Words and Deeds

They seem to have cracked the words bit

Thank you to everyone who commented and emailed yesterday telling me not to be so depressed about the Condem Coalition. As you pointed out, instead of moaning about the destruction of the old Tory Party, we ought to be looking at what the coalition is promising to do.

Fair comment.

So let's pull ourselves together and take a look at the joint Con-LD manifesto. And guess what - a lot of it turns out to be stuff we support. Although a lot of BOM's priorities are still missing:

1.  Deficit Reduction - they are promising to "significantly accelerate" Labour's deficit reduction plan "with the main burden of deficit reduction borne by reduced spending rather than increased taxes", to cut that contentious £6bn this year, to cut some middle class welfare, and to base their forthcoming budget on independent forecasts produced by the new Office for Budget Responsibility. All of which gets a great big tick, both from us, and by the sound of it, the Governor of the Bank of England. MISSING: although they promise "long term deliverability", there's no mention of quantified fiscal rules - including that all-important "third rule" to limit spending.
2. Spending Review - there's now an even longer list of protected areas- the NHS, schools, overseas aid, Trident, and restoration of earnings-linked state pensions. MISSING: detail on what gets cut.
3. Tax - partial rescinding of Labour's jobs tax (but not as much rescinding as the Tories promised), and a pledge for "a substantial increase in the personal allowance from April 2011". Both good. But against that, CGT is being whacked up, and the promised IHT cut is being ditched. MISSING: there is a worrying silence about VAT. Plus there is no acknowledgement of the vital need to reduce the overall tax burden built up under Labour.
4. Banks - new bank levy (aka liability insurance premium), and restoration of the Bank of England's supervisory powers. Both good. Euro entry ruled out, although given the rioting PIGS and the squealing German taxpayers, anything else would have been preposterous. MISSING: nothing substantive on splitting our too-big-to-fail megabanks.
5. Immigration - cap on non-EU economic migrants - good. MISSING: any limits on other non-EU migrants like those overstaying students (eg see this blog).
6. Political Reform - widely discussed elsewhere - fixed term Parliaments (but sensibly subject to a Commons override), referendum on AV, MP recall. MISSING: English parliament, radical reform of the Barnett Formula, fiscal decentralisation (ie decentralisation of tax raising).
7. Pensions and welfare - bring forward increase in state pension age to 66, simplify welfare to work programme, stronger incentives for private contractors to get claimants back working, and tougher line with dole scroungers - all good. MISSING: concerted attack on middle class welfare, abolition of welfare incentives to breed, increasing state pension age to 70 soonest.
8. Education - full free-school Gove with brass LD knobs on (ie pupil premium for poor kids). Hurrah. MISSING: explanation of how we fund pupil premium.

There are also various other headings, but as we can see, most of what the document says, we can support.

The problems come with the missing bits, especially the lack of content on spending cuts and just how we're going to manage our future public finances to deliver the lower tax burden vital to our future prosperity. NHS reform - one of Labour's biggest failures - also remains a complete mystery.

All of which is concerning. Because when it comes to spending cuts, the devil is always in the detail.

The joint manifesto's words say the coalition is starting off pointing in the right general direction. But only by their deeds shall we really know them.

PS The word fairness got a lot of use yesterday. Cam included it in his strapline pledge - "freedom, fairness and responsibility". To Tyler, fairness is a motherhood word that totally fails the opposites test - ie you cannot imagine any politico of any persuasion ever arguing for the opposite, which makes it pure waffle. But yesterday evening when Tyler suggested this to a non-Tory friend, he was told that actually there is a politico who would be prepared to argue the opposite: to wit, Lady M Thatcher. Is that right? Did she argue for unfairness? Can't say I remember it, but this friend seemed pretty sure. Must look it up, but whether she did or not, it just goes to underline how tough spending cuts always are. Because there are always losers, and it's impossible to ensure everyone takes the same hit. We may all be in this together, but some are going to suffer more than others, and whatever words Cam may use, they most definitely will not consider it fair.

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Bucket Time

We're not coming out

Last night we had to throw a bucket of water over the Major. He was about to combust.

"How dare they! How dare they!!! A coalition of losers? Two-faced Clegg doing a squalid deal with Mandelson. Listen, we in England voted for a Conservative government - no doubt about it*. But now we're getting yet another socialist government rammed down our throats by the Jocks. That Salmon bastard coming down here and selling his MPs - MPs he shouldn't even have, mark you - selling them to keep Labour in power. We end up giving even more to the Scots, the Welsh  and the Irish, just so Labour can cling on. And with yet another unelected Marxist Prime Minister! Can you believe it!?!!"

"Well, Major," I began, "that's democracy..."

"Democracy!?? Democracy!!! Listen, this is no more democratic than Stalin. And at least he didn't pretend to be anything other than an autocratic genocidal maniac."

"Actually, Major, I think you'll find..."

"This will not stand! This will not stand!! All bets are off. We must fight. Fight! Fight! Bastards! Yellow bastards! Round them up!! String them up! Bastard yellow scum bastards! Bastards! Bastards!"

*****

The one good thing about all this is that it's showing us with jaw-dropping clarity how PR and its never-ending coalitions would actually work in the real world. Minority parties would constantly extort all manner of expensive goodies from the rest of us. We'd all be held to ransom.

As we've already blogged, England has voted convincingly for a Tory government. Scotland, Wales and N Ireland do not want one. And let's face it, why would they? Given that they are all big beneficiaries of England's taxes. This election gives a huge boost to the campaign for an English Parliament, with English taxes for English people.

As for the Lib Dems, the sight of them pontificating about the national interest while at the same time secretly stitching up their grubby backroom deal with Mandy will have cost them awful lot of votes round our way. Vote yellow get red is a message that will resonate right across Southern England. They will pay a big price at the ballot box.

