Tuesday, 31 August 2010

Miliband v Miliband

You can read my take on the Miliband brothers' argument over Labour electoral strategy on the New Statesman website - The real difference between the Milibands.

For the first time in Labour's history, party members will return leadership ballots without already knowing who will win. That is because Ed Miliband rejected a Bobby Kennedy role, seeking to influence his brother's leadership from a kitchen table seat. A significant political disagreement with his brother gave him reason to believe that his advice would seldom be taken.

That argument has finally moved to centre-stage as the campaign closes. It is not about different worldviews - both are social democrats who believe Labour's mission is to narrow the gap in life chances, albeit with mildly different instincts about how to get there. And the brothers have resisted excessively personalising their fraternal battle, to the mutual frustration of some supporters.

What the Milibands really disagree about is why Labour lost and how to win again. Couched in psephological number-crunching about the shifting class structure, they are playing out a deeper existential question about the party's strategy and public identity. What does "moving on" from New Labour mean, and how deep should it go? David Miliband warns that throwing out too much of a recently successful formula could mean a long spell in opposition; Ed Miliband fears that it is failing to recognise the scale of change needed which would keep the party from power.

Read it here

Has big brother David read little brother Ed's electoral analysis?

The central argument between the Miliband brothers has been about Labour's election strategy. Their debate about why Labour lost and how to win being the subject of a major speech from each brother in the last week, as well as interventions from Lords Mandelson, Kinnock and others.

Many people have noted the danger that the campaigns are talking past each other.

One reason why could be spotted in the course of David Miliband's Guardian interview with Decca Aitkenhead yesterday.

"Yes, we lost 1.6m votes among DE voters, as they've advertised," he says – referring to his brother's team. "But we lost 2.8m votes among C1s and C2s" – the Middle Englanders who delivered Margaret Thatcher's landslides – "who apparently were left out of his table. He compared DEs to ABs – and yes, we've got a real issue among DEs, we've got to get those votes back. But we lost 2.8m votes among C1s and C2s combined. Of course we lost fewer ABs – because we had fewer of them to start with. But we've got a 16% lead among DEs."

The tell-tale "apparently" suggests that this is a second-hand point, with the candidate unusually uncertain of his facts. It suggests that the elder Miliband did not look at his brother's analysis himself, and is instead relying on what his campaign aides have told him about it? Alternatively, he may have misremembered.

Whatever the explanation, David M would appear to have been misinformed, since that claim is clearly wrong.

The table of electoral analysis published by the Ed Miliband campaign - Analysis of Lost Voters (PDF file) clearly set out the change in AB, C1, C2 and DE vote shares in 1997 and 2010. The loss of C2 and C1 votes was prominently highlighted as a headline finding by the campaign on the day of its release, alongside the DE analysis. One later table which shows how the fall in DE votes alone affected the 2010 share, but that can't stand up the idea that the loss of the C1 and C2 voters was omitted from the analysis.

The analysis was published by Left Foot Forward: the "evidence-based" blog may perhaps be disappointed to see the David Miliband campaign not paying more attention to the evidence. This coincided with the publication of Ed Miliband's Fabian Essay, part of the collection to which all leadership candidates have contributed.

Perhaps the claim that the C1s and C2s have been ignored simply reflects a political decision to sharply polarise the argument about electoral strategy, characterising the competing analysis as the case for a "core vote" strategy. Yet, on the face of it, the comment implies that the candidate hasn't read the analysis which his campaign is rejecting.

The electoral strategy debate is important, but it is considerably more nuanced than those offering daft caricatures of "Red Ed" or David as an "uber-Blairite" suggest, and perhaps more nuanced than the campaigns themselves want to admit too.

It is perfectly clear that neither candidate thinks that electoral success can be done on so-called "core votes" or "middle-class" votes alone, though the question of whether it makes any sense to talk about a "core vote" given how Labour's vote fractured is one of the central arguments in the debate.

It is fair to say that the thrust of Ed Miliband campaign's political argument was that New Labour had failed to realise how much its DE vote had slumped, and the impact of that on vote share and seats. The David Miliband campaign agrees that these votes matter, while placing more emphasis on lost C1 and C2 votes and maintaining a strong middle-class appeal, warning against pretending that these don't matter. And, of course, the Ed Miliband campaign has had a strong focus on middle-class votes too - though suggesting the loss of twice as many AB votes to the LibDems than the Tories suggests that New Labour was too dismissive of civil liberties and foreign policy concerns, and will need to rethink those issues to recover ground among the middle-classes too.

Each of these debates matters - and a robust debate during a leadership contest is fine - but lets try not to caricature it. David Miliband supporter Tom Harris is quite right that coverage of the argument implying the party is descending into civil war is absurdly hyperbolic and ahistoric. Both Lords Kinnock and Mandelson know enough Labour history to make a letter to the Times a most unlikely way to kick a Labour party civil war.

How Labour's new members could decide the leadership election

There has been a sharp increase in Labour party membership - around 32,000 people have joined the party since May. Estimates of total membership suggest this is between 160,000 and 170,000, though the number of ballots to be issued remains open until September 8th, since anybody who
joins the party
before then can vote in the election.

So new members now make up a striking 19% to 20% of the party membership, and so over 6% of the whole electoral college. (Turnout among party members was 69.1% in 1994, but new members may well be slightly more likely to vote, both because some have joined specifically to vote, and more prosaically because a small proportion of long-standing direct debit members would not have updated their current address details. If this happens, it would marginally increase their importance).

So could they decide the election? The answer, in principle, is yes.

In one sense, what Labour's new members think would prove decisive in any very close contest. For example, the final round of the 2007 deputy leadership saw Harriet Harman defeat Alan Johnson by 50.43% versus 49.56% in the electoral college, a similar 0.8% margin of victory to that by which Denis Healey defeated Tony Benn in the 1981 deputy contest. (The three contested Labour leadership elections since 1983 were all won by large margins).

But that is not quite the same as a scenario where the presence of the new members means the outcome is different. That would not happen in a close race where both current members and new members prefer candidate A to candidate B by 51% to 49%.

Here is a scenario in which the new members make all the difference.

Firstly, imagine that small leads for each of the final two candidates in the Parliamentary and affiliate sections were to cancel each other out almost exactly. (For example, as a rough back of the envelope estimate, one candidate might lead by by 20 MPs yet be behind by perhaps something like 40,000 trade union votes out of 500,000 returned ballots)

Secondly, that would make the members' vote decisive. Lets say 89,000 not-new members cast votes in the final round (that would be 70% valid votes in the final round from 127,000 members) which favour candidate A over candidate B by 51-49% in the final ballot.

Candidate A: 45,390
Candidate b: 43,610

Those 1800 votes would give candidate A the leadership - the decisive 2% lead among party members would translate into a 0.66% margin in the electoral college, similar to that in previous knife-edge deputy contests.

But that's before we count the new members votes too in the membership section. Let's say there are 25,000 votes here. (75% turnout out of 33,000 would be 24,750 votes).

If candidate A can split new members 50-50 too, they will still win. But a 60-40 split among new members for candidate B is worth a 5000 vote margin (15,000 - 10,000). A 70-30 split is a 10,000 vote lead, and even a 55-45 split (2500 votes) would be enough in such a close scenario as this, where everything else comes out almost even.

Finally, every campaign has another week in which it can seek to expand the electorate, by persuading supporters who are not members to join the party. There are opportunities as the race receives more media attention this week. There are further opportunities among the 500,000 to 750,000 likely to vote in the affiliate section. If a campaign could persuade supporters in this section who are not party members, persuading them to join the party too before 8th September would shift their voting power from around a fifth or a quarter of that of a party member to 1.25 votes in the contest. This is unlikely to happen on an enormous scale - but a thousand or more new member votes could be very valuable.


So might new members might split differently from existing members? There are reasons to think that they might, though it would be dangerous to overstate these.

A plausible hypothesis is that new members may be more likely to vote for candidates they perceive as representing "change" rather than "continuity". Existing members may be more likely to heed warnings - such as those from Peter Mandelson - about the risks of change from the New Labour script.

Every candidate will appeal to new and current members. Every candidate argues they are the leader most likely to defeat the government and get back to power. If new members have been fired up by the Coalition, then they might particularly warm to Ed Balls' combative opposition to the government, for example. Overall, new members are likely to be as interested in Labour defeating the Tories as the rest of the membership.

Every campaign has been trying to recruit more new members too. One important goal of the David Miliband house parties and movement for change rallies; Andy Burnham was trying to do something similar with his large launch event in the north-west and his battlebus tour. Diane Abbott has been encouraging more people to strengthen the Labour left's voice.

There isn't enough information on who the new members are to provide any definitive verdict of how similar or different there are. The media have been interested in the idea that these are LibDem defectors, which is probably overstated. There probably are a good number of ex-party members in the joiners cohort - either because they left over a specific issue, or became disillusioned, or just felt less politically engaged - along with "never members" who are broadly Labour but stayed out for similar reasons. Examples can be found among new recruits from the blogosphere - such as Sunny Hundal from Liberal Conspiracy, or those like Lisa Ansell or Jim Monaghan who have blogged on their decisions to join, though they would not of course claim to be representative of all new members.

