Guido really likes this video from the wonks at the Centre for Policy Studies, it animates a very clear message, around the world lower taxes lead to higher growth rates.
The data is pretty clearly presented, are you watching Mr Osborne?
Tom Clougherty is leaving his post as Executive Director of the Adam Smith Institute at the end of April. He will be taking up a new post as Managing Editor of the libertarian Reason Foundation think-tank in Washington DC.
Dr Madsen Pirie, president of the ASI tells Guido, “We are very sorry to be losing Tom because of the incredible work he did to build up the ASI, but this is a wonderful opportunity for him and we wish him well in his new venture.” There are a lot of ladies in Westminster who will miss the charmer’s smile too..
We are on the eve of a round of musical chairs in Westminster’s wonk-land – expect announcements soon. Downing Street is looking likely to have a big re-organisation of personnel on the policy unit front – Steve Hilton is off to California and Clegg’s strategy wonk Richard Reeves is also leaving for America. They are not the only ones said to be leaving Downing Street. Foreceful political direction of the civil service is much needed, the permanent bureaucracy has become far too dominant in Downing Street…
The link between think-tank research and its “sponsors” has always been opaque. A cynical man would say companies bung a load of cash to shape supposedly independent research, but wonks wil always stress that their final recommendations are free from the influence of their paymasters. Not only did PA Consulting “kindly support” the New Local Government Network’s “Antcipating the Future Citizen Report” but the NLGN even let PA Consulting’s ‘Local Government Lead’, Graeme Walker, co-author the piece. The NLGN deny that any money changed hands for the research and stressed they have contractual commitments to independence. The “kind support” was apparently staffing, but it does look a little odd…
Westminster tube commuters are currently greeted with advertisements for “Think Tank: The Story of the Adam Smith Institute“. The book is the story of how a handful of motivated individuals, without any backing or resources except their own conviction, managed to create a think-tank which played a key role in the transformation of the country. One anecdote that is missing from the book is the tale of an intern once employed in the mid-80s, before the interweb, to stuff envelopes. After a day of stuffing envelopes the book’s author Madsen Pirie decided to give the teenage intern a lesson in practical economics. “Here at the ASI kiddo we believe in applying free-market principles, so why don’t you name a fair price for your labour, if it is too high we won’t hire you again and if it is too low, well that will be your loss…”
The intern hesitated and thought for a moment before responding “£100 please”. Madsen was a bit taken aback, “£100 for an afternoon’s envelope stuffing?” Nevertheless he wrote the cheque paying way over the market price daily rate for an intern in the 80s. That intern never worked at the Adam Smith Institute again. Guido really didn’t like stuffing envelopes…
Leaving aside IPPR’s massive shift to the left, that has culminated in quotes for Seamus Milne’s knocking copy, Guido had to chuckle at their latest email:
IPPR event series:
Where next for Europe?
The ‘democratic deficit’ and reform of the EU’s machinery
Tuesday 21st February 2012
12:30 – 14:00
IPPR Offices, 14 Buckingham Street, London WC2N 6DF
Nothing to do with the fact that IPPR stays afloat thanks to an €800,000 bung from the EU…
Today sees the evil Fabians holding their “The Economic Alternative” conference and Ed Balls is the keynote speaker. To raise the curtain he has an interview with Mary Riddell in the conference edition of the Fabian Review. Print deadlines however mean the interview was given some weeks ago when the party line repeated ad nauseuam was different to what it is this morning. In the interview Balls says of the Tory deficit reduction strategy “Nobody in the Labour Party should get into the idea that it has to be this way”.
What a difference to his Guardian interview this morning in which he claims “My starting point is, I am afraid, we are going to have keep all these cuts.”
Same line of questioning, very different answers. The reality of public scepticism regarding Labour’s credibility on the economy and pressure from Shadow Cabinet realists combined with the weakness of Ed Miliband’s authority has forced Ed Balls to switch to George Osborne’s ‘Plan A’. There is no alternative.