So why haven't the markets tanked?

Well, for one thing, the markets have been focused on the Greek problem, and their attention span is limited.

Second, they are still giving us the benefit of the doubt, based on the belief that unlike the PIGS, we've always managed to pull the fat out of the fire in the past.

And third, markets don't walk in straight lines. They operate instead on the following well-established principles:

"Dum-di-dum-di-dum... everything's fine.

Dum-di-dum-di-dum... everything's fine.

Everything's fine.

Everything's fine.

OH MY GOD! We've just noticed everything's NOT fine!

HELP! Where's the exit?! Let me out!"

Unfortunately, nobody knows when that moment of horrible realisation will come. All we know is that it hasn't come yet.

Perhaps it will come tonight. Perhaps it will come next week. Perhaps it will never come.

Feel lucky?


*Footnote In England the Tories got 40% of the votes and 55% of the seats.

PS Tyler's Polish patio-layer tells of an old Polish expression re changing governments - "same trough, new pigs".

PPS Just for future reference:

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Lib Dems On The Skewer

Found in the gutter

Goodness knows how Clegg will wriggle out of this one. Cam has made it quite clear PR is not on offer, and Clegg knows it. But he also knows it is the number one demand of his revolting LD activists.

So WTF is he going to do?

Press on regardless? Bust out of the LDs' so-called triple lock and ignore his activists?

They wouldn't like that one little bit. It could easily splinter his party, with the lefty hippies tripping off to the Greens, and the Orange Book suits jumping overboard to rejoin all those other SDP suits deserting the sinking Labour party.

Put his foot down with Cam? Insist on PR, or the whole deal's off?

But that kind of hissy fit at a time of National crisis would look terrible with all those decent hard-working punters who voted for him. The ones who believed all his assurances about continental-style consensus politics and the saintly rationality of coalition government.

So what about propping up dying terminally unpopular Labour?

Talk sense, will you.

No, the best thing for Clegg will be to step back and keep his political virginity intact. Tell activists and voters alike that he will always support Cam where he acts in the national interest. But he will not join a formal coalition because he will not compromise on fairness in the electoral system.

So it's another election pdq, the only question being whether it's next October or next March.

******

What about PR then? There's no doubt our current first-past-the-post system is very unfair, but we have no confidence that coalition government could possibly deliver the kind of fiscal squeeze we must have.

Yes, we know the Germans have stable coalition governments, and yes we know they have in the past proved capable of fiscal retrenchment. But (a) we're not Germans, and our Westminster politicos have no experience of coalition government. And (b) Germany is a federal country with a high degree of fiscal decentralisation. Which means that much of the unpopularity of spending cuts and tax rises can be delegated down to state and local politicians. Just like happened in Canada in the 1990s - another federal country.

And when it comes to the LDs stepping up to the spending cuts plate, we just need to remind ourselves of the party's official advice to their local councillors:

"Oppose all service cuts ... No cut is going to be popular and why court the unpopularity that goes with the responsibility of power?" (see this blog).

Having guys like that anywhere near the fiscal controls will have us smashing into a Greek mountainside in 10 seconds flat.

PS And another thing... I know winners are supposed to be gracious in victory, but our local LDs really are gutter politicians (see this blog). When they noticed Tyler Towers had erected a Tory election poster facing the road , they came along one night and stole it. Just like that. They pulled into Tyler's drive, trespassed on the Tyler Estate and committed a criminal act. Moreover, ours was one of many such LD crimes right across the constituency, including a Tory council candidate getting a long scratch down the side of his car. Frankly, poor naive Tyler was shocked. So much so that the Major and "his people" are now planning to "even things up a bit" in the forthcoming October election.

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Morning After Pill

Totally knackered after a marathon local election count that took an extraordinary 7 hours to deliver a result. But briefly...

Locally, the Tories did incredibly well.

Our new consituency MP fought off a strong LD challenge to increase the Tory majority and win over 50% of the votes - the first time that's been done since c1738. A fantastic night.

Next door in the Major's constituency, the Tory incumbent fought off another strong LD challenge to win a hugely increased majority.

Across Surrey as a whole, the Tories won a clean sweep of every single seat, and with increased majorities.

Zooming out to look at England, the Tories have so far accumulated a clear majority of 32 seats, winning 40% of the votes.

And yet...

Yes, once again, our old friends North of the border have voted for something entirely different. Only one of their 59 MPs will be a Tory.

So we have dropped into the merde. Markets crashing, and we Surrey/English taxpayers unable to elect a government that will tackle spending.

The phone-ins are saying that the country has voted for politicos to come together "for the good of the country" - they should stop bickering and "just get on with it".

OMG. There is zip understanding that "getting on with it" involves some very awkward decisions and a lot of losers. There isn't a cat's chance of getting on with anything without a majority government.

So, time to leave?

First, some sleep.

Then, let's see the appalling Brown levered out the door.

Then... well, sleep first.

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Decision Day

What the bookies say - implied probability (%) of outright Tory majority (blue) and hung parliament (red)

Mr and Mrs T are about to hit the election day trail - voting, followed by last minute town centre canvassing, followed by "getting the vote out" (whatever it takes), followed by a nail biting night at the local count.

Locally, the bookies reckon our man now has an 80% + chance of winning - better than a fortnight ago, but way short of comfort in a constituency that has never been anything other than Tory.

Nationally, the odds say a hung parliament is the most likely outcome (chart).  So we suggest everyone watches some more of that Greek coverage before voting.

Our result is due at 2am, so we hope they have a TV at the count - we certainly don't want to miss any Balls moments.

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Hand-Wringing Won't Cut It

What happens with too many wringing hands

Today's scary report from the IFS spells out in forensic detail what we should already know - the spending cuts currently identified by all three main parties fall way short of what will be needed.