However, the YouGov poll also shows that existing members are also to the left of voters generally, and Labour voters too, perhaps also reflected in views about why Labour lost, so this may not differentiate new and existing members as sharply as some may imply.

And those who were broadly Labour but somewhat disillusioned with the party in power will not be the only joiners. There has long been a very large pool of Labour identifiers and supporters who are not members: the Fabian Society Facing Out research identified a pool of 2.5 million non-members who are politically engaged outside the party and who are Labour identifiers, identifying the need to lower barriers to entry to party politics and to ensure members voices counts . The new members may well have a younger demographic - Harriet Harman has said that 30% are under 30 and 80% had joined online; and one driver of some people deciding to join was seeing or hearing about others doing so, including through online social networks.


How new members will vote is not the most important unknown in this election: the (undeclared) second preferences of MPs and MEPs matter more. With at least 60+ Parliamentary votes up for grabs, they are worth 20-25%+ of the Parliamentary section.

(So another way of looking at the new members' influence is that a 70-30 split among them offsets perhaps 10 MPs, or slightly more).

The second preferences of not-new members may well have a broadly similar weight to the overall votes of new members (on first and later preferences). We could estimate that these could be worth around 7-8% of the electoral college.

If around a third of members vote for candidates who do not make the final round, second preferences overall (combining those of new and old members) would be worth around 10% of the electoral college, with affiliate second preferences worth something similar. This will be higher if the final two candidates get fewer than two-thirds of first preference votes between them (and lower if their first round share is greater).

Clearly, new members won't decide the election against the strong preference of other members. But their voices will have an important weight and influence - and it could be decisive in an evenly balanced contest.

Persuading and inspiring more people to join Labour is one of the remaining ways in which candidates and their supporters can affect the outcome. So if you care about who wins the contest, joining the Labour party could be one way to help to make it happen.

Andrew McIntosh RIP

I was sorry to hear the news that Andrew McIntosh has died after a long illness with cancer.

Andrew is most famous for being the moderate Labour leader at the GLC elections in 1980, who was victim of the Ken Livingstone coup immediately after the results. Excitable prophecies that the left would use the same method to ditch Tony Blair immediately after the 1997 election proved wide of the mark.

The Guardian and Telegraph obituaries and tributes capture much his broader contribution.

Andrew was Chair of the Fabians in 1985-86, and continued to take a close interest in the Society, including as a trustee of the Dartmouth Street Trust charitable trust, which supported a number of major Fabian research projects, particularly exploring issues of social inequality and life chances.

I last spoke to him at the end of July, when he had just had the news from his doctors that further treatment was no longer possible. He wanted help to let friends and colleagues in the Fabian Society know that he was nearing death which, as a staunch humanist, he faced with remarkable stoicism. Andrew was always a Labour moderate, but felt fired up by the Coalition's budget, and was particularly keen to see the Fabian Society research its impact on inequality.

Monday, 30 August 2010

Peter breaks cover (again) as the Blairite battalions come out

David Miliband began his campaign with an effort to shake off the "Blairite" tag, which has always been something of a caricature. On policy substance, his campaign has quite a lot in common with that of his brother, enabling Next Left to anatomise and welcome his own centre-leftward "lurch".

David Miliband told The Independent on Sunday this weekend

It’s also a deeper thing. Tony and Gordon’s politics was forged on the anvil of ’92. that wasn’t where my politics was forged really and they had to learn the lessons of the 87-92 period or the 83-92 period.

So there are pros and cons in the extent to which, as the ballot papers go out, the Blairite big battalions have come out in force for Miliband the Elder. This is now likely to dominate the mood music of the early voting, coinciding with a week in which the other big political story is publication of the biography of Tony Blair himself.

The scale of the New Labour push partly reflects the view, among MPs supporting both candidates, that the contest remains much closer than the bookmakers suggest. The David M campaign have done well to create a sense of momentum towards the finishing line, but it still looks neck-and-neck enough to fear that second preferences could swing it the other way.

So could it now be the Blairites wot win it for David M? Or might their high-profile intervention do more harm than good to their favoured candidate, highlighting Ed Miliband's argument that it is time to move on? (On the other side, Paul Kenny of the GMB's apparent threat about party funding almost certainly unhelpful for Ed Miliband, who politely begged to differ).

The Blair biography is unlikely to receive a warm media reception. But hacks - and perhaps the Labour twittersphere too - may significantly underestimate the extent to which Blair - electorally Labour's most successful leader - still holds considerable influence with party members themselves.

But what about Peter? Deborah Mattinson tweeted, in response to that point, that:

Agree of course TB still holds sway. But Mandelson may be another matter...

And so, even today, Peter Mandelson again stops officially 1% short of a direct endorsement of David Miliband, in case it might not prove helpful to have it, though there is little rationale behind that given how clearly his choice is being projected.

And here, history repeats itself, with a curious symmetry with Blair's own election campaign for leader.

Back in 1994 when Mo Mowlam and Peter Kilfoyle told Labour MPs that Mandelson had no role in the Blair campaign, to which he was central, being thanked under his codename "Bobby" in Blair's victory speech.

As Donald MacIntyre writes in his excellent Mandelson biography, which is also perhaps the best general history of the making of New Labour back in the day:

Contrary to reports at the time, it was nothing to do with the Kennedys. It was hastily plucked at random by Kate Garvey, a member of Blair's staff, as a way of keeping Mandelson's extensive involvement in the campaign clandestine; it was very nearly 'Terry'. The secrecy was thought necessary for the Blair campaign to ensure its appeal beyond the ranks of modernisers, to avoid putting off those who were personally hostile to the Hartlepool MP, and (ironically) to allay the fears of those who thought he was still a 'spy' for Gordon Brown. Mo Mowlam, initially hostile and part of the original Blair campaign, began consulting Mandelson regularly, whle carefully maintaining the fiction to others that he had no role in it.

Even though he had agreed to it, Mandelson was frustrated, even hurt, by Blair's insistence on keeping his role in the dark ... the secrecy largely held, because journalists knew that, if they broke it, their contact with Mandelson would cease".

Sunday, 29 August 2010

Could the Laffer curve slash the deficit through lower taxes?

LibDem Chief Secretary Danny Alexander doesn't think a government which makes deficit reduction its number one priority can hope to have a lower level of tax in 2015 than it inherited in 2010.

Iain Martin of the WSJ, while joining the economists of the centre-left in noting that the answer to deficits is economic growth, wants to introduce Alexander to the Laffer Curve, whereby taxes could be reduced and revenues increased.

Well, nobody wants to look a gift horse in the mouth. Have the Labour leadership contenders all missed a trick here too? Could, say, Andy Burnham have said "my deficit reduction plan is scrap the 50p rate, knock 5p off the top rate, 5p off the basic rate - and then we'll have much less need for spending cuts" - AND got the applause of the political right. Sounds tempting, doesn't it?

Still, a Chief Secretary may need to perhaps ask one or two questions first.

If you draw the Laffer Curve on the back of a napkin, then you know that revenue is zero with 0% tax and zero with 100% tax too. The important missing bit of information is where the peak is. Whether we're currently on the upwards or downwards slope would determine whether tax cuts will cost or gain revenue. (Ezra Klein of the Washington Post asked US economists of the left and the right about this recently - and it probably isn't a 19% flat rate that maximises revenue).

And the Laffer curve has some political history when it comes to deficits.

The Reagan government used it to argue that slashing taxes would increase revenues, notably in its massively tax-cutting 1981 bill. However, the 1981 Act in fact reduced government revenue by around 3% of US GDP over the next four years.

So Reagan began with national debt at 32.5% of GDP in 1981 and left it at 53.1% of GDP in 1989. (Graph, via Scott Willeke, using Congressional Budget Office data)

Reagan's Budget director David Stockman said of the Laffer curve:

[T]he whole California gang had taken [the Laffer curve] literally (and primitively). The way they talked, they seemed to expect that once the supply-side tax cut was in effect, additional revenue would start to fall, manna-like, from the heavens. Since January, I had been explaining that there is no literal Laffer curve."

Iain Martin says that Art Laffer is coming to London this Autumn. It is a reminder that one of the great political arguments of the next few years should take place within the right - between fiscal conservatives and those like the Taxpayers' Alliance who argue an "oppose all tax increases" philosophy.

Tax myths in an imaginary centre-ground

The Spectator's Peter Hoskin doesn't like the idea of extending the 50p top rate of tax to earnings over £100,000 (rather than £150,000) though he rather jumps the gun in suggesting that "it’s fairly probable that this will be official Labour policy in the not-too-distant".

