Posts Tagged ‘George Osborne’

Labour’s manifesto launch went well but it’s tin ear on aspiration could prove costly

13/04/2015, 09:04:49 PM

by Samuel Dale

Labour’s manifesto launch went well. The focus on tackling the deficit was right and Ed Miliband’s performance was assured.

But on Tuesday it’s the turn of the Tories and how Labour responds to their retail offer will be critical to deciding the outcome of the election.

We already know one of the centre-pieces of the Tory prospectus: inheritance tax cuts were widely trailed across the media, over the weekend. And so far, Labour has seriously mishandled its response.

George Osborne first floated a £1m inheritance tax-free allowance in the autumn of 2007 when its popularity saw off the election that never was.

The latest plan removes family homes worth up to £1m from inheritance tax from 2017.

It comes hot on the heels of big cuts to inheritance taxes related to pensions and Isas.

The current inheritance tax rules offer a £325,000 individual allowance with an additional £325,000 transferable allowance from your husband or wife. In effect £625,000 can be passed tax free to a married couple’s children.

Labour has been keen to point out that only 4% of people will benefit from the changes. The IFS says “over 90%” of estates are unaffected.

The implication has been that only the rich will benefit and as such this can’t turn an election.

So why do the Tories think it is a big vote winner? The £1bn centre-piece of their manifesto.

Firstly, it gives a bottom-line financial incentive to the wealthy estates who will directly benefit. They are the better-off pensioners who vote in large numbers (and the Ukip vote the Tories desperately need back).

Secondly, and more importantly, it is about aspiration.

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Labour’s decision to abolish non-doms is tactically astute but strategically risky

08/04/2015, 05:54:55 PM

by Samuel Dale

There are 116,000 individuals resident in the UK but not domiciled here.

It means they pay no UK tax on their overseas income as their permanent home is judged to be in another country.

High profile non-doms include HSBC chief exec Stuart Gullliver, Tory peer Lord Ashcroft and Roman Abramovich.

Labour wants to restrict the maximum temporary resident status to two or three years. The only restriction today is to pay a £30,000 charge when a non-dom has been UK resident for seven years.

It’s good policy for three reasons.

Firstly, it is morally justified that everyone plays by the same tax rules.

Non-don rules are arcane, unfair and widely abused.

Business people support the change too to level the playing field – notably Dragon’s Den’s Duncan Bannatyne who signed a letter to the Telegraph last week but has switched his vote to Miliband after the move. That’s a big endorsement.

Secondly, it should raise some revenue although it is highly uncertain.

Some tax lawyers say up to £1bn, Labour says hundreds of millions and the IFS says it will raise more than zero.

And, incredibly, Labour will use the extra cash towards the deficit. Hallelujah! Even though it’s a tiny amount it is the first time in months a tax rise hasn’t been immediately spent elsewhere.

Thirdly, and in an election battle this is the most important, it’s politically astute.

I was convinced George Osborne would simply adopt the policy, claim it as his own and move on. The Crosbyite focus on the long-term economic plan has ruthlessly removed distractions.

Cameron pledged not to rise VAT last month while Osborne used the Budget to shoot every Labour fox out there from “1930s spending” to “falling debt”. Except non-doms.

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Revealed: Osborne’s next Budget

01/04/2015, 08:47:09 AM

by Jonathan Todd

Of course, we strain every Labour sinew to have the next Budget delivered by Ed Balls. Even if the worst happens and the next government is Conservative led, it may be that George Osborne finds himself serving away from the Treasury.

But Osborne’s 2010 “emergency” Budget framed this parliament. Amid a leadership election, Labour struggled to respond. He’ll spy a way to repeat this trick. On different terms, however.

The 2010 vintage made spending this parliament’s key axis. Labour had spent too much. Osborne would curb it. You can’t trust Labour on spending but you can trust Osborne.

This spending card showed its age in 2014’s Autumn Statement. Again playing it big, Osborne crash landed in the 1930s. He predictably backed out of this rickets afflicted cul-de-sac in the Budget. Neither the Autumn Statement’s spending profile for the next parliament nor that which followed his Budget readjustment are truly credible.