In aggregate, the IFS reckons there's not that much difference in the cuts suggested by any of them. Nobody has actually spelled out the future totals for cash limited departmental spending, but the IFS has derived some numbers based on HMT's most recent budget projections and what each party has suggested about required cuts in borrowing. And here's the comparison:

In summary, the IFS calculates the following cumulative spending cuts between what Labour are planning for this year, and 2014-15:

• Conservatives: £59.4bn (15% cut)
• Labour: £47.0bn (12% cut)
• Liberal Democrats: £42.7bn (11% cut)

Now, in normal circumstances these would be huge cuts. But against the background of a £90-150 bn structural deficit they're not enough.

Worse, each party has committed itself to protecting certain favoured spending areas - such as the NHS and overseas aid - which means that the cuts falling on the other unprotected areas will be so big nobody wants to even think about them.

So what we're being shown instead is a huge blank. The vast bulk of the aggregate spending cuts implied by each party is simply unspecified. The Conservatives have a £52.5bn blank, Labour around £45bn, and the LDs £34bn (although note that the smaller LD blank largely reflects the fact that they're being less ambitious on the total cuts).

And remember this: even if they could fill in the blanks post-election (ie assuming there really is a secret plan ready to roll), their aggregate cuts are still not going to be enough. As the invaluable Jeff Randall keeps reminding his interviewees, merely reducing our rate of borrowing does nothing to address our now wobbling mountain of government debt. To do that you actually have to start repaying it - not simply go on borrow at a slower rate.

Meanwhile, Tyler is busy on the campaign trail. He's spent the last couple of days resuscitating the local blue (party blue, that is) website, and posting some much needed photo coverage of the campaign.

Last evening, he and Mrs T attended a local hustings debate, where our candidate fronted up to his LD, Labour, and UKIP opponents. Very interesting  - even if the village hall seats were designed more for stackability than two-and-a-half hour sitdowns.

Our man put in a good performance, enlivened by a favourable reference to Maggie T, which provoked a satisfyingly outraged reaction from the many LD activists in attendance. And on the night, the Labour candidate, 24 year old Tom Miller, was excellent*.

But the LD candidate.... oh dear, oh dear, oh dear.

Tyler had already heard she wasn't up to the job, but this was his first opportunity to actually see her in action.

And it left him not only worried for the local constituency should she get elected, but also, quite frankly, for her.

She's simply not up to it. Sure, she's very concerned about the plight of children, refugees, the mentally ill, the atomic bomb, airmiles fruit, and a host of other worthy causes. In fact, she's very good at hand-wringing. Literally.

But what she completely fails to display is any grasp of the real policy issues involved. Added to which, she's embarrassingly inarticulate and ineffective.

In truth, soft-hearted Tyler ended up feeling rather sorry for her. But God knows how she'd cope in the Westminster bear pit - she'd be eaten alive. And God knows how we local residents would fare with her as our MP.

The fact is that hand-wringing can only take you so far. It's perfectly fine for a vicarage tea party, or a council debate on recycling bins. But right now, neither of those are our principal concern.

Our principal concern is HTF do we repair the damage wrought by 13 years of Labour misrule? And HTF do we get this country back onto a sustainable economic footing?

And on those issues, we need a deal less handwringing, and a deal more honesty.

*Update 28.4.10 - Well, I guess you should never trust a pretty face, especially when it's coupled with a highly persuasive and amusing presentational style. Having now Googled Tom Miller more thouroughly, we discovered this post by Tory Bear. TB recounts how Miller was closely involved with the appalling Derek Drooper, and was forced out of his previous Labour blogging role over his participation in Drooper's gutter politics smear campaigns. Not many people know that. At least, not many voters round here know it.

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Down And Dirty With The Party Of Protest

Preparing an LD election leaflet

Tyler's feet are complaining bitterly about their weekend pounding the pavements.

The opposition here in the leafy glades are the Lib Dems, and they are mounting their usual ferociously unprincipled campaign. Their big pitch is that the Tory candidate is a professional politician who is only fighting this seat because he's failed to get in elsewhere. They have distributed thousands of fake local newspapers headlining this point, and explaining how their own candidate is a local councillor and ex-Mayor, 110% committed to local shops for local people.

No mention of the fact that the Tory is one of our own County Councillors, lives only a few miles outside the constituency, has already pledged to move his family into the constituency if elected. Or that far from being a career politician, he's actually had a very successful career in business. Or that their candidate fought and lost another constituency in 2005, and may very well have applied for a stack of LD nominations elsewhere. Or that... well, frankly, she doesn't look up to the job.

What's that? Ahhh, diddums?

Yes, fair enough. This is an election, not some sacred act of democratic accountability.

But what does stick in the throat is the preposterous LD line that they are somehow above the Punch and Judy fray, and that they offer a non-political alternative to the tired old discredited parties.

Peter Oborne's article yesterday gives a good overview of how the LDs actually operate, including several examples of the fake communications they routinely send out.

And lest anyone think it's simply a case of a few over-enthusiastic local zealots doing things of which Clegg and St Vince know nothing, we have these jaw-dropping quotes from their official manual for LD councillors Effective Opposition:

"Be wicked, act shamelessly, stir endlessly...

Positive campaigning will NOT be enough to win control of the council... effective opposition accentuates the negative...

...you can secure support from voters who normally vote Tory by being effectively anti-Labour and similarly in a Tory area secure Labour votes by being anti-Tory.

Oppose all service cuts ... No cut is going to be popular and why court the unpopularity that goes with the responsibility of power?"

Why indeed?

Although if, say, you were living in a country with a huge fiscal problem, needing to make unprecedented spending cuts, you might slightly wonder why the LDs should be allowed anywhere near the controls.