Hoskin suggests that Ed Miliband has joined Ed Balls and Diane Abbott in advocating this policy. In fact, he hasn't, despite that claim erroneously appearing in one New Statesman editorial which the Coffee House blog links. What Ed Miliband has said is that he would make the 50p rate at £150,000 "permanent", rather than temporary, but has yet to go further than that.

But lets imagine Labour did make this part of its deficit reduction plan.

Hoskins' substantive argument continues the tradition of right-of-centre media commentators warning centre-left parties not to desert the centre-ground on higher taxes at the top, when they would do so with only the company of a substantial majority of the voters as consolation.

He writes:

If so, the impetus behind the tax hike will be more presentational than anything else: Labour will sell it as both a way to reduce the deficit and as a "progressive" dividing line with the coalition. But it’s unlikely to work as smoothly as that. For starters, it could rekindle the same internal struggle that we saw when Alistair Darling was drafting his last Budget. And that's before we get onto what it would mean for Labour's appeal among the aspirational middle classes. David Miliband's "broad coalition" this is not.

Of course, every right-of-centre commentator believes this (and David Miliband might well agree with Hoskin about the politics). But would it be impertinent to ask for some evidence? Hoskin is sure that the proposal would send aspirational voters running for the hills, so he must expect to find that it sharply divides opinion across classes, regions, parties and between lower and higher earners?

Which it doesn't.

If a proposal can get 60% support among ABC1 voters, with 21% against, and 63% among C2DE voters, with 13% against, couldn't you more plausibly argue that it has "broad coalition (centre-right commentators excepted)" written all over it.

Indeed, when a 50p tax rate on earnings of £100k+ can generate 57-27% support among Tory voters and 69-13% backing from LibDems, along with 68-11 support among Labour voters, it begins to look like the very model of a modern coalitionist centrism. Support does fall very slightly in London and the South: in both regions, 58% are in favour (with 19-20% against), compared to 62-66% support across the midlands, Scotland and the north. Still, I seem to recall that 58% came out as a much "broader" section of southern opinion than 20% last time I did the maths on that.

Some will believe, like Hoskin, there are important economic, policy or ideological reasons to oppose such a policy - but they should realise that do not have "broad coalition" on their side of the argument.

The 50p on £100k question has not been polled very often: there has been no post-election polling on the question. I am aware of only two YouGov polls, both for the pressure group Compass. An April 2009 poll found 61% supported and 18% disagreed with the statement that "the government should break its 2005 manifesto commitment not to increase any rates of income tax and immediately introduce a new top rate of income tax for those earning above £100,000 a year". (The break figures above come from this poll). The question - with the manifesto pledge mentioned - would be more likely to reduce than increase support.

A November 2009 poll found very similar support (62% against 25% opposition) to a 4-point package including a 50p rate at £100k, higher NI on the top 10% and capital gains, in order to bring back the 10p rate.

My strong hunch is that those 2009 polling numbers probably somewhat understate support for the policy now. At that point, there were important pressures on the public finances - but nothing like the same awareness of the scale of cuts to public services which will be proposed this Autumn. (After all, David Cameron went right through an election campaign in which he said the deficit was the major issue promising that he would cut only "waste" and pretending that he planned to reject any ministerial plan which affected frontline services. Everybody now knows - and the government admits - that this was nonsense).

Public advocacy of the case for 50p on over £100k could also have an impact. For one thing this "we're all in it together" Coalition would not relish a public fight with Labour about tax at the top, with the Conservatives having ducked out of arguments over increases to 45p and then 50p on earnings of £150,000 in opposition. (50p on £100k was LibDem policy for a long-time until dropped by Ming Campbell after the 2005 election).

A cross-class and cross-party pattern of support for higher taxes at the very top is a consistent feature of poll findings on the subject. YouGov polling for the Fabian Society in December 2008 found that the 45% rate on earnings over £150,000 (which the government had proposed) was backed by 76% (45% supporting it strongly). At that time, polling the idea of a 50% rate on earnings over £150,000 was backed by 52% to 28%, with strong support at 29% and strong opposition at 9%. The class and party breaks can be found in this earlier post.

However, when Alastair Darling announced the government's new policy of a 50p rate over £150,000, there was a sharp rise in support for the 50p rate on earnings over £150,000, with 68% support in YouGov's post-budget poll in the Telegraph. (This despite the furious reaction of Tory blogs, arguing that the Tories had to be staunch in opposition this time).


One can exaggerate how far 50p on £100k really ditches so much of the New Labour script. There was considerable internal debate about this policy after 1994 - with Balls advocating it in internal debates in different circumstances back then. (It would hardly have cost Labour the election, any more than Tory and CBI warnings about the minimum wage or windfall tax did), Both Blair and Brown were very keen to close ['down discussion of this issue after 1997, when the Fabian Society, Peter Hain, the Liberal Democrats and others kept it on the agenda.

Today, both Eds Balls and Miliband remain cautious about punitive taxation on those on middle and high incomes - meaning those short of six figures, including if applied to those earning more than 95-97% of us.

All five Labour leadership contenders reject the claim that the party must lose its appeal to aspiration if it was ever to moderately increase any taxes on the top 1-2%. Instead, all now think that must be part of a broad "fairness" approach to deficit reduction. It is a matter as much of the "we're all in this together" symbolism as making the revenues add up.

The leadership policy difference are, substantively, about whether slightly higher taxes on a "fairness and aspiration" ticket best applies to earnings above £100k or £150k, or to assets of £1 million or £2 million. (That is where David Miliband pitches his mansion tax - again challenged by the Standard in similar terms, for a policy which would affect 34,000 Londoners out of 8 million.

A parallel presentational debate is, given that Labour will have some such policies for "tax fairness" in its economic plan, whether these should be pitched as a heartfelt commitment to social justice, or a somewhat reluctant response to tight fiscal circumstances, which would be reversed as resources allow. Since nobody - including the Coalition - is going to be reversing the 50p rate on £150k any time soon, this seems more about mood music and rhetoric than policy decisions.


Ed Miliband made the striking point in his Fabian essay that 50% of voters in Reading West earn £21,000 or less.

The source for this was the fascinating data-sets produced by HMRC - see table 3.15 on this link - on mean and median income and tax by Parliamentary constituency.

Even where average incomes are a good deal higher, the differences between mean and median incomes show how this is driven by the highest salaries at the top. So the mean income in London is £37,400 and the median £21,800; in the south-east outside London, the mean income is £30,900. Even in the City of London and Westminster - where the mean income is right up at £96,100, the median income is £33,800.


It is sometimes claimed that to suggest higher taxes could be compatible with an appeal to aspiration is to unlearn the lessons of New Labour. Certainly, this seemed to be strongly believed by New Labour at the time, and by politicians and commentators since. But the story is more complex if we ask what the public themselves thought at the time.

New Labour attributed its electoral success to its tax pledges, but the public themselves did not. Striking if counter-intuitive evidence was set out by Mark Gill of the pollster MORI, writing for Fabian Review back in 2005, where he set out what the voters thought about New Labour and tax in 1997 and 2001:

As Gill wrote:

The flaw in this argument is that although Tony Blair pledged not to increase income tax rates in 1997, the key voters didn’t believe him anyway: in MORI’s 1997 final pre-election poll for The Times, 63 per cent said they expected that a Labour Government, if elected, would increase income tax, only 3 per cent lower than the 66 per cent who expected a Kinnock Government to do so in 1992.

This point was reinforced at the 2001 election. As early as December 1999, the public was convinced that taxes had risen under Labour: 28 per cent thought that the Government had kept taxes down since it had been elected, while 57 per cent thought it had not. By January 2001, when asked for their ‘thinking about all forms of taxes’, 48 per cent thought taxes had gone up since 1997 ‘for most people’ and 41 per cent that their own personal taxes had risen. Furthermore, few expected a re-elected Labour Government to have a better record of keeping its tax promises: at the end of May, 74 per cent thought that Labour would increase taxes if re-elected, and only 16 per cent thought it would not.

All told, the voters elected Tony Blair with a landslide in 1997, expecting him to increase taxes, and re-elected him in 2001 believing that his Government had done so, and would do so again.

Sorry Ms Lumley, the Coalition is set to axe the Gurkhas after all

It was the start of a beautiful friendship, as Nick Clegg and David Cameron publicly joined forces for the first time, along with Joanna Lumley too, to celebrate a Commons victory in the Gurkhas' rights campaign.

Mr Clegg said: "This is an immense victory on a series of fronts: for the rights of Gurkhas who have been waiting so long for justice, a victory for Parliament, a victory for decency." He added that it was "the kind of thing people want this country to do".

Mr Cameron said it was "embarrassing" for the prime minister because his efforts to strike a "shoddy deal" with Labour rebels had failed.

Yet now the Gurkhas could well be for the chop under the Coalition. The Observer reports that they are likely to be sacrificed as part of the MoD cuts needed to make a like-for-like Trident replacement possible.

Patrick Mercer, a Tory MP and a former army officer, said: "The first people to go will be the Brigade of Gurkhas, probably in their entirety. In the past, the Gurkhas' existence was guaranteed by the fact they are cheaper to run than British troops, and that there was a shortage of British troops.

