken off them to fund the Hampstead’s Marxist pet causes.
The only thing I can agree with here is that Balls and Milliband are incompetents and Labour has done nothing to correct this view.
“Miliband does not care about the UK’s debt mountain and deficit”
He’s not the only one; neither do I.
Most of the UK’s population don’t understand the deficit and could care less than they understand..
(Just look at the posts above)
Labour has mortgaged the NHS for the next 30+ years under PFI. They allowed the private sector to dictate the terms and conditions of the PFI deals through utter incompetence in negotiating the contracts. PFI was started under the Major government and could have been stopped on day 1 in 1997.
In the PFI trusts the only staff who are NHS employee’s are doctors nurses and AHPs everybody else is employed by the PFI contractor. Two Trusts I know, Central Manchester PFI is £5.5 BILLION over 35 years and South Manchester £1.1 BILLION over 40 years. South Manchester has a £20 MILLION hole in it’s 2014-15 accounts. Both of these PFIs were signed by the last Labour government. Look at a lot if not all PFIs are in trouble and the vast majority were signed under the Blair/Brown years.
Tax cuts, the top rate of tax at the end of the Brown was only increased after twelve and a half years of the last Labour government. Raising tax thresholds will decrease the tax paid by the lower paid unlike ‘fiscal drag’ used by Brown over 13 years, briging more people into tax.
Here’s some cuts and tax rises Labour can make:
Child benefit rolled into the tax credit system – £4.5bn
Inheritance tax replaced by capital receipts tax (with no exemptions or reliefs) – £3bn
Replace fuel duty with congestion charges – £2.5bn
Cap child benefit and tax credits at 2 children per family – £2bn
Tax disability benefits – £2bn
Restrict pensioner benefits to Pension Credit – £2bn
Restrict Pension Credit to over 70s – £3bn
Restrict child benefit to those under 13 – £3bn
Scrap higher-rate pension tax relief – £7bn
CGT on primary residences – £12bn
CGT aligned with income tax – £2bn
Reduce some VAT exemptions (on gambling, financial services) – £10bn
Tough decisions (some nasty decisions) but deficit would be dealt with. Credibility restored.
@ Never Was Labour
Did you even read the article?
I think you’ve put your finger on it: Millband is the problem facing Labour.
Milliband is a weak leader who reacts to events, and doesn’t hasn’t the ability to lead from the front. It doesn’t auger well, and 2015 will be a repeat of 1992 in all likelihood.
Landless peasant, he’s not the only one, well as you keep referring to people like you who won’t vote labour as ‘we’ I’ve found out who the other one is.
Well said ex labour
So mr dale ,once again,has to tell us he thinks labour will lose under ed miliband.Yeah we know he has form on this subject.But if I wanted to read this stuff I would buy the torygraph and read hodges or the indie and read rentoul.Better class of blairite critique.
There will be plenty of time for all this if mr dale is right and we lose.It serves no purpose whatsoever publishing it now.
@ Blott on the Landscape
Yes I did and I specifically pointed out some of the wrongs. But did agree that B&M are pretty useless and have done nothing to address financial credibility.
He can’t throw accusations around about Tories being reckless, or do you not remember the last Labour era ? “No more boom and bust” said ‘Broon’. Wonder how that worked out ?
To give some under-reported examples of his recklessness: Raising the income tax allowance threshold to £10,000 combined with slow wage growth has seen income tax receipts plummet by billions.
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So fuck the poor. Tax them heavily. Labour policy.
07052015 ,Surely if Rentoul, Hodges and co, have a point then us labour members wanting labour to win ought to listen,or will it be a case after the election if Ed loses, the Tony benn 1983 quote, we’ve lost as it wasn’t left wing enough will come out
I can see that ‘reckless’ is going to be a very popular word leading all the way up to the GE.
I’d agree with most of the points raised above, including why shouldn’t the poor pay their bit of tax … even if we have to lend them the money to do it.; they should not be left out.
1992 was a double whammy for Labour on tax, thanks to J Smith, and we got hammered. And expect another Jennifer’s Ear embarassment to turn up just like Mrs Duffy when you least expect it.
@LB
Great comment and exactly what I was trying to say above. But you put it better !
Miliband makes big speech on the deficit today -no doubt dale will be back to tell us it bombed.
Swatantra,the double whammy in 1992 was a lie, we said we weren’t gonna put up the basic rate of tax, the tories said under labour you’ll pay 1,250 more tax a year
As for Jennifer’s ear, when it was revealed by Williwm waldegrade that it was the tories who leaked Jennifer’s name to the press,we went 7% ahead at that stage, unfortunately the fear of a labour govt, saw people thinking of voting liberal as a protest panic, and back the Tories, as for Mrs Duffy, weren’t you the one who said the Emil thornberry tweet was right, surely that’s the 2014 Mrs Duffy moment.
07052015′ how did you guess