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Coalition Cuts

Helmut delivered coalition cuts... but we haven't got Helmut... or Germany's other politicos

As we hurtle towards our Jedward style election, the prospect of a hung parliament and some kind of coalition government looms ever larger. And the key question is whether such a government could possibly deliver the cuts we must have?

Because what we all need to remember is that these cuts are unavoidable. Depending on whose figures you believe, HMG is living £70-140bn pa beyond its means. And the only real question is whether we make the cuts in a considered way - attempting to safeguard the more valuable bits of public spending - or whether we make them over a single weekend of panic with an IMF gun pointed at our head.

We think a hung parliament will make the latter much more likely. As Ken said yesterday:

“The bond markets won’t wait for all the discussions and horse trading. Sterling will wobble. If Britain doesn’t deliver a Government a working majority, markets don’t think that we can tackle the problem, then the IMF will have to do it for us.”

Which sounds spot on to us. We'd be straight into a re-run of 1974-76, when a wobbly Labour government failed to grip a huge fiscal deficit, until forced to do so by a melt-down financial crisis and an IMF visit. And in that case, the government had actually started out with a majority - albeit wafer-thin (3 seats).

But despite that grim experience, there are those who reckon a coalition would actually be better at making the cuts, because it would have broader legitimacy. After all, our strained first-past-the-post electoral system means that no modern government ever has majority support (the current one only got 35% of the votes). So wouldn't it be better to combine the support for two parties?

Frankly, nobody has any idea. While it is true that coalition governments overseas have from time-to-time managed to implement substantial cuts programmes (eg Germany in the 1990s), we have no modern experience of such governments. A coalition would be trying to invent the rules at the same time as tackling the biggest peacetime fiscal deficit ever. Which doesn't sound at all reassuring.

And there's another key point. Minority and coalition governments only ever seem to have been able to succeed after a prolonged period of failure and crisis. For example, a minority government in Ireland managed a successful consolidation in the late 80s, but only after nearly a decade of failure during which government debt interest payments soared to 30% of revenues (eg see here, and see here for excellent Policy Exchange overview of selected fiscal consolidations in the UK and around the world).

Of course, as we've blogged before, there is absolutely no guarantee that even a majority Tory government would actually make the cuts required. And it may be that nobody will do all that's required until we as a nation have suffered our Dunkirk moment.

But a coalition government - probably with the increasingly unconvincing St Vince as Chancellor - would be the least likely to grip anything. Sooner or later we'd face that IMF gun, and a slash and burn emergency package that would make no discrimination between what we do and do not need.

PS If you missed yesterday's Chancellor's debate, you should definitely catch up on the demolition of St Vincent da Flipflop. Guido has the key clip here.

PPS On those German cuts, they were necessitated by the bill for German reunification. Kohl had initially promised reunification could be achieved without the need for tax increases. When that turned out to be nonsense, he was forced to introduce a string of increases in social contributions (aka hidden taxes - cf NICs), sell off government assets, and even fudge the budget numbers (thank God that could never happen here). Only after taxpayers started getting seriously pissed was he forced into serious action on spending. And he was further pressed by the need to meet the strict fiscal criteria for joining the impending Euro - a kind of external IMF-style cosh (only later did it emerge that half the other joiners, like Greece, cheated their way in).

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Labour's Legacy Of Misery

We've blogged the Misery Index before. It was first devised when Labour last had a go at wrecking our economy, back in the 70s. It comprises the sum of the annual increase in the RPI and the unemployment rate, which are two key statistics in gauging economic misery.  

The latest reading has pushed the index up to 12.4%, comprising 4.4% RPI inflation and an 8% unemployment rate.

So they really have done it again. When Labour came to power, the index was running at 10% and falling. It is now 12.4% and rising.

And today's unemployment stats show quite clearly that Brown's apparent miracle of stabilised employment in the teeth of recession was no more than a cruel illusion. And the unemployment rate of 8% compares to the 7% they inherited.

What a disaster.

PS Tyler lunched with a friend who has now completed his contingency arrangements to bail out on 7 May. He has a private pilot's licence, and even if the air space eco police have again closed us down, he's off. He reckons remaining here with Brown still at the controls will be far more hazardous to his health than any conceivable cloud of volcanic ash. But he'll need an early start - our guess is that the runways could be pretty packed that day.

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Poorer By The Day

So much for deflation

One of the ways that you're being made to pay for Brown's catastrophe is via higher prices. And today's worse than expected inflation numbers underline just how painful it's getting.

All the official measures of inflation have jerked back up again, and are almost back at the levels last seen before the financial crisis broke in 2008.

It's being driven by higher energy prices on world markets, but also by the fall in the value of sterling which is increasing the prices of everything we import. And these days, that means virtually all the goods you need to survive day-to-day (eg I'll bet you're not wearing a single item of clothing manufactured here - Tyler's currently wearing India, Bangladesh, Sri Lanka, and Egypt... although his socks are of unknown origin).

But while inflation is running between 3.4% and 4.8% (depending on which of the government's various measures you pick), average earnings are only rising by 0.9% pa. Which means that over the last year, the average worker has had his real income squeezed by between 2.5% and 3.9%.

And it looks set to continue. Earnings rising very slowly, while prices rise very quickly.

But in truth, wage earners should consider themselves lucky. Many people no longer have a job to generate any earnings at all - another million have found themselves in that position since the recession began (official unemployed plus inactive). And of course, pensioners dependent on fixed savings have seen their income walloped since the Bank of England fired up the printing presses and abolished interest on savings accounts.

As we've blogged many times, anyone with money - be it earned income or savings - is a sitting duck. And there is no way that a LibLab coalition will have the steel to do what's really needed - ie a substantial cut in public spending.