"Recent changes mean they are now just as expensive, and recruitment is extremely healthy at the moment. I am afraid the writing is on the wall."

Ironically, Clegg and Cameron's backing for the Lumley campaign may have sealed the Gurkhas fate, as the report suggests that their Coalition government is now likely to use the increased costs of fairer terms for the Gurkhas to argue that the Gurkhas have become unaffordable.

(However, equal pay and pensions was the policy of the last government after 1997, whose record on the Gurkhas was considerably better than reputed, as Dominic Lawson set out; the central demand of the Lumley campaign was to extend the right of veterans to settle in the UK).

Saturday, 28 August 2010

Hague warns press not to follow Guido's lead

The Telegraph reports on its front-page that "a Cabinet minister is ready to take legal action to halt a series of increasingly lurid but baseless rumours sweeping Westminster over his sexuality ... Friends of the minister have warned that he will not hesitate to take “action” should unfounded allegations that he is homosexual, which are circulating on the internet, appear in mainstream media".

The minister, not named in this report, is clearly Foreign Secretary William Hague.

His identity would be considerably more closely guarded from Telegraph readers if the newspaper had not already placed itself at the forefront of those using online sources to spread innuendo about Hague, doing so with the subtlety of a brick in its Mandrake diary column on Wednesday.

The Telegraph was quoting a Freedom of Information request from Paul Staines, blogging as Guido Fawkes, who has led the online charge, slightly bizarrely claiming that answering it "amounted to an official inquiry". Paul Dacre's Mail titles have also shown some interest since the weekend.

It now appears that Hague is (probably sensibly) not threatening legal action against blogs, but seeking to warn newspapers not to follow up the online reports. It is not entirely clear whether the route would involve injunctions (which could well prove counter-productive) or rather threats of subsequent PCC or legal action against false or libellous reporting. It might simply be that the generic threat and strength of denial are intended to provide an effective deterrent to reporting in mainstream outlets of rumours and innuendos which the minister dismisses as simple falsehoods. It is a strategy which depends on maintaining the rather blurred boundaries between news outlets, blogs and social media; the dilemma being how to deny the rumours most effectively without fuelling them further.

The Guido Fawkes blog has just come top of Total Politics' libertarian blogs category. The enthusiasm with which it would seek to "out" a Minister perhaps sits oddly with that. (Whether it does so erroneously in this case, while important, is not the central point there). Staines has also again proved willing to host long threads spattered with homophobic comments - some very vile - on his blog. No doubt he would offer a free speech defence of that. It might reasonably be questioned whether that fully addresses the enthusiasm with which they are encouraged and in effect celebrated - such as with special caption competitions in effect offering a green light to further rounds of homophobic comments. (Next Left isn't calling for Staines to be banned from doing this: we are simply publicly criticising him for being willing to so actively encourage homophobic attitudes, when these are thankfully much more marginal than they were a decade ago).


Meanwhile, there is a lot of personal sympathy for Crispin Blunt across the political spectrum at Westminster. The Conservative minister's decision to come out as gay, aged 50, and end his marriage again reflects, as Iain Dale posts, very different public and political culture just a decade ago; which was also reflected in David Laws' decision to keep his sexuality private.

Blunt first stood as a Tory candidate in 1992. The point of his decision to keep his head down can be seen in how, as late as 2002, Blunt's own constituency chairman could attack Alan Duncan's decision to come out:

"I would not be happy if we had a gay candidate here - I would always go for a candidate who had a normal background," he said. "Our current MP [Conservative Crispin Blunt; majority 8,000] is happily married with two children."

Blunt's constituency association's reaction yesterday was more sensible.

The Daily Maybe reports that Blunt's own public statements were not always on the side of gay rights: unhappily opposing an equal age of consent on the grounds that homosexuality was a lifestyle choice. That will be challenged as hypocritical, though it must also have reflected an attempted self-rationalisation of his own life choices at the time.

The prisons minister has increasingly become a significant liberal voice in the Conservative party. This may perhaps adding to the sympathy for his personal turmoil among political opponents as well as colleagues, along with the desire to show that we have (almost) all moved decisively on from the days when homosexuality was thought a bar to a public life or political career.

Why did David Miliband cross the road?, asks Lily Allen

I tried to identify how any remaining endorsements in the Labour leadership campaign might play out in a LeftFootForward post on Friday.

But I was blind-sided by Lily Allen's attempt to swing the race. (A silly mistake when is far from Allen's first political intervention - as fans of her "Fuck you" ode to the George W Bush legacy will know. Allen is staunchly Labour, and has campaigned on green issues).

Political Scrapbook has the amusing story of a bit of banter between Lily Allen and David Miliband over the merits of Masala Zone as a curry house.

That ended with the popstar offering this endorsement of a rival candidate. It could prove a game-changer - except that only a minority of Allen's 2,308,654 twitter followers will have a ballot in the contest.

Why did David Milliband cross the road ?

To get to the middle.......#VoteEd

In the context of some Miliband-banter with David, I take that to be an endorsement of his brother, though Scrapbook does not rule out the possibility it refers to Balls.

Still, that could stake a decent claim to be the best joke of the Labour leadership campaign so far (though I am not aware of oodles of competition).

Unless you, dear reader, know better ...

Save NHS Direct - the next Coalition u-turn?

The NHS Direct phone service is to be scrapped by the Coalition government, in favour of a "cut price" medical advice phone-line which will use fewer nurses and medically trained staff.

John Prescott is on the case, having launched a petition which can be signed at www.savenhsdirect.co.uk. He has the first 500 signatures and anticipates thousands over the weekend, and there is much discussion on twitter of a #savenhsdirect

David Cameron has every right to be rather busy and on leave following the happy news of the birth of his daughter earlier this week.

So it may not happen quite as quickly as over scrapping free milk in nurseries.

But I predict a u-turn.


One thing which might worry the Coalition is the amateurishness to how the news has come out: The Guardian reports that Health Secretary Andrew Lansley accidentally let the cat out of the bag about the decision, appearing to reveal that the official line that a "pilot" scheme was being evaluated was in fact a cover story for scrapping NHS Direct.

The government begins on the back-foot, but is offering "more for less" rhetoric.

The Guardian reports a Department of Health spokeswoman: "It is important that we deliver the best possible service for the public and, in the economic climate, deliver the best value for money.

Whatever the legitimate debate about the best phone-line health advice service, the Coalition's cack-handed handling of the issue means it is now going to struggle if it now wants to claim that the move is not cost-driven.

Like many parents, I have found NHS Direct really useful on a couple of occasions, when not sure whether or not (or how far) to panic when young babies have been ill at night. NHS Direct costs £123 million a year. A large part of the point is to ease pressure on other NHS services, particularly people unnecessarily turning up at accident and emergency as the only well-known way to immediately access the NHS.

Friday, 27 August 2010

AV is as easy as 1, 2, 3 for Labour members

The Parliamentary Labour Party was famously said to be "the most sophisticated electorate in the world". But one of its new members - Wigan MP Lisa Nandy - is worried that Labour party members, enfranchised in leadership elections over a quarter of a century ago, might not understand how to take part in the vote, asking "is preference voting confusing Labour party members?".

But AV really is as easy as 1, 2, 3 for party members - who seem to have managed to understand this in CLP nominations and Parliamentary candidate selections (though the Wigan selection seemed to run into farcical trouble, according to Tribune's report at the time, which must have been rather trying for both Nandy and her rival candidates, though not apparently because of voting systems).

I presume that the point of the complaint is that Nandy doesn't think AV is fair - and that a Labour leader elected under Alternative Votes may struggle to explain a u-turn on the issue

Nandy undermines that case in claiming that there was a widespread feeling that the 2007 deputy leadership result was unfair.

"there was a feeling of unfairness amongst many members that Jon Cruddas, the popular left-wing candidate at the time, had won more first preferences than other candidates, but didn't win the contest".


Why it would be silly to hold a six-candidate deputy leadership contest on first-past-the-post can be seen quite clearly from looking at the first ballot result.

Jon Cruddas had 17% of party members, 13.9% of MPs and 27% of union members in the first round - giving him just under one in five share (19%) of the overall college vote in the first round of a very even six candidate contest. Harriet Harman had 24% and Hilary Benn 22% of the party members section at that initial stage, but were further behind Cruddas in the affiliated section than he was behind them among party members.

To declare the contest over at that point really would be thought farcical - unless of course it had been a Parliamentary by-election. It turned out that Harriet Harman was the candidate with most support - and over half the party - in the final reckoning.

So 19% of the party (college) wanted Cruddas to win, but given a choice between Alan Johnson, Hariett Harman and Cruddas he narrowly trailed as a strong third choice, with 36% and 34.5% preferring the other candidates to Jon, now on a 30% share. (Harman led Cruddas 42-27 among individual party members at the point when he was eliminated).