It’s a charade engineered to push Labour into positions that allow him to bemoan Labour’s supposedly reckless profligacy. If Osborne does deliver another Budget, he would be expected to reveal the brutal details that he has lead us to expect.

Will he close the police? Or the army? Or is local government an outdated sticking plaster?

Much as Labour sees Osborne as an ideologue – and he probably does have somewhat more deeply held convictions than David Cameron, a particularly light wearer of his beliefs – he is sensible enough to know that the cuts that he has set himself up for in unprotected departments risk policy chaos and political ruin. To the extent that he has ever had a Long Term Economic Plan (LTEP), it has only existed as rhetoric of spending responsibility. The policy substance has regularly shifted, not least away from the 1930s between the Autumn Statement and the Budget.

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Revealed: George Osborne’s secret £6.5bn tax raid on pensioners

20/03/2015, 11:17:26 AM

by Samuel Dale

Buried deep in this year’s dull Budget was a secret £6.5bn tax raid on pensioners and savers under the guise of radical reforms.

George Osborne’s most significant policy announcement was the proposal to allow pensioners already drawing an annuity to sell their policy in exchange for a lump sum.

It is the second stage in major pensions reform announced in last year’s Budget to allow all over-55s to access their pension pots.

The first stage of pension freedoms is relatively simple. The pension system saw savers build up a retirement pot of cash with generous tax relief on contributions. In exchange they had to buy a secure income or annuity (or face a punitive 55% tax if they withdrew their cash from the pension wrapper).

Annuities work as a reverse insurance product so you pay over a big chuck of cash to the insurer and in return they pay you money every month until you die. Insurers pool the risk so those who die earlier fund the payments for those who live longer than expected lives.

As people live longer insurers are paying a lower amount each month over a longer period, making pensioners buying them poorer. Successive Governments have taken steps to ease the requirement to buy an annuity by allowing wealthier investors to drawdown their own money.

But Osborne’s announcement last year, coming into force on 6 April, is the big bang. It means anyone can withdraw their pension pot at marginal income tax rates (although everyone receives an initial tax-free lump sum of 25%).

The Treasury estimates the behavioural changes will see individuals wanting the money today despite the tax penalties. It will lead to many savers paying income tax on withdrawals they have never paid before.

So how much does it cost?

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Budget 2015: The quiet moments matter

19/03/2015, 02:27:16 PM

by Jonathan Todd

Budgets are supposed to be big moments. The kind that determine general elections. But maybe they are decided by millions upon millions of quieter moments. When payslips are inspected, profits turned, and housing wealth accumulated.

In these quieter moments judgments are made on the economy’s performance. In turn, these bear upon general election votes. It is a eighteen months since Uncut spotted a gradual rise in the proportion of the electorate reporting the economy as doing well and a steady decline in Labour’s poll lead. We ran a regression to assess the relationship between these data series and postulated that the Tories would overtake Labour when a quarter of the electorate came to the view that the economy is doing well.

In May last year, when YouGov’s tracker on economic sentiment first started to bump up against a quarter of the electorate being of this belief, we noted that Tory poll leads had started to emerge. These leads were faltering and slow to confirm themselves. Like the upward trajectory in the proportion of the electorate positive about the economy.

24 per cent of the electorate thought the economy was doing well last May and Labour held an average of a 3 point poll lead, as the table below illustrates. Occasional Tory leads then existed but the average favoured Labour. The Tories weren’t consistently ahead but nor was economic sentiment resoundingly over a quarter. At 30 per cent, economic sentiment now comfortably clears the quarter threshold, and Labour’s poll lead is less impressive than last May.

If we simply compare the data in May 2014 and March 2015, they seem to confirm the original Uncut hypothesis: the more the economy improves, the narrower Labour’s lead. The pattern of these series between these two months, however, rewards inspection.

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What has changed on the deficit since general election 2010?