Which means the pain will land squarely on those with earnings and/or savings. Some of it will come via much higher taxes, and some from higher inflation (Darling's decision to freeze personal tax allowances actually combines the two, with people lifted into higher tax brackets by inflation itself).

And yes we know, given that everyone will have to tighten their belts (made in Cambodia), it's only fair that those with money contribute their share of tightening. Fine. Just so long as the state and its clients remember that they ultimately depend on those who earn and save in order to generate the income and the taxes on which they depend.

And that's something our campaigning politicos seem to be keeping awfully quiet about.

PS You know all that stuff about how HMG could lose its AAA credit rating? You can forget it. In reality, the bond market reckons HMG has already lost it. According to Credit Market Analysis, HMG's debt is already trading at prices below AAA (based on Credit Default Swaps). The market believes there is now a 1-in-15 chance HMG will default within 5 years. So the US is still AAA. Germany is still AAA. France is still AAA. Australia is still AAA. Even Gruniad Sweden is AAA. But we're not. Somewhere down there, Gladstone will be spinning.

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Tax Cuts - Always A Winner

Champion of the low paid

The LibDem plan to abolish income tax for everyone earning less than £10 grand has certainly registered. You and I may understand their sums to pay for it don't actually add up, but then again, nobody's sums on any of this stuff add up. And outside the groupthink confines of the Westminster village, it is a truth universally acknowleged that tax cuts win elections.

So why aren't the Tories making more of an effort to counter the LDs repositioning themselves as the party of tax cuts?

BOM correspondent KK reckons Cam must be crackers, and urges him to remind voters of the Tories' past record. In particular, their record under Thatcher's Brilliant Chancellor Lawson, who delivered repeated real terms increases in the personal tax allowance to lift millions of low paid workers out of tax.

The facts?

In the six years of Lawson's Chancellorship, 3 million new jobs were created. But the number of taxpayers only increased by one million. Lawson had increased the real inflation adjusted value of the personal tax allowance by 15%, effectively lifting 2 million of the low paid out of tax altogether.

And what's happened in the two decades since then?

Well, there are another 2.2 million jobs. But unfortunately, the number of people paying tax has increased by 4.3 million. So all of those 2m low paid workers that Lawson lifted out of tax have gone straight back in.

And as things stand, it's about to get much worse. Darling has frozen the personal tax allowance at £6475 pa, so as inflation kicks in - as it surely will - millions more will be dragged into the tax net.

Cam should spell it out. His is the only party that has ever actually delivered what Clegg is promising. And he should tell us that lifting the low paid out of tax will be a priority for his government.

Not only is the right thing to do, but despite two decades of lefty propaganda about the sanctity public services, tax cuts are always a vote winner.

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Vote Clegg Get Brown

X Factor it ain't

Tyler again spent a chunk of his sunny weekend out canvassing.

Post the leadership debate the doorstep mood seems to have hardened against all politicians - they're all as bad as one another... I may not vote at all, etc.

But there is also a view that given our dire straights, the politicos should stop bickering and come together for the good of Britain. Why can't we have a coalition like we had in the War?

The answer of course, is that we aren't at war. But in fairness, we have had coalition government in peacetime as well. And in circumstances not so very different to those we now face.

The last time we tried full-blown peacetime coalition was in 1931, in response to the financial and economic crisis that followed the Wall Street Crash 2 years earlier. Then too, we faced the need to make big spending cuts, and then too, a Labour government was not up to the task.

So we got a National Government, comprising a coalition of Conservatives, Labour, and Liberals, under the leadership of Labour's Ramsay MacDonald (see slick party political above). It was very popular, and in the subsequent election it won 90% of the seats. But the bulk of the Labour party split away, and was pretty well wiped out, losing 80% of their seats. The Liberals also split and were rewarded with a similarly savage electoral mauling. Only the Tories came up smelling of roses, winning 55% of the vote and 76% of the seats: their man Baldwin later took over as PM.

Which tells us something.

It tells us that although it was called the National Government, and although it pretended to be a coalition, it was in fact a Tory government. And as time went by, it came to be increasingly dominated by Tories.

Unfortunately, the coalition that's now hoving into view will not be a Tory government. It will be a LibLab lash-up. And does anyone seriously imagine such a lash-up will be capable of making spending cuts on the scale required?

No, it won't.

It will deliver us that financial crisis that's been brewing.

And our return visit from the IMF.

PS On Saturday I met my first certified BNP voter of this election. It was alarming. Not because he had a shaved head and a pitbull on a chain, but because he didn't. He looked perfectly respectable and was washing his BMW outside a neat 4 bed executive detached. That must be what happens when Westminster no longer represents the views of ordinary taxpaying law-abiding punters in 4 bed executive homes.

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An Evening's Knob Twiddling

Knob twiddling is always such fun. Which is why all the TV news channels assembled their own teams of twiddlers to entertain us during the leaders debate last night. And the results were interesting.

There's little doubt that Clegg was the debate's overall winner, both because he seemed fresh and confident, and because he was able to present himself as the outsider offering real change from the old discredited two party politics of the past. That's always been the LibDem pitch of course, but Clegg was really able to get it across last night - powerfully assisted by the sleaze scandal, from which the LDs have somehow distanced themselves.

Which, for those of us who are desperate to see a Tory win, was all rather discomfiting.

It was especially discomfiting when we saw what those twiddlers were telling us. Because when it came to Cam, the bits that went down best - by a mile - were the bits where he was expounding traditional Tory themes. Proper punishment for criminals, school discipline, much tighter immigration controls (see vid), and - most interestingly - cutting wasteful government spending to fund tax cuts (Cam's waste examples were topical and excellent).

Conclusions?

Traditional Tory themes became traditional Tory themes because they represent what very very many of us believe. They are the themes that have guided Tory leaders throughout Tyler's lifetime - Michael Howard could - and did - say exactly the same stuff in 2005. And they are the themes that Tony Blair aped to win three elections.