So the argument that victory for Harman on 50% was "fairer" than a triumph for Cruddas on 19% was that AV discovered that more of the party preferred her to him for the job. QED?

Of course, the voting would probably have been rather different under first-past-the-post, since members may have had to guess who they thought was in the running to win, rather than simply voting for their favoured candidates.

The tactics of that would have been something to tax party members' brains - voting 1, 2, 3, 4 in a leadership election really isn't.

What Labour leadership votes are worth when they are counted

George Eaton at the New Statesman looks at the relative weight of votes in Labour's electoral college, which gives one-third of the vote are held by MPs and MEPs (278 people), one-third to party members and one-third to trade union levy payers and members of affiliated organisations, in particular highlighting the "disproportionate power" of MPs.

The point of an electoral college is to ensure a leader is acceptable to both MPs and party members, though Eaton highlights the potential tensions were a candidate not ahead in both sections, winning the leadership with Parliamentary support against a plurality of party members, is the favourite choice of members but not MPs, or indeed surges home with a large trade union lead while being narrowly behind in the other two sections.

He summarises:

To better display the idiosyncracies of the Labour system, here are some key figures:

- The vote of one MP is worth nearly 608 party members and 12,915 affiliated members.

- The vote of one party member is worth 21 affiliated members.

- An MP's vote is worth 0.12 per cent of the total electorate, a party member's vote is worth 0.0002 per cent and an affiliated member's vote is worth 0.00000943 per cent.

That seeks to capture the relative value of the ballot papers which go out. But the values of the different sections are different when they are counted, which may be what counts in the end. Each section is still one-third of the college, however many votes are cast or remain valid in later rounds. So lower turnout or more drop-outs in any section makes individual votes in that section more valuable.

In practice, this means that party member votes will probably be worth between four or five times those of affiliated members, rather than 20 times.

The question is, firstly, what turhout is in returning votes and, ultimately, what we could call "final round turnout": the proportion of votes which express a preference between the top two candidates, and so are still being counted in the decisive count.

MPs and MEPs will turn out at 100% or thereabouts. (It is unlikely that an acting leader or ex-leader will not cast a ballot to remain neutral even under anonymity; and no MPs plan to publicly abstain, as Neil Kinnock crucially did in the 1981 deputy leadership). 99%+ should express a preference between the last two candidates, excepting the possibility that a couple of Campaign Group MPs are entirely neutral between Milibands. (But perhaps not if a surprise candidate makes the run-off, and some supporters of an eliminated Miliband have not given 2nd/3rd preferences because they didn't think that possible. I have heard that there were a handful of MP "exhausted" ballots in the final 2007 deputy contest, with enough voting power in theory to switch the result from Harriet Harman to Alan Johnson in 2007).


Party membership turnout may well be around 70%. There is no fixed total yet, since new members can join until September 8th and get a vote. Membership turnout was 69.1% in the CLP section 1994 leadership contest, with 172356 valid votes cast in a membership which was then higher, at around 250,000. (Turnout was 77% in the Tory contest in 2005, and 64.1% in the last LibDem contest in 2007).

YouGov found that 9% of Abbott, Balls and Burnham supporters said "neither" at the end of July, when asked which Miliband they would prefer, with Ed Miliband 51-33 ahead of his brother, and 6% "not sure" at that point.

If we assume that a third of votes go to candidates placed 3rd, 4th and 5th, and rate of "exhausted" ballots were to approach 10% of these votes (or 3.3% of all votes cast), this would reduce "final round turnout" by around 2.5% of the total eligible membership, for example from 69% to 66.66%. This is probably most likely among a minority of Abbott voters, and the "exhausts" proportion could end up lower. (To the extent this occurs, it also means first preferences count a little more than at first glance).


Affiliated turnout is still anybody's guess. It was 19.1% in the 1994 election - around 770,000 votes of just over 4 million ballot papers issued, and 8% in the 2007 deputy leadership. The ratio was 4.5 votes to 1 between the affiliate and members' section. (Turnout also differs a lot within this section: Fabian turnout in 2007 was 50%, six times above the trade union average, in the deputy leadership; socialist societies may again find their turnout rates similar to party members' turnout; not union turnout).

Again, there will be some exhausted ballots and some think this could be a little higher in this section. If this were again to apply to 3-5% of ballots cast, it would still only reduce overall "final round turnout" among eligible voters by under 1%, say from 19% to 18% for example.

The Balls alternative on the deficit

Ed Balls accuses George Osborne of being a "growth denier" and increasing the risk of a double dip recession, sending Britain unprepared into an economic "hurricane".

“George Osborne was fond of saying – wrongly – that the Labour government had failed to fix the roof while the sun was shining. What he is now doing is the equivalent of ripping out the foundations of the house just as the hurricane is about to hit,”

Speaking on Friday morning at Bloomberg, where Chancellor Osborne attacked Labour as "deficit deniers", Balls argues that the Coalition has ignored the impact of its accelerated deficit reduction plan on growth:

“We have a Chancellor who believes that he can slash public spending, raise VAT and cut benefits – he can take billions out of the economy and billions more out of people’s pockets, he can directly cut thousands of public sector jobs and private sector contracts, and none of this will have any impact on unemployment or growth.

“Why? Because against all the evidence, both contemporary and historical, he argues the private sector will somehow rush to fill the void left by government and consumer spending, and become the driver of jobs and growth. This is ‘growth-denial’ on a grand scale.”

The speech - which will be available at Balls' campaign website - is Balls' response to George Osborne, and also to the debate inside the Labour party about how the next leader should set out Labour's approach

A significant party debate was sparked by Pat McFadden's speech to the Fabian Society last month. There are several points of agreement between McFadden and Balls - the need to challenge the Coalition's claim that 'there is no alternative' and set out a pro-growth political economy - but the important difference is between McFadden's concern of Labour being "tuned out" by the electorate if it focuses only on fighting the cuts and does not stick to its previous strategy to halve the deficit in four years. Balls' argument that this debate should not be closed down.

This is how Balls argues for an alternative Labour strategy.

it is Labour’s responsibility to set out a clear plan for growth, a more sensible timetable for deficit reduction, and a robust explanation of why that will better support our economy and public finances.

“Even halving the deficit over four years represents comfortably the biggest and fastest cut in the deficit since the period after the Second World War, but without the peace dividend to fund it.

“In a recent article in the Financial Times, the historian Niall Ferguson writes: ‘People are nervous of world war-sized deficits when there isn’t a war to justify them.’ But this is precisely the case I made to Gordon Brown and Alistair Darling last year - we have just experienced the biggest global financial crisis in a century, an event as momentous in historical and financial terms as war, famine or plague.

“Our economies were saved from catastrophe only by government intervention to nationalise banks and to absorb huge financial liabilities from the private financial sector. To attempt to repair the damage of such an event and return the national debt to its previous level in juts a few years is not only dangerously incredible in the eyes of financial markets but places an intolerable burdens on current users of public services.

“Just think if Clement Attlee’s government at the end of the second world war had decided that the first priority was to reduce the debts built up during the second world war - there would have been no money to fund the creation of the NHS, no money to rebuild the railways and housing destroyed in the Blitz, no money to fund the expansion of the welfare state.

“All the things the Labour movement is proudest of about that post-war government would have been jettisoned.

“And why weren’t they? Because they recognised that when a country has been through an once-in-a-generation event like the Second World War – where the costs involved are a second thought next to equipping the armed forces and saving people’s lives, homes and freedom – then the government needs a once-in-a-generation approach to the resulting deficit: a slower, steadier pace of reduction which meant they could also fund the improvements in health, education and welfare that the post-war generation demanded and deserved.

“Instead, George Osborne not only wants to go further and faster than the post-war government in reducing the deficit, he is planning to go £40 billion further and faster this year than even Alistair Darling’s plans.

“So when George Osborne – and some in my own party – say that there is no alternative to their timetable and that anyone who disagrees is a deficit-denier, I say this: If it was possible for our post-war government to have the wisdom and foresight to recognise the benefits of a slower, steadier approach to reducing an even bigger deficit, then it does not behove you to close off all debate.

“That is why - on grounds of prosperity and fairness - I believe Labour does need a credible and medium-term plan to reduce the deficit and to reduce our level of national debt, but only once growth is fully secured and over a markedly longer period than George Osborne is currently planning.”


Balls' argument about the level of debt inherited by the Attlee government echoes an argument made by Tim Horton and James Gregory in the Fabian book 'The Solidarity Society', where they wrote:

compare Britain of 1945 to that of 2009. There can be little doubt which was the age of austerity and which of affluence. One was the era of the ration book; the other of the iPod. After the war, Britain had national debt of over 200 per cent of GDP, compared to 60 per cent today. But that country voted for the vision set out in the Beveridge Report of 1942, created a National Health Service free at the point of need, and pledged ’never again’ to the mass unemployment of the 1930s.

Today, even after inflation, our national output is four and a half times greater than it was then.

So the real difference between 1945 and 2009 is not a crisis of affordability. It is a crisis of ambition.

