Posts Tagged ‘George Osborne’

Chairman Mao lives in the 48 PLP members that rebelled

21/07/2015, 05:32:53 PM

by Jonathan Todd

Chairman Mao lives in 48 PLP members, including 19 elected under Ed Miliband: “We should support whatever the enemy oppose and oppose whatever the enemy supports”.

When the Conservatives cut tax credits in a way that is unnecessary, will increase poverty and reduce work incentives, it is sorely tempting to oppose them.

But George Osborne prefers Sun Tzu to Mao. The Art of War stresses the importance of positioning in military strategy. By delivering his summer budget, setting a trap for Labour and watching much of the opposition walk into it, Osborne will feel that he has secured his desired positioning.

There is a third way. Between Chairman Mao and Sun Tzu. Labour should seek whatever positioning does most harm to the Conservatives and vacate whatever positioning does most harm to ourselves.

Osborne follows the inverse path. He seeks whatever positioning does most harm to Labour and vacates whatever positioning does most harm to the Conservatives – or, at least, him and his prime ministerial ambitions, which become ever more naked.

Janan Ganesh, Osborne’s biographer, recently summarised the core ideas behind the chancellor’s politics in the Financial Times. Ganesh then conceded to John Rentoul, biographer of Tony Blair, that the “Tao of George is also the Tao of Tony”.

In the decade since the last of his three general election victories, Blair has become ever more toxic within Labour, while Osborne has prospered by applying the tenants that Labour discarded in our abandonment of all things Tony. This doesn’t make Osborne a Blairite. The core precepts that they both follow are neither Blairite nor Osbornomics, not left or right. They are more essential than that. Whether we lean left or right, the political world is flat.

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Labour should have vaulted the welfare trap

21/07/2015, 02:29:22 PM

by Kevin Meagher 

Conventional wisdom has it that you either fall headlong into a political trap or you carefully inch around it. This is said to have been the choice presented to Labour MPs at the Second Reading vote of the government’s welfare bill last night.

The measures contained in it represent a Daily Mail leader writer’s bingo card of populist welfare-bashing themes. £12 billion worth of cuts. A four-year benefits freeze. A reduced benefits cap. Scrapping child tax credits for working families. And restrictions on some benefits for families with more than two children.

The choice presented to Labour MPs was to vote against the bill and look flaky about welfare reform. Or to vote for it and risk the ire of the party’s core voters.

But there was a third option in overcoming this particular political trap: the party could have tried to vault over it. Labour’s frontbench should have focused on countering the callow game-playing of a government misusing the parliamentary process for its own ends by changing the conversation.

Instead of arriving at the position of either backing the government’s welfare bill or forever being depicted as the friend of the scrounger, shadow ministers should have been making a big argument about the regressive nature of the Budget, the lamentable symbolism of effectively scrapping child poverty targets and the removal of in-work benefits to those eponymous hard-working families.

The party could have welcomed measures in the bill to boost apprenticeships but laid the ground for opposing the egregious parts, which will do little to meet the bill’s stated intentions of promoting social mobility and tackling joblessness and will simply increase poverty among working families.

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The leadership contest is a total disaster for Labour

13/07/2015, 06:01:30 PM

by Samuel Dale

The leadership election has been a disaster for Labour. It is painfully clear that we are not learning the right lessons from defeat.

The spectacle of Andy Burnham and Yvette Cooper, charging headlong into the tax credit trap set by George Osborne, giving him the opportunity to keep hammering Labour as the welfare party, shows how deep a hole we are in.

Let’s be clear.

We lost in 2015 because we had a desperately unpopular leader who was not trusted to manage the nation’s finances. That’s it.

To win in 2020 we need a more popular leader than the Tories have with our economic credibility rebuilt. If we do that then we have a chance.

We don’t need a big debate. We don’t need to talk to Jeremy Corbyn about his views on Greek debt and Hezbollah. It doesn’t matter whether Liz Kendall has no children. I am not bothered if Andy Burnham is a member of the metropolitan elite. Or whatever platitudes Yvette Cooper is pitching this week.

Instead of debating fringe issues we should be straining every sinew to prove we can be trusted in the Treasury again. We should be comparing the candidates against their potential Tory opponent in 2020.

Once you have the fundamentals right then you can try and win the election with a string of policies to attract key voter groups. But that is for another day because the only thing that matters in this leadership election is the fundamentals.

We should have had a new leader in place by June 1 after asking ourselves the simple, questions about how to win. The long drawn-out affair has proven just as damaging as it was in 2010 when Labour’s reputation was trashed by the coalition.

That’s our lesson from defeat and we are not learning it.

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Osborne has laid the most obvious trap for Labour on tax credits. Will the party blunder in?

13/07/2015, 12:21:26 PM

by Jonathan Todd

Ten years since 7/7. Ten years since London won the Olympics. Ten years since Robin Cook was telling Labour party events that he was meeting people whose fortunes have been transformed by tax credits, but who don’t realise that they have the (then Labour) government to thank rather than some obscure administrative change at the Inland Revenue.