07/01/2015, 08:31:55 AM

by Jonathan Todd

This is the first of a series of pieces from Uncut on what has changed in respect of key political issues since the last general election. Looking over this timescale, we hope to distinguish the signal from the noise; what really matters from the day-to-day froth.

Liverpool played Burnley away on Boxing Day. The last time that happened was just before the 2010 general election when Rafa Benitez managed Liverpool. Roy Hodgson and Kenny Dalglish both did so between Benitez and the current reign of Brendan Rodgers. Hodgson’s tenure coincided with the near bankruptcy of one of the world’s great sporting institutions. Enter John Henry, deus ex machina. This American has invested in the club stadium and playing squad, including in Luis Suarez, who brought both disgrace and nearly a Premier League title. Life is easier off the pitch and harder on the pitch sans Suarez. Fans yearn to be made to dream again. And will soon have to hope to do so without talisman Steven Gerrard.

In summary, much has happened at Liverpool since the last general election. Soon after which, I wrote my first piece for Uncut on ‘the emerging politics of deficit reduction’. Since when, as much as politics feels like a rollercoaster, these politics have changed remarkably little. Around the time that piece was published, Peter Mandelson was fighting for airtime by launching his memoirs.

We would not convince the country, Mandelson conceded on the deficit, that the Tories were going too far unless we convinced them that we would go far enough. That reflection on the 2010 election exactly parallels the advice that both myself and Samuel Dale have recently given Labour’s current campaign. I called for ‘Don Miliband’ to show himself, Sam for a ‘carpe deficit’ moment. The terminology doesn’t matter, the point is the same. Mandelson returned to the debate before Christmas to make a similar point in a speech to a Progress and Policy Network conference. Labour, Mandelson advised, will only get a hearing on ‘what will the effect be on society and the economy?’ if we are clear on ‘how much must we cut public spending?’

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The Uncuts: 2014 political awards

31/12/2014, 10:01:09 AM

Politician of the year – Alex Salmond

The loss of the independence referendum was meant to be the end of the SNP. The Scottish public gave their verdict and the SNP’s raison d’etre was rejected. Cue internal ructions and a nationalist collapse.

That’s how it was meant to be.

But it wasn’t, largely because of Alex Salmond.

He made mistakes in the independence campaign – notably over nationalist plans for the currency – but Salmond’s easy charm and force of personality helped make the race much closer than many expected.

And following defeat, standing down as leader, his legacy to the SNP is to have taken them to the brink of holding the balance of power in next year’s Westminster election.

If the SNP register a general election result even vaguely in line with their current poll rating, then under Alex Salmond’s leadership, the Scottish nationalists will have fundamentally transformed British politics.

The SNP will have usurped the Liberal Democrats as the third party and Scottish independence will be a real prospect just a few months after it was meant to have been decisively rejected.

No other party leader or MP will have had such a profound impact and for these reasons, Alex Salmond is Uncut’s politician of the year for 2014.

Media misjudgement of the year – Nigel Farage’s leadership of Ukip

The common media narrative about Nigel Farage’s leadership of Ukip would not be out of place in a Mills and Boon novel. Charisma, personality and star quality are meant to be the Farage hallmarks.

He certainly generates good copy and has helped filled countless columns and reports with newsworthy content.

But away from the day to day photo-opps in pubs and quotable one-liners, Nigel Farage has made a catastrophic error. Through his words and actions he has helped confirm Ukip’s biggest negative, toxifying Ukip as the party for racists.

At the start of October, at the height of the largely positive publicity around the Clacton by-election, YouGov polling found that 55% of the public believed Ukip to be more likely to have candidates with racist or offensive views, while 41% believed the party to be racist (41% believed it not to be racist).

In a general election, Ukip’s vote will be squeezed as the choice is polarised between Labour and Conservative and being seen as extremists will amplify this effect.

In the biggest domestic election held this year, when millions voted in the local elections, Ukip’s national equivalent vote share actually fell compared to last year – from 23% to 17%.

Nigel Farage’s main task this year was to detoxify Ukip and make them a viable choice for all voters. By failing to redefine Ukip as an optimistic, unprejudiced party (along the lines that Douglas Carswell clearly wants to), Nigel Farage has ultimately doomed them.