It will be necessary to rebalance the public finances, and debate the different priorities about how to do so. But we should remember too that our societies today, overall, remain the richest the world has ever seen.

The Solidarity Society - Tim Horton and James Gregory, Fabian Society and Webb Memorial Trust (2009)

Thursday, 26 August 2010

Why David Miliband shouldn't want to be heir to Rab

David Miliband said something very intriguing in his major speech last night about the best model for the rethink and renewal which Labour needs.

“Labour under new leadership must engage with the big issues facing Britain with an openness, a freshness, a vivacity unlike anything it has seen.

The closest parallel I can think of is the Tories’ rethink under RA Butler after they lost the 1945 General Election.”

Rab Butler may now be remembered primarily as a man who failed to seize his chances to be Tory party leader and prime minister - in both 1957 and especially 1963, when Enoch Powell cruelly but perhaps accurately observed that Butler had been handed a loaded revolver but failed to shoot for fear it would make a noise. But Miliband is right to say that Butler's greater contribution was in bringing the Tories to terms with the post-war political settlement, for which Butler and Gaitskell was immortalised in the so-called "Butskellite" centrist mixed economy and welfare state consensus which can be seen as lasting from 1951-74, before being rejected by both right and left in the mid-1970s.

But is this really the best analogy for Labour's renewal challenge now? These strike me as being a rather better description of the Cameron political challenge in reshaping Conservativism after New Labour.

A much better analogy for Labour now is the challenge which faced Labour (rather than the Tories) after 1951 - and which the party largely flunked, having already run out steam in office after 1948. The Attlee government had enormous achievements, being effective in addressing the problems of Britain of the 1930s and changing the condition of the country, but could not then find an approach which spoke to the new society which it had done much to shape. This was best expressed by Richard Crossman in the introduction New Fabian Essays of 1952, arguing that the difficulty of renewing a party at the end of a long period in power was that it was liable to rely too heavily on its experience in office and so to fail to look with fresh eyes at the new society which had resulted from its reforms. As he famously wrote:

[Labour had] "lost its way not only because it lacked maps of the new country it is crossing, but because it thinks maps unnecessary for experienced travellers".

That, again, is one trap that Labour's next leader will have to avoid, whoever it is, if they wish to substantiate their claims to be candidates of "change".

What's wrong with seeking to emulate Rab's Tory refresh after 1945?

Firstly, the implication of that as a lesson for Labour depends on a prediction that the Coalition reshaping the politics of the next three decades as profoundly as Clement Attlee did from 1945-75, and Margaret Thatcher did in the three decades after 1979. That case is very much unproven. It is also somewhat at odds with an argument promoted by the elder Miliband's campaign (perhaps rather over-optimistically) in CLP debates that the party must choose the most "Prime Minister ready" of the candidates since the Coalition could collapse at any time.

Of course, Labour must address the challenge of opposing the Coalition intelligently, which can be difficult during a leadership contest. Yet Miliband's analogy could risk conceding the argument about who will set the terms over which the centre-ground is framed. The Coalition is caught between embarking on enormously radical ventures on several fronts at once - the scale of deficit elimination; NHS organisation; schools. Whether this will come to be thought brave or reckless remains to be seen. There are also many areas where the Coalition now renews Cameron's early claim to be "heir to Blair", on the existing New Labour centre-ground, or where it faces challenges - as in the IFS' destruction of its distributional fairness claims for its first budget - where the rhetoric does not match the reality.

Secondly, while Butler did modernise the Tory party machinery, the outcome in policy terms of Butlerism was a Churchill administration of 1951-55 which was perhaps the most "no change" government that 20th century Britain has ever seen, with the emphasis very heavily on accepting the legacy of its opponents, as emphasised by Churchill in the King's Speech debate in which he suggested a desire to rise above partisan politics.

This was politically enormously effective: the government's moderate and conciliatory course shot Labour's fox in response to the central campaign claim that the Conservatives were the "same old Tories" of the 1930s. (It helped a great deal that prominent Conservatives were centrists by conviction and not merely circumstance, especially in Macmillan's strongly Keynesian opposition to Treasury austerity which involved facing down monetarist challenges from the party's right, as he mocked claims of a debt crisis).

But while the Tory governments of 1951-64 dealt very well with the political challenge of accomodating the Labour legacy, yet they could hardly be said to have been effective in coming up with new approaches to the great challenges of their time: to Britain's relative economic decline, or in redefining Britain's place in the world. (The transition from Empire to Commonwealth managed deftly, but Britain did not find a future role). In this, they were impeccably conservative governments of consolidation and managed decline, rather than of change whether from right, centre or left.

Indeed James Purnell told me in a Fabian Review interview in the Autumn of 2008 that Labour's critique of Cameron should be that his conservatism risked repeating the mistakes of the Butler era Tories.

Purnell believes that David Cameron owes less to Blairism than to Harold Macmillan's paternalistic Toryism:

"I think its that kind of conservatism which hasn't invented the status quo but realises it can't turn the clock back, so it has to defend the new status quo rather than the old one. David Cameron's problem is that he's a small-c conservative as well as a big C Conservative. If we look back in ten or twenty years, we won't be saying that what we needed to do was protect the status quo.

I think that's a recipe for decline. That was the sort of mistake that was made in the fifties and sixties - a failure to realise the way the world was changing, whether it was trade union law on our side or the attitude to the empire on their side.

Revealed: surprise new candidacy for Tory Treasurer

The Times front-page splash updates us all with a blast from the past - the return of Asia Nadir, the Tory donor who has been a fugitive from justice for 17 years having fled Britain when charged with fraud.

Asil Nadir will return to Britain voluntarily today to face multimillion-pound fraud charges over the collapse of his Polly Peck business empire after spending almost two decades beyond the reach of justice.

The newspaper says that the timing of Nadir's return has come as a major surprise.

The speed of events in the past three months and Mr Nadir’s decision to return has caused surprise. There was no legal pressure on him to come back and the SFO had consigned the case to history.

But Next Left can join the dots!

Perhaps Nadir spotted the decision of David Rowland to relinquish his appointment as Tory Treasurer before taking up the post. After all, a Tory source told the Mail that Rowland "makes Lord Ashcroft seem like a nun". So Nadir may understandably be under the impression that CCHQ see that as a central part of the job description, so that they could ensure that any future Treasurer will be considered to be a worthy successor in taking on the Ashcroft mantle.

Lord A has not gone away - and is reported to be angling to keep a major party role - but Nadir may well feel he could be the one major ex-donor who could be confident of trumping Lord A in the controversy stakes.

Nadir is believed to have given over £500,000 to Margaret Thatcher's Conservative Party, though the precise amount will never be known as this was in a period when there was no legal requirement for parties to reveal who major donors were, nor any bar on foreign donations or donations under any other source.

Conservative Minister Michael Mates resigned from the government in 1993 over his close association and alleged financial links with Asil Nadir, after it was revealed that Mates had lobbied successive Attorney-Generals over the Serious Fraud Office's handling of the Nadir case.

Nadir is thought unlikely to comment on the potential candidacy, and he will doubtless feel that he should deal with the complex fraud trial first. While other prominent Conservative donors and supporters threatened to leave the country, Nadir is one of the very few Tory supporters to boycott Britain throughout Labour's 13 year term in government, albeit for rather distinctive personal reasons. Perhaps he may feel that this show of partisan loyalty ought to help him to rebuild his political interests and connections.

Wednesday, 25 August 2010

Clegg wants the IFS to get an octopus too

Nick Clegg continues his audacious attempt to rewrite the "old politics" rules of economic analysis. He has again attacked the Institute for Fiscal Studies over its analysis showing that the Coalition's choices in the budget were distributionally regressive, on the grounds that the IFS graphs do not include future budget decisions which the government has not yet taken.

Clegg said today:

"It doesn’t cover what we’re going to do in future budgets to build on the steps that we included in this budget to make the tax system fairer"

So we renew our challenge to Nick Clegg, George Osborne and Danny Alexander: can the Treasury set out how they believe their progressive "future intentions" should be included in the IFS' distributional modelling?

The IFS analysis shows that the decisions which have been taken so far by this government are regresssive. When the government makes further decisions, they will include them in their analysis - with the next major IFS briefing taking place the day after the comprehensive spending review.

But it sounds as though Nick Clegg thinks they should place less faith in Robert Chote's number-crunchers, and employ a clairvoyant octopus to do their budget modelling too.

Coalition supporters, there IS an alternative to "IFS denial" over the regressive budget

There are two ways in which Coalition supporters can respond to the Institute for Fiscal Studies study, commissioned by the End Child Poverty campaign, which shows beyond doubt that the new measures introduced by George Osborne in the Coalition government's first budget hit the poor hardest.