Guido had better things to do than attend Chuka Umunna’s speech yesterday at an event organised by the re-energised IPPR, but that’s not to say he didn’t have eyes and ears in the room. There was a panel discussion afterwards featuring, among others, Lord Myners and Deborah Hargreaves, the Chairman of the self-appointed High Pay Commission. The event was trailed with a suitably hand-wringing leader in the Guardian which, once again, left them open to accusations of rank hypocrisy. Editor Alan Rusbridger’s package was up 7% to £605,000 last year and when a hack in the audience asked the High Pay Commission panel if this reward for failure was acceptable, with his characteristic charm, Myners instead chose to play the man rather than the ball, describing the hack that had asked the question as “embittered”. Deborah Hargreaves was more forthright:
“The answer is no and maybe that is why they need an employee representative on the remuneration committee.”
Which was rather honest considering Guardian editor Alan Rusbridger was until recently her boss, when she was his business editor and she still contributes occasional articles. Sadly nobody mentioned City tycoon and hedge fund boss Paul Myners’ multi-million pound modern art collection…
After leaving Downing Street a few months ago, in less than clear circumstances, policy-chief James O’Shaughnessy popped back onto the radar in this morning’s Times. Not only has he penned a passionate article about Gove’s education reforms, but he’s put his money where his mouth is:
“This is why I left Downing Street to start a new social business that aims to operate schools and to provide educational services based on a blend of traditional values and positive psychology: because after ten years as a policy wonk I believe that lasting change will only happen from the bottom up.”
However his blue sky days aren’t quite over yet. Having left Policy Exchange in 2007 to go to work for Cameron, Guido hears on the wonk-vine that he is on his way back to his ideological home. Policy Exchange are heading into their tenth year and are said to be lining up some big projects to celebrate. Guido understands that O’Shaughnessy will be coming back part-time to work, surprisingly enough, on the education side of things. You read it here first…
The Labour left and the Guardian are getting very worked up about the perfectly reasonable housing benefit cap proposal
“for example Louise Ryan, 41, who lives with her husband and two children in Islington, north London, will see the £438-a-week benefit, which covers the rent, reduced to £340 under the changes to housing benefit introduced this month.”
To just afford that £438 rent those of us who work would have to earn as below:
That rent alone is higher than median wages. It takes the taxes of four people on median wages to cover Louise’s rent. Add on her other benefits and Louise has a household income equivalent to a working family with a household income of over £40,000. Where is the social justice in paying welfare benefits to people that are higher than the majority of the tax paying working people’s take home pay? This simply cannot continue.
To be fair the Labour shadow work and pensions secretary Liam Byrne recognises this, so the Labour left have begun excoriating him as “a reactionary”. The ubiquitous Owen Jones, author of “Chavs“, is representative of the Labour left. He thinks it is “progressive” to pay out to welfare recipients more in benefits than the majority of working people earn:
The Guardian reckons thousand of benefit recipients will have to move out of Kensington and Chelsea. Doesn’t your heart bleed? Guido really hopes that Owen Jones succeeds in getting the Labour Party to go into the election with a manifesto commitment to reverse the cap. It will be a huge electoral liability on the doorstep…
For the second time in a month Peter Mandelson’s think-tank, Policy Network, has launched a policy salvo against the direction the Labour Party is taking under Miliband. Mandelson privately is contemptuous of young Ed, these high-minded wonkish policy exhortations are the respectable manifestation of that contempt.
Last month his think-tank published “In the Black Labour: Why fiscal conservatism and social justice go hand-in-hand” is a discussion paper in which the authors; Graeme Cooke, Adam Lent, Anthony Painter and Hopi Sen, called for Labour to embrace fiscal conservatism. The paper was an explicit rebuttal of the kamikaze economics of Ed Balls endorsed by Ed Miliband, which poll after poll shows is not seen as credible by the public. Despite the state of the economy Cameron and Osborne are supported by the British public to a far greater extend than Miliband and Balls.
In exactly the same vein shadow pensions minister Gregg McClymont MP and Oxford historian Ben Jackson have written a paper for the think-tank warning that austerity governments often defeat opponents and that historically the Tories have achieved this on multiple occasions. They also urge Miliband to abandon his “predators and producers” rhetoric and “put forward a more convincing strategy for private sector growth than the Conservatives”. McClymont and Jackson further warn that Ed Miliband must avoid the “tax and spend” trap and “a simple defence of the public sector and public spending”. Alas that is Labour policy in a nutshell..