While the Labour government did good, Cook argued, it was not credited with having done it, as it was done by stealth. The tax credits architecture that Gordon Brown quietly built, and which helped the UK to an impressively robust employment performance, even after the financial crisis, was loudly dismantled in George Osborne’s Budget.

Where New Labour reassured business, while using state levers to redistribute with minimal fanfare, Ed Miliband was a Labour leader eager to have business do more. Whether Osborne would have found it harder to take an axe to tax credits if Labour had trumpeted them as bullishly as Cook preferred, as well as whether Osborne would have been in the position to do so had Miliband more assiduously courted business, are imponderables.

As Osborne warmly embraced Iain Duncan-Smith’s welfare reforms to declare himself the bringer of social justice and adopted a form of the predistribution beloved of Miliband by accompanying his dilution of tax credits with legislation for a claimed living wage, Labour’s attempt to come to terms with these unknowns is complicated by Tory cross-dressing.

In spite of events in Greece, the Budget, unlike in 2010, was pitched less as a bulwark against calamity and more as a staging post to better future. In which we are all invited to share. Reality may struggle to keep pace with the one nation rhetoric. Particularly when a tool for creating an income floor (the statutory minimum wage, which is what Osborne has raised through his supposed living wage) is deployed as a replacement for incentives to additional work (working tax credits).

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It’s the budget next week. Does Labour even have a policy on tax?

03/07/2015, 05:45:29 PM

by Samuel Dale

George Osborne is putting the finishing touches to a Budget that will define our national politics for the next five years.

I have previously written how Osborne is both shifting the centre on areas such as fiscal responsibility and tax cuts while moving to the centre on areas where the public opinion will not follow. In other words, political pragmatism – remember that?

The 8 July Budget will do both. It will cut taxes over the parliament, entrench a smaller state as well as moving on to traditionally Labour areas such as boosting low pay.

On moving the centre, Osborne could create a roadmap to merging national insurance and income tax over the next few years in the biggest simplification of tax this country has seen since the 1980s.

As already hinted by the prime minister, he could set in train moving Britain away from a system of tax credits towards a living wage. A lower welfare, lower tax society.

Or he could build on his outlandishly popular pension reforms from last year with a long overdue reform of savings taxation.

He could do all three and more. In the last parliament major reforms to stamp duty and pensions alongside corporation tax cuts shows a bold Chancellor wanting to get out.

He’s also revolutionised how the self-employed file tax returns and he’s simplifying income tax bands on lower and middle earners.

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Labour must support George Osborne’s budget surplus law

11/06/2015, 04:15:30 PM

by Samuel Dale

George Osborne is fond of saying that in opposition you move to the centre while in government you can move the centre.

Ed Miliband’s disastrous attempt to move the centre from opposition is the latest example proving this valuable piece of political wisdom.

You can not change the rules of British politics from opposition but you can if you’re sat in the Treasury.

Labour built a new consensus over 13 years.

In the 2002 budget, Labour decided to increase national insurance contributions by 1p to fund higher spending in the NHS.

The Conservatives now back rising NHS spending every year.

The same is true of the minimum wage, devolution and public service reform

And so it’s happening again.

In his Mansion House speech this week, Osborne resurrected his idea to make deficits effectively illegal in “normal” economic times.

The plan is that only the OBR could approve a budget deficit and otherwise a surplus must be run. It shifts the political centre.

It’s an attempt to shrink the state and force future governments to cut spending or raise taxes if it wants to spend more.

Some in Labour argue it makes sense to “borrow to invest”, which justifies deficit spending even in good years. In simple terms it is sensible to take out a big mortgage loan (capital spending) but not a credit card (current spending).

Maybe. But the hard truth is that the economics don’t matter. With Labour’s economic credibility hole only the politics matter.

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Labour urgently needs a new narrative on the economy

20/05/2015, 11:15:22 PM

by Dan Cooke

One thing we learned in the election campaign was that the younger Ed Miliband, while apparently much in demand, was a lousy date who “only wanted to talk about economics”. We also learned something much more serious: the mature Miliband and his advisers were completely wrong to think Labour could win an election without talking about the economy.

The Tory narrative on the economy, before and during the campaign, was so clear and powerful that friend or foe could recite it in their sleep. They had a “long-term economic plan”, that got the economy “back on track” after Labour “crashed the economy” and the “money ran out”. This account of the recent past provided powerful rhetorical support to their forward offer of prosperity for all, including more investment in the NHS than Labour promised.

If this grates with unfairness to many of us, we have to bluntly ask:  did our party ever pose a counter-narrative to challenge this one?  The frank answer is – at least during the campaign – clearly no. The line to take, when it was put to Labour spokespeople that the Tory plan was working, was apparently  to say that the recovery was not felt by all, the proceeds of growth were unevenly distributed or, more abstractly, that the economy was run for the benefit of the rich and not ordinary people.

Unfortunately these were talking points only to avoid talking about what for most people is the central question of economic debate: who can be trusted to deliver growth and jobs. It sounded as though we were saying this did not matter because it was the “wrong growth” and the “wrong jobs”. By building a campaign around issues of how to regulate a successful economy, like banning zero hours contracts, we forfeited the debate on who can be trusted to deliver a successful economy in the first place – in other words the debate that actually decides votes.

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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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