As the IFS report puts it:

The Chancellor claimed in his Budget speech that the June 2010 Budget was a 'progressive Budget', backed up by distributional analysis in the Budget documentation that showed that tax and benefit changes due to come into effect between now and 2012-13 will hit the richest more than the poorest. IFS researchers have previously cast doubt on this claim, noting that the main measures which will lead to losses amongst better-off households were announced by the previous government, and that the reforms to be in place by 2014-15 are generally regressive. The distributional analysis in the Budget documents also excluded the effects of some cuts to housing benefit, Disability Living Allowance and tax credits that will tend to hit the bottom half of the income distribution more than the top half.

IFS research published today makes use of analysis published by the Department for Work and Pensions since the Budget, and attempts to reflect the impact of all the benefit cuts announced in the Budget. It shows that, once all of the benefit cuts are considered, the tax and benefit changes announced in the emergency Budget are clearly regressive as, on average, they hit the poorest households more than those in the upper-middle of the income distribution in cash, let alone percentage, terms.

Hence the IFS verdict is clear - and the graph offers a dramatic visualisation of it.

"Our analysis shows that the overall effect of the new reforms announced in the June 2010 Budget is regressive, whereas the tax and benefit reforms announced by the previous government for introduction between June 2010 and April 2014 are progressive", the report said. "Low-income households of working age lose the most from the June 2010 Budget reforms because of the cuts to welfare spending."

So how to respond?

The first option - the "IFS denial" route - is the choice of Coalition ministers. They could return again to that ingenious Nick Clegg defence of a regressive budget: why has that pesky think-tank not given the government any credit for measures it hasn't announced? Or the straighter denial of Mark Hoban on the Today programme, in sticking to a Red Book distributional chart which fell apart after 24 hours of scrutiny: "We are the first government to produce a detailed distribution analysis of our Budget measures. We went further than any previous government has gone in explaining how our measures would impact on people, why it's a progressive Budget and we stand by that robust analysis", he told the Today programme today, even as considerably more robust and independent analysis proves him wrong.

But there is an alternative to IFS denial. The second option is to acknowledge what the independent analysis shows. Both social liberals and progressive Conservatives who support the Coalition overall should join Labour voices in pointing that out. This is a clear credibiity test of independent-minded or evidence-based supporters of the Coalition. Politically this choice would strengthen the hand of those who want to increase pressure to ensure the aspiration to be progressive does not unravel within 24 hours after future budgets. (However, that reopens the central economic policy choice of the Coalition, since meeting the government's own fairness test mean rethinking the central choices on the speed and scale of the elimination of the structural deficit in one Parliament).

The central point is that it does matter that the Coalition has itself promised that distributional fairness will underpin everything it does - even as it fails its own test. Their budget would have been even more regressive had the government not mitigated the impact of its other regressive choices with £2 billion put into the child tax credit.

But this wasn't enough, as the IFS analysis for the End Child Poverty Coalition again shows. So the fairness pledge makes a difference - but only at the margin. A central question should now be what policy choices should the government make about deficit reduction if it took its own fairness rhetoric seriously?

That should strengthen the hand of Coalition supporters who did not intend the fairness pledge to be mere window dressing for a smallest state possible ideological drive under the cover of austerity. In particular, Simon Hughes' challenge to the Coalition's housing benefits change ought to be strengthened.

But the IFS verdict is before analysis of the distributional impact of the bulk of the forthcoming spending cuts is included. The government's course in October's spending review seems clearly set. The outcome will be considerably more regressive even than the emergency budget. Here, it might be better to drop the "progressive" claim than to see that shredded at once. The LibDems in particular may want to avoid being sent out to front-up a claim that the spending review is distributionally progressive if the government have not made that IFS-proof.

Hoban also effectively acknowledged on the Today programme that the government had not undertaken an equality impact assessment ahead of the budget, by refusing to respond several times to the question. Equalities Minister Theresa May had written to remind George Osborne and other colleagues ahead of the emergency budget that this was a legal requirement. The Fawcett Society has taken legal action, after evidence showed a disproportionate impact on women, to discover whether due process was followed in terms of the government's legal obligations to ensure equality impacts are considered.

Friday, 20 August 2010

Cameron to kiss and make up with Ashcroft?

It is never very wise to be an enemy of Michael Ashcroft in the Conservative Party.

That could well be a lesson of the resignation - before taking up his post - of the man appointed as Ashcroft's successor as Tory Treasurer, David Rowland. And it is a thought which may still be on the mind of party leader David Cameron too.

And so a week of political controversy over whether the new Tory Treasurer is a reputable choice for the high profile role, and of heated debate about Philip Green's credentials for advising on austerity and deficits appears to have cleared the way for a possible return to the political frontline for Michael Ashcroft himself, according to the Guardian's front-page report.

Ashcroft himself had promised in the Spring to resign as deputy chairman - to spend more time with his business interests (and perhaps his blogs too, having spent £1.3 million to acquire majority stakes in ConservativeHome and PoliticsHome).

The Guardian reveals that he has not carried out his promise to resign - and is instead in talks with David Cameron about a future role.

One ministerial aide said: "This certainly leaves the door open for him. It really depends on whether Cameron feels that Ashcroft can be trusted after the tax debacle [over his undeclared 'non-domciled' status]," he said.

The source said he believed Ashcroft had promised to stand down because of a rift with Cameron's aides. "If Michael is taken back into the fold, he could come back in a more powerful position because they [the aides] have tried and failed to get rid of him," he said.

Not carrying out his public promises is not a new thing for not-Lord Ashcroft. It is what rather got the Conservative party into a rather controversial mess over his tax status. Hence the Guardian's suggestion that there may be a small issue of trust to resolve.

Still, Dave may find some advantages in keeping Ashcroft inside the tent too. No doubt the motivation would be to draw on the peer's incisive political insights - though Next Left would argue that Cameron would be rather selfish to keep these all to himself.

After all, with too much spare time on his hands, Michael Ashcroft does like to pen a score-settling tome or two (you can read Dirty Politics, Dirty Times account of his battle with The Times on his own website), so Westminster has been eagerly anticipating Ashcroft's account of why Cameron's Conservatives failed to win a majority at the General Election.

If Dave does find Lord A a new role, it would be a sad loss to political literature as the peer may feel it inappropriate to produce that revelatory insiders' account.

The Guardian report refers to "well-sourced speculation that he [Ashcroft] was instrumental in forcing the embarrassing resignation of the property tycoon David Rowland as Tory party treasurer on Thursday, weeks before he could even take up the post".

Ashcroft is, rather deliciously, widely reported to have warned his party of the reputational damage of appointing Rowland as his successor as Tory Treasurer.

Let us be absolutely clear that we have no evidence at all that Ashcroft was any more directly involved in fanning the spate of high-profile press reports about Rowland's record and reputation than offering that helpful warning. ('David Rowland makes Lord Ashcroft seem like a nun', one Tory source had earlier told the Daily Mail).

I would think it is perfectly plausible that Ashcroft happens to be a very happy and coincidental beneficiary of this sad outcome for Mr Rowland, which would appear to have reopened the happy possibility of Michael Ashcroft being able to continue to serve his party leader in a prominent role.

Thursday, 19 August 2010

Tax avoidance to get easier before it gets harder

In May, the Coalition Agreement said:

The parties agree that tackling tax avoidance is essential for the new government, and that all efforts will be made to do so, including detailed development of Liberal Democrat proposals.


Last week, Philip Green was appointed to advise the Coalition on efficency measures, despite his own controversial record on tax.

Business Secretary Vince Cable - a staunch critic of tax avoidance - was not consulted about the appointment and refused to endorse it. Cable told City AM: "There's a lot I could say on this, but I'd better miss this one out ...I'm tempted to comment, but I think I'd better not".

Green was not pleased, phoning the newspaper to call the reporter concerned a "fucking tosser" for inquiring about his tax status.


On Wednesday, as his own MPs turned up the heat over Green's appointment, deputy Prime Minister Nick Clegg said that plans to crackdown on tax avoidance remained at the front of his mind, and that the government was looking into what to do about it:

We are looking at the case for an anti-avoidance rule to ensure that wealthy individuals pay their fair share of tax.”


So it may (perhaps) get harder to avoid tax under the Coalition government some day.

Still, it now looks rather as though tax avoidance may get easier first, as Friday's Financial Times front-page reports a softer approach from Her Majesty's Customs and Revenue towards tax avoidance by major businesses.

The headline: Tax office to soften stance on avoidance

The FT reports that the HMRC permanent secretary for taxation believes the Revenue can be too "tough" in its willingness to pursue legal action under its 2007 litigation strategy, and that inspectors will in future be asked to reach agreements instead where conflicting advice means different amounts could plausibly be thought payable.

The FT report suggests the shift in emphasis is intended to "chime" with the Coalition's pro-business approach.

a greater willingness to settle cases would be welcomed by businesses critical of the Revenue's uncompromising approach to litigation and also chime with the Coalition's "open for business" message.

Curiouser and curiouser.

Will ex-tax exile's withdrawal as Tory Treasurer increase pressure on Philip Green?

ConservativeHome reports the CCHQ announcement that controversial former tax exile David Rowland will not now take up the post of Tory party Treasurer.