Unfortunately they are also the themes that Tory modernisation has tried to blot out. Which is why voters now think they're all the same, and why Cam's task in this election is turning out to be much more difficult than it should have been.

So let's hope those knobs weren't twiddled in vain. Let's hope Cam takes the hint. Much more on cutting government waste - with examples; much more on the importance of tax cuts (such a shame the Tories are still nailed to the fuel tax cross); more on immigration controls (where the strength of Tories' cap and points system still hasn't fully registered); more on locking up criminals; more on school discipline.

Right. Tyler's now off to the hairdresser for his blue rinse.

PS Yes, I do understand that knobs are only as good as the twiddlers twiddling them. And we have no real idea how the TV stations selected their twiddlers. But since the results confirmed the twitchings of Tyler's own knob, and the impact of previous policy announcements (eg see here) he's going to accept them as both representative and definitive.

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Phoney Election

Would we have voted for this?

If you're anything like Tyler, you'll have mulled over some of those great "what if" questions from history. And one of the most intriguing is what if Britain had made peace with Hitler in the summer of 1940? It's generally reckoned that once France had fallen, large swathes of our ruling establishment were in favour of a deal, and Hitler seemed to be offering one.

But let's change the question slightly. What if there'd been an election after the fall of France? What if the choice had been between a war party under Churchill and a peace party under AN Other? How would we have voted?

Of course, with the benefit of hindsight and safe in the knowledge of our final victory, we'd have voted overwhelmingly for Churchill. But at the time, with most of Europe already crushed, the panzers massing outside Calais, and the mighty Luftwaffe buzzing the Channel, some belligerent old toff promising to have us fight on alone, street by street through our towns and cities, would likely have lacked mass appeal.

Indeed the whole campaign would soon have switched focus. Instead of blood, sweat and tears, we'd have had a debate about negotiating the best possible terms for British entry into the European Co-Prosperity Community. About how by being members we could secure a seat at the top table, and could influence policy making more in the direction of free markets and stuff. And how we would insist the Community made special arrangements to preserve the British Empire and our historic links with kith and kin across world. And most of all, how British Reichsmarks would still have the King's head on the back (King Edward's head, that is).

In other words we'd have slipped straight out of the phoney war into a phoney election. An election in which the really big issue -whether to fight while we still had a chance - would barely have got a look in.

And so it is we face our phoney cuts election.

When the campaign began last year, we did indeed have a war party and a peace party. But as it became clear that the panzers weren't coming straight on over, we punters began to go seriously cold on the idea of war. The war party trimmed its message accordingly, and all that remains now are a few general hints that they will cut spending a bit more quickly than the peace party, but nothing like the blood curdling New Age of Austerity once promised.

Because peace is so seductive. Last night, Tyler attended a debate at the IEA, in which the SDP's Lord Skidelsky lectured us on why cuts are bad and Keynesian deficit spending is all that stands between us and another Great Depression. As he put it, "it's the economy, not the deficit". An attempt to cut the deficit now will result in mass unemployment and a return to the dark days of that evil woman. Is that what we want?

And you know, it's kind of hard to mount a killer argument against that line. The economy no longer seems to be plunging down, and those much feared bond market panzers generally seem to have remained parked in their bases. We seem to have escaped the fate of lesser European nations, so why rock the boat?

For sure, you and I understand it can't last. You and I realise that the government is spending far too much and that large chunks of it are just been flushed down the bog (eg see this post). You and I watch what's happening in Greece and shudder (see today's excellent piece by Ed Conway). And you and I understand that our debt is mounting at dizzying speed (half a billion a day), and that our debt interest payments are going through the roof (by 2014-15 ,even on the government's optimistic projections, they will be £3,000 pa for every single household).

One day we know there will be a terrible reckoning.

But out in the bright Spring sunshine, it all seems so far away. Skidelsky and his SDP fellow travellers seem like reasonable men, so why not just trust them? As punters, we certainly don't want to contemplate the pain of swingeing spending cuts, still less tax increases - or at least, not unless the pain falls on someone else, such as the undeserving rich or those piggy bankers (we're not alone in this - see this on the entirely similar US situation - HTP Ted Bromund).

So here we are with our phoney election. Producing in all probability a phoney result. A result that will not provide a mandate for the kind of drastic action needed, and which leads straight down that old primrose path to a full-blown financial crisis, and huge emergency cuts to meet IMF conditions.

We are not confronting the real issue facing us, and it is nobody's fault but our own.

Hey ho. Time for a walk in that sunshine.

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www.gudanggrosiran.com Categories: 2010 Election, cuts

Showtime

They apparently don't think it's all over

So how many people will tune in tomorrow?

Just for your information, here's the all-time top 20:

1 1966 World Cup Final 1966 BBC/ITV 32.30m

2 Funeral of Princess Diana 1997 BBC1/ITV 32.10m

3 Royal Family documentary 1969 BBC1/ITV 30.69m

4 EastEnders: Den divorces Angie 1986 BBC1 30.15m

5 Apollo 13 splashdown 1970 BBC1/ITV 28.6m

6 FA Cup Replay: Chelsea v Leeds 1970 BBC1/ITV 28.49m

7 Royal Wedding: Charles and Diana 1981 BBC/ITV 28.40m

8 Princess Anne's wedding 1973 BBC1 27.60m

9 Coronation Street: Alan Bradley killed by tram 1989 ITV 26.93m

10 Only Fools And Horses: Batman and Robin 1996 BBC1 24.35m

11 EastEnders: Pat Butcher runs down little girl 1992 BBC1 24.30m

12 Royal Variety Performance: Shirley Bassey, Peter Cook and Dudley Moore 1965 ITV 24.20m

13 JFK assassination news 1963 BBC/ITV 24.15m

14= Winter Olympics: Torvill and Dean 1994 BBC1 23.95m

14= To The Manor Born: Penelope Keith holds hands with Peter Bowles 1979 BBC1 23.95m

16 World Cup: England v Argentina 1998 ITV 23.78m

17= Miss World: Miss Grenada, Jennifer Hoste 1970 BBC1 23.76m

17= Miss World: Miss Peru, Madeline Hartog Bel Houghton 1967 BBC1 23.76m

19 Royal Variety Performance: Michael Crawford 1975 BBC1 22.66m

20 Apollo 8 and 11 splashdowns 1968 BBC/ITV 22.54m


What do you reckon? Will it make it into the top 20? And even if it does, will it make any difference?