Gaffe of the year – George Osborne for the Autumn Statement

George Osborne’s Autumn Statement is the political equivalent of the loud celebrations of AC Milan when 3-0 up at half-time in the 2005 Champions League final, the fatal conceit that opens the door to wounded opponents transforming into glorious victors. 2010’s “emergency budget” was Paolo Maldini’s goal in the first few minutes of the final, establishing an early advantage grounded in Conservative credibility and Labour profligacy. Everything Osborne has done since then, akin to the brace of Hernán Crespo goals that drove home Milan’s first half advantage, has sought to reinforce these perceptions.

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Carpe deficit: Miliband must seize his moment on spending cuts

23/12/2014, 10:39:15 AM

by Samuel Dale

It’s working. On Sunday, Labour took a seven point lead in an Opinium and Observer poll with 36% to the Tories’ 29%.

Sure, it could be a rogue poll, a one-off that misleads us all. Or maybe it is an example of what Damian McBride has called the rope a dope economic strategy while Labour Uncut editor Atul Hatwal said is Miliband’s attempt at triangulation.

With less than six months to election day Miliband has finally awoken from his deficit slumber.

Cut spending every year until the deficit is gone. Prepare shadow ministers for big cuts. Get debt falling by 2020.

Miliband’s speech on the deficit after the autumn statement was substantive. He finally admitted the next parliament would once again be dominated by cuts; deeper, more difficult cuts than this parliament.

It’s a far cry from his conference nightmare when he didn’t even mention it as part of his 10 year vision for Britain.

It is a huge relief for those of us calling for Labour to present a clear deficit reduction plan instead of burying its head in the sands.

Why has Miliband seemingly changed his mind? Firstly, Labour has been forced to change. It lost the debate on whether to spend your way out of recession. Then living standards started to rise, only just but leaving the cost of living campaign with less potency.

Secondly, George Osborne messed up. He outlined huge spending cuts and tax cuts that would reduce the state to 1930s levels.

It is scaring people and Miliband took his chance. Osborne opened up the space for Labour to seem seriously tough on spending cuts without being deranged.

Labour MPs now have genuine answers when asked how they will close the deficit: we’ll scrap it in five years without taking us back an Orwellian Wigan Pier.

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Osborne’s new austerity will force local government beyond breaking point

09/12/2014, 08:02:33 PM

by Kieran Quinn

December the 12th is one of my favourite days of the year: I attend the pensioner Christmas party in my ward. It’s an opportunity to mark the contribution that many of our senior citizens have made to Tameside in Greater Manchester. It also gives people the chance to celebrate and socialise with other Tameside pensioners.

With further austerity measures being levelled on local government over the next few years, I fear for the future of events like these, and services that residents have taken for granted.

£142 million will have been taken from our budget by 2017, we are currently consulting on the £38 million of cuts imposed upon our borough over the next two years, and we are now at a tipping point. Put simply, with half of our budget taken away we simply cannot fund the same level of services, and our workforce has halved so far. We are beyond the approach of doing more for less, despite a hardworking, innovative and dedicated workforce.

As the 980 residents that have taken part in our budget consultation will know, nearly two thirds of our budget is spent on safeguarding the very young and the very old. These services are statutory, laid down in law by parliament. With no additional resources put into these services our ability to provide for our most vulnerable citizens will come into question.

While any funding ring-fenced for the NHS is welcome(a one-off figure of £2 billion , not year on year) a more holistic approach to public sector funding is needed. If you cut our budget by £142 million, high spend areas such as Adult Services are not immune from this and the pressure on NHS resources goes up. It is both morally and economically sensible to integrate these budgets, the emphasis must be on early help in the home and community.

Enough really is enough. If the Chancellor genuinely believed “we are all in these challenging financial times together”, he would have responded to the cross party call for a fair approach to local government finances and deliver an even bolder approach to devolution.

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Miliband only has himself to blame for Osborne’s reckless tax cuts

09/12/2014, 10:56:14 AM

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.

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