It is a fact of life that they stop manufacturing news over Christmas, which is why the papers are filled with even more dross than normal. Double-page jumbo cryptic crosswords help you while away the time between Christmas lunch and the turkey sandwiches. Guido has something equally as cryptic but far more rewarding…
If you can figure out how a Eurozone state can leave the Euro you could win £250,000. Guido isn’t joking, the Wolfson Economics Prize will be awarded to the person “who is able to articulate how best to manage the orderly exit of one or more member states from the European Monetary Union.”
You have a month until the deadline for submissions on January 31, 2012. So instead of snoozing in the armchair after lunch dreaming of escaping to sunny lands dream of rich sunlit post-Euro uplands. According to the Wolfson Prize announcement the detailed issues that exiting the Eurozone raises include:-
The Wolfson Economics Prize, worth €286,000, is the second biggest cash prize to be awarded after the Nobel Prize. It aims to ensure that high quality economic thought is given to how the Euro might be restructured into more stable currencies. Guido is read widely in City dealing rooms, crammed with bond market vigilantes and Phd wielding economic analysts. Given the paucity of bonuses this year, best get your thinking caps on…
Full details from the website:
Talking to Labour insiders, ambitious young PAds, think-tankers and old hands alike, the candid admission is that they are stuck with Ed Miliband because as with Gordon Brown, there is no-one else. Ed gets a regular mauling at PMQs despite a terrible economy, still looks and sounds like the kid who does the photocopying, has failed to impress the British public and is unable at this stage of the electoral cycle to push further ahead in the polls. His shadow chancellor can never win the argument, because the argument he makes is that the British public is wrong and because it is Ed Balls who is making the argument. Dislodging Ed Balls would risk fraticidal conflict and not getting him off the television screens will guarantee Labour won’t be given a hearing on the economy.
The Labour Party’s centrists and the realist operators who just want power have written off the 2015 electoral prospects of the Labour party under the two Eds. So it is against this backdrop that we should look at two new publications that have just come out. Labour’s Business written by Luke Bozier and Alex Smith argues that the party should be pro-business, it even has one brilliantly simple business-friendly idea that the government should steal immediately – small businesses should have one person as their point of contact at the HMRC. One person who is responsible for dealing with issues arising from the complexity of the myriad of taxes – VAT, NI, capital gains, corporation taxes and the like – burdening small businesses.
“In the Black Labour: Why fiscal conservatism and social justice go hand-in-hand” is a new Policy Network discussion paper in which the authors; Graeme Cooke, Adam Lent, Anthony Painter and Hopi Sen, call for Labour to embrace fiscal conservatism. Policy Network is backed by Peter Mandelson, so is not exactly a fringe ginger group. The paper can be seen as a direct rebuttal of the kamikaze economics of Ed Balls endorsed by Ed Miliband, which poll after poll shows is not seen as credible by the public. Despite the state the economy is in George Osborne is believed and supported by the British public.
The policy details in the two papers won’t worry their Coalition opponents, they will however be seen as part of a slow move back towards the electorally potent reality-based politics of New Labour, rather than the one-more-heave-to-the-left politics of Ed Miliband. Ed Miliband and those around him believe the electorate is moving towards the positions of the Occupy and UK Uncut activist groups, a strategic error that will guarantee them electoral defeat in 2015. If Labour’s reality-based wonks want to be in government before they are old men, they have got to either get rid of the Eds or convince them to tack to the centre. These are the opening salvos…
Yesterday saw the third CBI-TUC annual footy match; the pro-business lobby beat the anti-business lobby 4-3 to win the cup pictured above. There must be a metaphor there somewhere, especially given that Guido hears that things were quite heated with penalties awarded against both sides. The row has continued off of the pitch today in the wake of the brave suggestions, leaked to the Telegraph, from Adrian Beecroft. The venture capitalist advising the government has finally put the employment “rights” stranglehold on growth to the top of the policy agenda:
“The rules both make it difficult to prove that someone deserves to be dismissed, and demand a process for doing so which is so lengthy and complex that it is hard to implement… This makes it too easy for employees to claim they have been unfairly treated and to gain significant compensation.”
