Could it have something to do with George Bush’s timely $150 billion bi-partisan growth stimulus package in February? Both the Democrats and Republicans are running on tax cutting platforms. We have bi-partisan tax and spend sloth policies. Guido understands the politics of it, the economics of it are what disappoints. The Finkelstein “you can’t win promising tax cuts” approach was always timid, it is now the wrong strategy at the wrong time. The voters have moved on, they recognise the economy needs tax cuts to grow.
Relative poverty has increased only because we have generally got richer. Absolute poverty has not increased. The problem for those who put equality before liberty is that they are too embarrassed to say that whilst we have all in aggregate got richer, some have got even richer, even faster. So What? Essentially if you believe in the conceptual value of the idea of “relative poverty” you believe that if Warren Buffet moved to London poverty would increase. Britons would after all now be relatively poorer compared to the average. If George when he becomes Chancellor succeeds in driving rich, non-domiciles away from British shores he will be able to claim he has reduced relative poverty. Not one single poor person’s absolute circumstances will have changed (apart perhaps from a few more unemployed domestic staff ). Splendid, Polly Toynbee will be pleased.
There was a moment of comedy when an extremely bedraggled looking Derek Draper piped up with a question from the back. Osborne congratulated him “on his new role as psychological consultant to the PM. Good luck with that.” Osborne was also quizzed about the ideological incoherency of all this cross-party triangulation on poverty and social justice. He said something wonkish about there being a continuum of political thinking from himself through Alan Milburn to Brown with the same long term goal.
Osborne took the opportunity to praise Alan Milburn. Mischievously saying, to much laughter, that he also shared with Milburn “his short term goals”…
Apparently Alastair Campbell is frantically texting round the great and the good to try and drum up numbers for tomorrow night’s Labour fundraiser at Wembley. Bit late now… One person has apparently been phoned 8 times asked to buy a c. £15,000 table. Still saying no.
In contrast, the room last night for George Osborne’s speech was full, not just with young thrusting Cameroon boys and girls, but with an extraordinaryly large number of civil servant high fliers, no doubt eager to know what the new masters will demand of them. In the words of Bob Dylan:
Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.
UPDATE : Sam also notes the guest list for Osborne’s speech.
It consistently tops the Reaganite Heritage Foundation’s Index of Economic Freedom. Judging by reports Vince Cable would love it here – at an off-the-record* post-budget briefing he gave to clients of pollsters ComRes, he lauded Nigel Lawson’s tax reforms and Ronald Reagan’s rolling back of big government. Vince was happily quoting Reagan’s dictum that the most chilling thing you can be told is “We’re from the government and we are here to help you.”
As George Osborne promises to stick to Gordon Brown’s tax and over-spend policies, maybe the most fertile political ground for the LibDems to stake out is to be liberal on economics rather than social democrat. The centre-right German Free Democrats and the Irish Progressive Democrats have been in government more often than not since the late 80s, despite being small liberal parties. Something to think about as we contemplate a hung parliament…
They have also introduced Green tax cuts! Financial Secretary John Tsang also announced last month tax incentives for “Greener” vehicles and a concessionary profits tax reduction for capital expenditure on “Greener” machinery and equipment. Corporate taxes were also reduced this year 1% to 16.5%. Pay attention Osborne at the back.
Perhaps he has good reason to explain Tory economic policy out of sight, being too timid to put the case for tax relief for the struggling middle classes and reducing state over-spending. The Tories basically accept that because of the dire fiscal position Chancellor Osborne will stick with Gordon Brown’s tax and spending plans. As we tip towards worldwide recession and a global financial crisis the Tories are advocating “tax hikes on alcopops!” and the LibDems “tax cuts for smoothies!” Pathetically unambitious.
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.
In the U.K. the equivalent amount would be a £13 billion, a quarter of what the government has used to prop up one insolvent bank to protect a mere 6,000 jobs in Labour’s North East heartlands.
A growth package should include two simple elements of action:
Housing market – stamp duty should be abolished for two years to help resuscitate the property market. House builder shares have slumped as demand expectations have plummeted, this is a relatively cheap way to boost sentiment and help young families in particular.
£500 per taxpayer flat relief – no matter what your level of taxation. This would disproportionately favour those taxpayers on lower incomes, boosting high street spending at a difficult time for retailers. It is simple and easy to implement, would be populist and would let individuals, rather than Whitehall, decide their own spending priorities. The receipt of a cheque for £500 by millions of taxpayers would boost economic growth from the bottom up in a healthy, decentralised way.
Greenspan says today the U.S. is teetering on the edge of recession, Mervyn King has said the same of the U.K., the cost of not acting now will be higher later…
UPDATE: Just read Osborne’s speech and am reminded that it is is already Tory policy to lift the stamp duty threshold for first time buyers to £250,000, taking nine out of ten out of the tax altogether.
So won’t the Tory policy drive more globally mobile wealth creators out of London? Isn’t Osborne’s policy worse for the City and more punitive?
Guido suspects that Spencer doesn’t think Osborne’s own plans for non-doms are so brilliant either, he implausibly says the Tory version of the policy was “broadly welcomed” when he took City soundings. Broadly welcomed by whom?
Phil Hammond is defending the plans rather meekly, whereas Michael Fallon, a Tory member of the Treasury Select Committee, tells the FT bluntly “Chasing non-doms out of London is a huge mistake … Why do we want to lose all that business to Luxembourg or Dublin or Geneva?”
The US Embassy has made their view known and is lobbying hard to persuade the Treasury to change the wording of its legislation to ensure the charge falls within the scope of the double taxation treaty. The Chancellor’s plans will actually cost the Treasury money, according to a study by the Society of Trust and Estate Practitioners: the £30,000 annual levy will cost £2.1 billion a year as many residents will leave the country. The 116,000 non-doms are mostly not tycoons but bank, hedge fund and private equity staff who bring investment and prosperity. The problem for the Tories with having their policy stolen by Gordon is that they can’t attack his even worse version without highlighting the problems with their own. The Treasury and Osborne should realise that the elasticity in the Laffer Curve applies even more to foreigners.
If Dave Were President He’d Have Resigned By Now | Alex Wickham
Loongate: What Happened in the Blue Boar Bar | Simon Walters
Feldman’s Tennis Days With Dave | Telegraph
How Geoffrey Howe Has Lost the Debate | Robin Shepherd
Dave Has Lost Control on Europe | Geoffrey Howe
Lib Dems Should Support EU Referendum | LibDemVoice
Feldman’s Denial | Fraser Nelson
Obama’s Presidency is Imploding | Nile Gardiner
Miliband Could Be a Great PM | Thomas Pascoe
What Are You Really Paying in Income Tax? | TPA
Galloway’s Mad Month | The Commentator
Tom Harris bemoans the public’s attitude to politicians…
“Mr Oborne echoes the lazy, anti-politics whine we hear so often these days, all based on the absurd notion that politicians were once loved and only fell out of public favour during the expenses scandal. He should take a walk to the Strangers’ Bar. But not to sup with the patrons he seems to despise so much, dearie me, no; he should instead look at the paintings on the corridor outside the bar, which depict the devastating fire which consumed most of the Palace in 1834. And he should reflect on the fact that on that dramatic night, as the Commons went up in flames, a crowd gathered on the South Bank to clap and cheer.”
The thing that Dave needs to work out is which group is more likely to vote Conservative. Mad swivel-eyed loons or mad homosexuals wishing to get married.