Rowland now intends to spend more time with his business interests but the right-of-centre blog gives credit where it is due to a highly energetic Daily Mail campaign in derailing Rowland's hopes of succeeding Michael Ashcroft, the Lord of the blogosphere, in the formal role as Tory treasurer and perhaps as chief source of public controversy over the party's tax ethics too.

Tim Montgomerie blogs that:

Big questions need to be asked about CCHQ failing to carry out due diligence on this appointment.

Though it may not have taken so much due diligence. At the least, Rowland certainly had enemies in high places, as the enthusiasm of Tory sources for gleefully encouraging the Daily Mail's scrutiny demonstrated.

My favourite helpful insider's quote in the Mail's stories:

'David Rowland makes Lord Ashcroft seem like a nun,' said one senior Tory source last night.

But might what is sauce for the Tory goose also apply to the Coalition gander? For the announcement comes amidst much upset among LibDem MPs at the appointment of Sir Phillip Green to advise on deficit reduction efficiencies, for reasons captured succinctly in a carefully legalled Guardian editorial at the weekend.

Sir Philip is also – we must express this with care – a man who is careful to arrange his own finances so as not to needlessly benefit the common weal. In 2005, for example, the man whom Robert Peston dubs both a lovable rogue and the king of jackpot capitalism paid himself a tax-free dividend of £1.2bn from the Arcadia retailing business. Technically the dividend went to his Monaco-resident wife, in order to avoid UK Treasury attention, a tax saving to Sir Philip that has been estimated at £300m. That one dividend payment, as Mr Peston has written, was equivalent to what 54,000 people on average earnings would earn in a year, would build around 10 secondary schools capable of educating some 13,000 young people, or, if paid in an unlikely column of pound coins, would tower 2,350 miles about the Earth's surface.

There was a Guardian-Mail consensus on this question, with the Mail explicitly linking Cameron's relationships with both Green and Rowland in its own editorial.

The Guardian editorial also found much to praise in Vince Cable's earlier comments about Green's election interventions in the Tory cause. Cable said:

"I have no time for billionaire tax dodgers who step off the plane from their tax havens into the country where they make their money and have the effrontery to tell us how to vote and how to run our tax policies. If some of them came onshore and paid their taxes it would make a useful dent in the budget deficit.

Business Secretary Cable was not consulted about Green's appointment to advise the Coalition, about which he is unsurprisingly far from gruntled.

The Staggers blog quotes LibDem Treasury spokesman Lord Oakeshott making what all will agree is surely an impeccable point for any government concerned with deficit reduction:

Lord Oakeshott, the Lib Dem Treasury spokesman, has encouraged the rebels, pointedly noting that: "Governments, like businesses, need to maximise their revenues. Tax cheats and benefits cheats both cost taxpayers dear."

If Green is planning to step up his civic engagement, perhaps he might now want to apply to be Michael Ashcroft's successor as Tory Treasurer too.

So what's the best way for Dave to break his election pledges?

It is being widely reported that a major argument between Iain Duncan Smith and George Osborne brought IDS to the brink of resignation over the funding of welfare reform, with the Treasury sticking staunchly to its traditional refusal to consider that the prospect of longer-term savings can mitigate up-front costs. (Who'd have thunk it? as Hopi Sen, who has been covering the IDS wars for some time might have put it).

The Cameron-brokered "deal" is that IDS can have the funds if he finds £3 billion from other benefit cuts - indeed Michael White reports that Osborne insists IDS must cut £5 for every £1 he wants to reinvest in the system - which sounds much more like a clear Treasury victory than a compromise. So universal benefits are back in the firing line, with those which David Cameron promised would be sacrosanct back under review.

So what about those tricky general election promises? Here are five ways to deal with the political headache.

1. Keep the pledges made at the election.

This "honesty option" would mean being constrained during this Parliament by the promises made in the campaign. You could announce plans to cut the benefits you pledged to protect - but could not introduce the cuts until the budget after the next General Election.

David Cameron's clear public commitments made in the election campaign were in the George Bush "Read my lips" category of clarity, with Cameron appearing to give himself no room at all.

Indeed, as Nick Robinson pointed out on May 5th, Cameron used the very same phrase as Bush on the eve of the General Election when promising to protect pensioner's benefits.

"You can read my lips. That is a promise from my heart."

"We have made a very clear commitment on that", said Cameron in the campaign when asked whether he would consider cutting the winter fuel payment. Having angrily accused his political opponents of scaremongering and "lies", how could he adopt the policy they argued he would consider?

2. Change the circumstances have changed since you made the pledge

The facts of the deficit were just as clear in April when these pledges were made - and then repeated in the Coalition agreement. That IDS' welfare reforms required up-front funding was also very clear, though his Centre for Social Justice was reticent when it came to costing the proposals ahead

The Coalition has already played its "risk of Greek default card" over and over again, particularly to justify its u-turn on VAT - where George Osborne told voters this would not be necessary, and the LibDems campaigned against the Tories over it. Its repeated use to justify serial pledge-breaking would be risible.

Politically, it will also give Cameron's opponents a free hand - "which pledges will they break this time" - at the next election, given that no Tory manifesto commitment could be considered solid. This ought to be a significant theme for media interviewers: 'if you broke your pledges last time, why should anybody believe you would keep these ones?'

3. Blame the Coalition - and say the LibDems pushed the Tories to the right

Coalitions can be a convenient pledge-ditching mechanism. ("Would you like this as well; we've been trying to get rid of it for some time" was Simon Hughes' paraphrase of the Tory negotiating team's approach to some of their own policies in the Nick Robinson documentary).

That is an accurate description of what happened to the Child Trust Fund, where the Tories would have restricted it but the LibDems won the argument for abolition.

On the Winter Fuel Payment, the LibDems wanted to raise the qualifying age to 65 (while promising to fund an extension for disabled pensioners with the savings). So the George Osborne could again adopt LibDem policy, saving around £600 million, while ditching his own leader's pledge.

But the two parties can not blame the need for Coalition compromise when both parties need to u-turn at once. And while Nick Clegg and Vince Cable have serially flipped and flopped over means-testing child benefit or maintaining their party's policy to keep it universal, both Clegg's LibDems and the Conservatives were very clear in their highest profile election interviews that they were not questioning the universality of child benefit.

Political observers may notice an "austerity asymetry" over which party gets to compromise. Where the Tory policy is to the right - as in the central, strategic choice of the Coalition for faster and deeper spending cuts, or over raising VAT - the LibDems have had to give way. But while the LibDems have been unable to prevail with their mansion tax, and had to compromise on equalising capital gains rates even after securing a Coalition commitment, they have found the Conservatives very happy to compromise where LibDem policy is for deeper cuts than the Tory manifesto.

4. Move the goalposts and claim to have kept the pledge

This can be legitimate or dodgy. George Osborne's decision to freeze child benefit for three years maintained the pledge not to means-test it, and was a better policy choice

But this can also become a clear exercise in political sophistry. Geoffrey Howe's VAT dodge in 1979 was a clear and recurring case.

Take this suggestion from the always well informed Paul Goodman about a possible swerve around Cameron's free bus pass pledge.

The emotional problem is that pensioners in particular believe that they've paid into the system for what they get back. That our welfare system doesn't work this way scarcely shakes their conviction – itself understandable – that their sacrifices deserve recognition. It was with this sensibility in mind that David Cameron pledged to keep free bus passes during the election. That promise wouldn't be inconsistent with raising the age at which one qualifies for a pass to as high as 75. If the deficit's to be eliminated, such decisions will have to be made.

The pledge "to keep free bus passes" has clearly been broken for those aged between 65 and 75. Under Goodman's logic, couldn't one raise the qualification age to 100 and claim to have kept the free bus pass?

Look out for many similar dodges - along with vehement claims the promises have not been broken. So how to tell the difference? Surely it is whether the reasonable, non-aligned voter will believe about the honesty of the claims. Will opinion polls show a majority believe the pledge has been kept or broken?

Attempts at dodges which fail that test may simply compound the broken promise with a further reputation for slipperiness and evasion. The classic case was the ill-fated Bush administration attempt to claim that agreeing "tax revenue increases" in the budget were not the same as "new taxes"; this only deepened the effect of the "Read my lips: I lied" headlines. If the pledge is being broken, it may be better to admit it.

5. Call a General Election to secure a mandate for your new policy

Given the centrality of the theory of the manifesto and the mandate in British politics, the British political convention is that a government wishing to reverse a significant manifesto commitment should seek a new electoral mandate.

Stanley Baldwin called a new election in 1923, just 13 months after the previous one had given the Tories a majority of 70, because he wanted to break the Tory manifesto commitment on free trade, to introduce tariff reform.

Baldwin did not get the mandate he sought in 1923, and had to give way to a minority Labour government. However, Baldwin's reputation for honesty and straight-dealing helped to make him the dominant figure in inter-war politics.

I think we can be quite sure that this is the one option which David Cameron will not be considering.


So which will it be?