These employment rules are far more complicated than the offside rule and prevent British businesses from competing on a level playing field with international competitors. Interviewed on Sky News, Mark Littlewood of the IEA called the rules “a real burden and a real fear” in the business world, and it’s true that there are now untouchable elements within all sectors, but the public-sector in particular. It’s nearly impossible to sack a useless teacher…
There are five million small businesses in the UK. If just half of them can be persuaded to take on one more member of staff then this country would not be facing an unemployment crisis. If businesses could hire and fire flexibly they would be less reluctant to take the risk of hiring new staff. There is some suspicion that this report has been trailed today in an effort to move on the debate from Europe with something that appeals to right-wingers, but if anything it is yet again reminding Tory backbenchers of the disproportionate power the LibDems have in government. Before a proper debate has even begun, Norman Lamb, the voice of Nick Clegg, has already come out to say that it’s “madness” and they will block such a move. Sound familiar..?
Guido has been marking various comings and goings in Downing Street and at the Policy Unit – supposedly the key ideas engine of a reforming government. Now run by non-political, technocratic, civil servants not known for radicalism. Chris Brown, referred to yesterday, is the education adviser whilst Paul Kirby and Kris Murrin run the unit. It seems to Guido that the Policy Unit could do with some outside talent.
The most obvious candidate to run a centre-right government’s policy unit would be Neil O’Brien who heads Policy Exchange, the biggest centre-right think-tank that basically supplanted the old, now slimmed-down, Conservative Research Department as the main source of Tory policy thinking. James O’Shaughnessy, the former Policy Unit head, was ex-Policy Exchange…
Given we have a coalition government perhaps a former LibDem wonk might be appropriate. Mark Littlewood, now at the Institute of Economic Affairs, is the most orange of Orange Bookers and a former LibDem head of spin with a reputation for shaking things up. Coincidentally they have both been spotted coming and going to Downing Street…
The big Downing Street change around continues. There has been much speculation that policy head James O’Shaughnessy was on his way out. With the re-jigging of Ameet Gill to replace Tim Chatwin as Head of Strategy, plus the arrival of Julian Glover in the speech-writing team, Guido has been waiting for the expected announcement. To no avail…
Guido tried calling O’Shaughnessy’s extension to be greeted by a confused staffer who first claimed that James was on “annual leave”, when Guido asked if the policy wonk was ever coming back from his “holiday” they said they didn’t know what was going on. Other Downing Street sources are refusing to deny O’Shaughnessy has left the building. Guido understands that a civil servant, Chris Brown, is running the policy unit.
Shades of dysfunctionality in Downing Street…
Younger readers will not know that “Guilty Men” was a book written by Michael Foot, Frank Owen and Peter Howard, published in 1940, attacking the leading establishment figures of the day for their appeasement of Nazi Germany in the 1930s. As denunciations go it is the classic and an equal to Émile Zola’s J’accuse. Peter Oborne and Francis Weaver have entitled their new pamphlet to be published by the CPS tomorrow “Guilty Men“ in a conscious echo of that great score settler. It is a coruscating attack on those who would have entangled Britain in the disastrous euro.
Their premise is that “Very rarely in political history has any faction or movement enjoyed such a complete and crushing victory as the Conservative Eurosceptics. The field is theirs. They were not merely right about the single currency, the greatest economic issue of our age — they were right for the right reasons.” This is not a mere opus of a gloat, they name and shame the establishment figures who shamelessly exaggerated, lied and eulogised on behalf the euro and the European Project and have yet to apologise for the disaster they would have wrought. The institutions who are guilty include the CBI, BBC and of course the Financial Times. The guilty men include the shameless pundits who smeared their opponents, for example David Aaronovitch, who compared David Owen to Oswald Moseley and Enoch Powell because the founder of the SDP had become sceptical of the wisdom of the euro currency. Andrew Rawnsley, Chris Patten, Tony Blair, Peter Mandelson, Michael Heseltine, Ken Clarke, Charles Kennedy, Danny Alexander and from business Niall FitzGerald, Adair Turner and David Simon figure among the guilty men. It is instructive and amusing to remind ourselves of the hysterical claims and wild accusations made by these europhiles. Though this isn’t referred to in the text, it occurs to Guido that many of the same guilty men are currently making the same kind of hysterical claims about global warming.
Oborne has employed his usual panache in delivering the charges. It is well worth reading if you enjoy the thought of europhiles squirming guiltily.
The best policy idea to come out of LibDem conference was Danny Alexander’s call for tax thresholds to be raised to £12,500, effectively taking minimum wage earners out of income tax. Reversing Gordon Brown’s complicated tax – the – poor – and – pay – them – benefits strategy. Brown effectively and deliberately made those in work on low earnings recipients of welfare benefits. Brown wanted everyone to be on state benefits (welfare “universalism”) for purely political reasons so as to maximise buy-in from all classes into the welfare state. Hence the cynical Brown/Balls attachment to child benefit for millionaire mums and winter fuel allowances for Michael Winner.