Tyler spent a chunk of today with people from various centre right think tanks. And despite the polls, the almost unanimous view among participants was a 20-40 seat Tory majority.

TV debate or not, is anything really going to change over the next 3 weeks?

PS How many did Tyler watch? Just 6.

PPS Sorry, listening to the Great Orange Hain on Newsnight appealing to "decent progressive voters, be they Liberal Democrats, Greens, or Great Crested Wibblies" to vote Labour in order to keep out the "savage Tories", has made me vomit all over the keyboard. So this blog may be indecipherable.

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The Tortured Soul Of St Vince

8th circle... going down

The thing about St Vince is that he's not only a trained economist, but he's also above reproach. When St Vince speaks on matters spiritual or temporal you may be assured it is the gospel truth. For St Vince is an honourable man.

Which is why when he tells us the LibDem plan to raise the personal tax allowance to £10 grand is fully funded by tax increases elsewhere, we know it must be true.

Yes, indeed. It must be true.

But just in case, just in case there are any doubting Thomases out there - unbelievers whose souls stand in mortal peril - let's just see how St Vince's numbers add up.

The LD plan is to increase the personal tax allowance from £6475 to £10000. They say it will cost £17bn pa. We don't know how they got to that figure, because it isn't explained on their website. Luckily, we have HM Treasury's tax ready reckoner, which allows us to calculate precisely what an allowance increase of £3525 would cost (or at least what the official Treasury calculation says*).

HMT says that an increase of £100 would cost £650m pa (full year effect). So St Vince's increase would cost £22.9bn.

Hmmm. That would appear to be £6bn pa higher than what St Vince says. And St Vince is an honourable man. It can't be right.

Well, maybe £17bn is just the first year cost. The Treasury says that only amounts to £17.9bn, so maybe St Vince has taken £17.9bn and simply rounded it down. A bit.

Yes, that must be it.

Althooooough... if it's just the first year effect, you'd kinda think St Vince might have wanted to mention that key fact.

And he might also have wanted to mention that the tax increases to pay for this higher allowance are longer term revenues, depending in large part on closing supposed loopholes and cracking down on avoidance. And come to think of it, he might also have pointed out that HMRC has been unsucessfully attempting to crack down on avoidance since the time of Caesar Augustus.

Then there are those spending cuts he claims to be so much more honest about. In reality, as we blogged here, he's only actually come up with one-fifth of the cuts he says we need - which ain't a whole lot better than anyone else.

Poor St Vince. Back in the day when he could just criticise from the sidelines, his soul could remain reasonably intact. But now he's pitching for hung parliament power, he's been sucked down into the same dark pit of spin and half-truths that ensnare and condemn every other mortal sinner.

May the Lord have mercy.

*Footnote A BOM correspondent has suggested we add some clarification. As you may know, HMT's tax ready reckoner is based on what's known in the trade as a "static" economic model. What that means is that it takes no account of the dynamic effects of cutting taxes - ie the stimulative effect on GDP growth and hence tax revenues. In reality, those dynamic effects will reduce the long-term fiscal cost of cutting taxes. How much is still a matter for debate, but Tyler believes the effect is significant. For example, recent work by Policy Exchange suggests that over the long-term, HMT's static cost of an increase in personal allowances could be more than halved. So shouldn't we give Vince credit for those dynamic effects? Well, yes we should - except for the fact that his associated tax increases would also have dynamic effects and they would go in the opposite direction. And as we say in the main post, we have no idea how he's reached his numbers because he hasn't levelled with us on the details.

PS Those polls, eh? We've started to keep a record of which poll is saying what, so we can have a good laugh at them after the Tories win a working majority. The latest is today's Populus poll in the Times which has the Tory lead imploding to just 3%. Of course, if they turn out to be right, and if the electorate gets the hung parliament it supposedly now wants, and if St Vince becomes Chancellor, and if we get the huge financial crisis that will inevitably follow, then we won't be laughing. But then again, we won't be living here either.

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Rolling Back The State

Yes, well, Cam's version is perhaps a tad more 2010

So after 5 years of angst, it turns out Cam may be a real Tory after all:

"We believe in responsibility: government responsibility with public finances, personal responsibility for our actions, and social responsibility towards each other. We believe in enterprise and aspiration. We believe there is such a thing as society, it’s just not the same thing as the state. Our fundamental tenet is that power should be devolved from politicians to people, from the central to the local. Personal ambition should be set as high as is humanly possible, with no barriers put in its way by the state."

Hurrah. Government is not responsible for running your life - its responsibilities centre on keeping the public finances under control. All of us as individuals are responsible for our own lives - which is precisely what we've always thought (yes, OK, by individuals we actually mean individual families, but that's what Cam means as well).

Individual responsibility, decentralisation of state power, and trusting us to run our own lives. Rolling back the state in favour of real people power. Sounds spot on.

Of course, when you read the manifesto, there's an awful lot of vital detail missing. For example, there's no hint of decentralising tax raising powers to local authorities, although without that change, local authorities will remain the puppets of Whitehall. And despite the proposals for allowing worker cooperatives to run hospitals, the plans for the NHS basically sound like business as is - the critical role of customer power remains unclear.

