Guido’s co-conspirators were impressed in our live poll during the exchange – and they have been pretty disparaging of Osborne over the last few months.
Some of the co-conspirators comments give a flavour:
Brown cuts taxes… Osborne doesn’t find room for serious tax cuts… Infighting breaks out inside Tory Party… Lots of interest rate cuts… Caroline Spelman forced to resign over nannygate… Barack meets Brown… Then narrow Labour election win early next year…
Feasible? Gordon is clearly going to throw some bribes the electorate’s way next year. In that context the Osborne-Letwin “no punk tax cuts” hair-shirt is political masochism.
If Labour does a Bush-style tax rebate, and Guido will not be in the least surprised if Gordon performs the mother of all U-turns, Osborne could talk about budget deficits, Gilt-yields and sound money until he is blue in the face. The electorate will see tax rebate cheques and the shadow chancellor saying they shouldn’t have ‘em…
The Tories need to follow the LibDem lead (not a phrase often seen). Point to the £20 billion in savings identified. £20 billion is 3% of government expenditure, expenditure which has nearly doubled under New Labour. Dropping ID cards alone could save nearly half that amount. It costs some £6 billion to raise thresholds £1,000 for everbody, it will defuse the Tory Tax Bomb blowing up in their face.
Back in February George Bush pushed through a tax cut based growth package with bi-partisan support. Reported on this blog thus:
Guido looks at the economy and sees real trouble ahead, it needs decisive action, not hand-wringing words from politicians about tax simplification. The property market is seized up and consumer confidence is draining away. A massive pro-growth tax package is required now, the earlier the better. George Bush is pushing a bi-partisan growth package targeting $150 billion in tax relief at individuals and businesses to kick-start private sector spending. That is a stimulus equal to 1% of U.S. GDP.
Speaking at an interfaith conference at the UN General Assembly in New York this morning, Gordon Brown has just called for global tax cuts, “a temporary and affordable fiscal stimulus” was needed to tackle the downturn he said. Gordon told journalists that he intends to ask leaders at the G20 summit to produce fiscal stimulus packages of tax cuts and spending increases to “stimulate growth in our economies”.
Perhaps Gordon didn’t notice that George Bush actually got his temporary stimulus in at the beginning of the year, whilst our far-sighted financial genius has yet to even announce his growth package, which is probably why US GDP growth last quarter was not quite as bad as UK GDP growth (-0.5). How is he going to blame that on America?
Gordon also warned against protectionism, a strategy that has proved to be “the road to economic ruin in the past”. Obama ran on a protectionist ticket.
The Tories are calling it a “tax con”, because debt may rise and taxes may have to go up later, of course if we don’t cut taxes and growth is even worse, tax revenues may well still fall and government debt will rise anyway. Under the Tory plan however the economy will have been additionally weakened by the heavier tax burden. This used to be orthodox Conservative economic analysis, it seems the last supporters of Brownite fiscal rules are in the Tory treasury team…
- To present himself as the respected elder statesman of international finance – never mind Sarko’s pretensions.
- To frame Britain’s problems in an international context. Sterling’s collapse is to be spun as nothing to do with Brown’s bubble.
- To frame any domestic tax cut U-turn as a co-ordinated international action. This will give him cover for abandoning everything he has told us is important for all his front-bench political life.
Why Gordon thinks it imperative to be portrayed as some kind of respected international finance genius eludes Guido. It won’t save anyone’s job, not even his own.
There is obviously an international angle to the credit crunch, but there are also domestic disasters which happened on his watch.. Sterling’s collapse is not random. Who for instance decided to exclude house prices from the Bank of England’s inflation target which meant we had a ridiculously loose monetary policy?