Raising the tax threshold is simple, has popular appeal and will benefit those on low earnings proportionately more than those on higher earnings. It will take some pressure off the “squeezed middle” and won’t increase the welfare trap. It isn’t a perfect policy, prominent Orange-booker Mark Littlewood, a wonk the Institute for Economic Affairs, is wary that it will result in millions of voters being unaffected by the basic rate of income tax who therefore won’t be incentivised to vote for parties and policies that favour lower taxes. He fears that low-earners will have no reason to buy-in to tax cuts if they are taken out of the income tax bracket entirely.
The organised opposition to this policy however is coming from the left-wing, EU-funded think-tank IPPR. The IPPR was founded and funded by the unions back in the Kinnock era to drag the Labour Party to the centre, in the post New Labour era and under new management it is dragging the Labour Party away from the centre towards the left. IPPR is arguing against raising tax thresholds because it won’t help the poorest who are on benefits and not working. This criticism cuts no ice because tax cuts, by definition, are designed to help taxpayers. IPPR argues that targeting benefits, sprecifically towards childcare, would be more effective and cheaper. It is as if they are speaking a different language, the problem of welfare dependency won’t be solved by paying out more benefits.
Nevertheless Guido wishes IPPR well, their wonkish sophistry may well appeal to Ed Miliband. If in 2015 the coalition parties are standing on a platform of reducing taxes on the working poor with the Labour Party standing on a platform of taxing the poor, Miliband will be on the wrong side of the dividing line. “Vote Labour and tax the poor” is a winning campaign slogan – for the coalition parties.
Guido had a bit of a dig at the three-houses-owning, multi-millionairess, anti-poverty campaigner Polly Toynbee last week. She responded that Guido was laying the charge of “Champagne socialist” against her, something which Guido has yet to do. More on the money was this part of her rebuttal:-
“…you say we should be Gandhi-like saints and give everything away before we can advocate being taxed more. The point about tax is that’s it’s collective – it’s an “I will if you will” deal. I see no hypocrisy in any of this – but no doubt you will go on spreading ad hominem empty spite – instead of engaging fairly with the substance of the argument.”
Engaging with the substance of her argument, Guido asks, why is progress towards her social democratic utopia an “I will if you will” deal? If it is conditional on reciprocation from the likes of Guido it will never happen. Millions of us already feel over-taxed, like her employers we’re going to hold on to every tax break and tax haven we can come hell or Edward Balls. If she thinks she is under-taxed she can do something about it tomorrow, pay the Treasury more, they really do accept donations to bring down the deficit. Polly could give her own self-defined “unjust rewards” – for that is how she describes her own income – to charity and live more like the common people. Instead she chooses to keep the rewards that put her in the top 1% of income earners.
The home in London worth a million-and-a-half, the house in the country, the villa in Italy, the sheer inequality of it all must play on the conscience of a progressive social democrat. Her get out for keeping all is that she won’t make the sacrifice unless the likes of the greedy and privileged bankers in the neighbouring villas do so as well. Do you see the flaw in this aspiration?
Polly’s excuse for educating her children in private schools is that the state schools were crap at the time. The exact same reason the Fawkes girls go to schools whose existence Polly Toynbee now campaigns against. Another case of “do as I say, not as I do”.
Meanwhile the next generation of progressives is lining up to be no less hypocritical than the last. Will Straw commends Tory MPs Matthew Hancock and Nadhim Zahawi who in their new book “Masters of Nothing“ argue that the banking crisis was partly due to a lack of women in trading rooms. Too much testosterone contributed to the debt crisis apparently, well that and a lack of pay transparency among other things.
Will is a wonk at the IPPR, the key policy and propaganda think-tank of the progressive soft left. So how does IPPR do on the gender equality and pay transparency front? Guido asked Will, IPPR’s associate director, how much he earns he refused to say or even give an average for associate directors at the IPPR. Pay transparency is only for bankers, not policy makers it seems.
On gender equality the IPPR has 9 male serving directors out of 12 at the top. At the bottom 7 out of 8 operations staff are female. Another progressive case of “do as I say, not as I do”.