If the G20 endorses a policy of tax cuts - if – Gordon will have political covering fire to return to Westminster to cut taxes and bugger the deficit. The Pre-Budget Report on Monday week will be his chance to unveil an epic tax-cutting stimulus package U-turn. The Osborne-Letwin* designed response as it stands will be “we shouldn’t be here, you shouldn’t do that”. Preaching fiscal sobriety to the fiscally hungover after the party has finished and the house is already wrecked.
The Tories have boxed themselves into holding to a Brown orthodoxy on tax cuts to which he himself no longer adheres. Time to think outside of the box…
*Letwin’s aversion to tax cuts might have something to do with the 2001 election campaign fiasco when as a junior finance spokesman, he was forced into hiding after disclosing that the Tories had longer-term plans for £20 billion of tax cuts.
Danny Finklestein is wrong, and cutting taxes is right, and here are some reasons why: Danny thinks that offering people on low and middle incomes a tax cut is a ‘con’- a short term promise intended to fool voters…. Growth is what we need now. Funded tax cuts help give us that. Without growth there’s no earthly way we’ll be able to balance the books over the economic cycle. Far from being irresponsible, as Danny alleges, tax cuts at a time of recession is the responsible thing to do… Why does Danny think it’s impossible after a decade of spiralling Whitehall spending to find 3% of that money that could be put to a better use? That’s what Gordon Brown says – the Government knows best, and the rest of us are not allowed to question the way he spends our money…. this isn’t about the media. It is about being clear and bold on what is needed at a time of growing economic distress. I may have failed to persuade Danny, but I suspect time will prove me right.
Exactly. Growth is the only way out of recession. Stimulus has to be more than just about monetary policy. Danny’s focus on the politics of a tax cut has blinded him to the economic imperative.
Obama, another novice, ran promising tax cuts for 95% of Americans. The “novice” promising tax cuts won.
Times have changed, voters want the pendulum to swing back from spending towards tax cuts. Rumours are circulating in the Westminster Village that Gordon and Alastair are preparing to announce tax cuts. Which will, even if they are only rhetorical tax cuts, in a stroke make Dave and George look ridiculous as both Labour and the LibDems promise tax cuts and the Tories are left high and dry stranded on the high tax centre ground with only Danny Finkelstein for company. The old strategy may have been strategically right during the decontamination phase of Cameron’s leadership, it is so wrong for now. The recent electoral lessons from the rest of the English speaking world show that to “seal the deal” people now need a positive reason to vote for the Tories.
See also: NZ Nats Tax Calculator.
*Unique Selling Point
Like a First World War veteran of the trenches, Fink is so traumatised by the destruction meted out by New Labour to the Hague-led Conservatives in 2001 that he suffers a policy version of post-traumatic stress syndrome. As soon as he hears the phrase “tax cut” he has flashbacks to New Labour’s old line of attack on “cutting public services”. The conditions are very different today, voters attitudes have changed, they know that tax and spend policies can’t be afforded now. Voters realise, as Clegg rightly says, that the public sector is bloated after a decade of big government policies. Voters want, poll after poll confirms, a tax relief agenda – tax cutting was once the Tory Unique Selling Point. The LibDems are the weather vanes of politics, the Tories should not allow them to take the wind out of their sails.
“I think I did make a mistake. In politics it is not just what you say and what you do, but how things look. This did not look very good and I regret that…”
He sounds like he is willing to take his punishment.
Balls’ Bet to Beat Osborne | Mary Riddell
Plain Packs U-Turn Disregards Evidence | Trending Central
Where Were Co-ops Directors? | Jesse Norman
Osborne is a Failure | Telegraph
Balls Works Sky News Party | Speccie
I’m Depressed | John Woodcock MP
Labour’s Error Filled Energy Market Analysis | ManicBeancounter
Cameron’s £45 Million Pig Semen Deal | Buzzfeed
The Truth About Richard Peppiatt | Dennis Rice
We’re All Patriots Now | Quentin Letts
Osborne Hints at Marriage Tax Breaks | Times
Nigella on her coke use:
“I don’t have a drug problem, I have a life problem.”