But let's not carp. It's one step at a time, and Cam's steps are definitely heading in the right direction.

The BBC's coverage seems to have got stuck on the issue we blogged this morning - do people actually want to spend their time setting up schools, or voting for Police Commissioners, or volunteering?

But that's missing the essential point. The essential point is that Cam is rolling back the state from its position as monopoly supplier of public services.

Take schools. Personally I wouldn't expect many parent groups to set up brand new schools. But I would expect specialist providers - including for-profit companies - to move into this new market. After all, we don't as individual shoppers have to run our own supermarkets in order to get a good choice of food suppliers.

All in all, Cam deserves a big tick.

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Counsels Of Despair

Don't despair

Just listened to Humphrys interviewing Hague. Humphrys was much exercised by the Tories' schools plan - in particular, the idea that parents will be allowed to set up their own schools.

"That's a counsel of despair," says Humphrys. "Most parents don't want to have to run their own schools. Surely with all its power, government should be able to provide good state schools for all."

Quite reasonably, Hague replied that if government power was the answer to everything, the Soviet Union would have been a huge success. Humphrys derided that argument as "preposterous".

Which neatly encapsulates the difficulty for those of us who believe choice and competition is the key to improving our public services. Despite all the manifest failures of top down state direction - especially over the last 13 years - the consensus view remains that somehow, in some unspecified way, government must be able to deliver. After a century of big government, Humphrys and millions of others, can't quite wrap their heads around the idea that government really really can't do this stuff.

Is it because they're all thick?

No, Humphrys isn't thick.

Well, is it because they haven't got the facts?

There's more truth in that. While there are plenty of instances of failing public services - picked over by Humphrys and his R4 Today colleagues every single morning - there's very little coverage of successful alternatives overseas (eg see this blog). In general, people don't know about continental-style social health insurance as an alternative to the doomed NHS, or US-style charter schools as an alternative to failing state schools.

But even if people did have the facts - and Today could do us all a favour by reporting them more extensively - would they necessarily vote for change?

Ex-teacher Mrs T reckons most parents will feel very nervous about the revolution Gove's free schools reforms imply. Parents may not like the existing schools provision, but revolution is scary, especially when it's your child's education on the line.

Which is why Gove needs to get on with it as quickly as possible - the new system needs to be given as much time as possible to demonstrate its success before the next election.

What we don't want is wimping around in the face of flak from the unions and derision from an outraged Humphrys. That really would be a counsel of despair.

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Spot The Difference

The Great Helmsman launches this year's empty promises

Spot the difference:

Statement 1

"We will not raise the basic or top rates of income tax in the next Parliament."

Statement 2

"We will not raise the basic, higher and new top rates of tax in the next Parliament."

Have you spotted the difference yet?

Yes, that's right - it's that bit about the new top rate of tax.

As you will know, Statement 1 comes from the 2005 Labour election manifesto, when they solemnly promised not to raise either the basic or top rates of income tax. Statement 2 comes from their 2010 election manifesto, after they'd increased the top rate in direct contravention of their promise in 2005. Plus of course, they've also slammed us with the NICs increase, which is income tax by another name.

And even if you're a trusting soul who believes they weren't necessarily lying through their teeth in 2005, it underlines the fact that promises from NuLabour ain't worth a bucket of warm spit.

So WTF should anyone take these busted charlatons seriously?

They haven't a clue how they'd fix our problems, be it our debt, our bombed out economy, or our dysfunctional public services. All Brown could come up with today was yet more top-down Stalinist direction from the desk of Mr Bean. Who has done quite enough damage already.

And as for launching the manifesto in a new NHS hospital that is costing us taxpayers £2.5bn, who do they think they are? That hospital belongs to us, not them.

Add to that their scare cancer cards - obviously sent using confidential NHS data - and we're looking at the politics of the gutter.

Last night we watched Health minister Mike O'Brien struggling to explain this outrage away. We actually ended up feeling sorry for him. He was probably a decent enough guy until he got involved with this crowd. He looks like he might even have gone into politics for those now ludicrous "public service" reasons. But here he is on telly, squirming around attempting to defend the indefensible. A bullet in the head would be a kindness.

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Only The Crumbliest Flakiest Thinking

Symbol of British potency

God, they're desperate. And giving their union backers a Cadbury Law shows just how desperate.

Typically, the Law was announced by Newsnight's Trotskyite economics editor. It's supposedly aimed at making it much harder for foreigners to take over British companies, which apparently will stop Britain losing any more British jobs for British workers.

What drivel.

For one thing, British jobs can just as easily be exported by British companies to their own factories in Eastern Europe and Asia. Indeed, Cadbury was doing precisely that - 80% of its business and 85% of its employees were already outside the UK, as were 78% of its shareholders.

More fundamentally, changes in company control are part and parcel of the way our hugeley successful market economy works. And there is no serious evidence that Britain loses out from the process overall.

The Economist recently published a survey of this evidence. They noted that over the last decade, foreigners have spent $1,000 bn on buying British companies, compared to $750 bn going in the other direction. But foreigners have tended to buy bigger operations, so in terms of numbers of takeovers, we've actually done more than they have (6000 vs 5400):

These are big scary changes. But as the Economist points out, many of the feared foreign takeovers have actually proved immensely beneficial to Britain. The workers from Austin Rover's old clapped out Cowley plant must wake up every morning and give thanks to BMW for rescuing them: they now work in the booming Mini biz, with 80% of their 200,000+ annual production exported. And throughout our economy, we have gained from the rapid importation of best practice from leading global companies - stuff we'd have taken decades to learn otherwise.

Labour are now putting all that at risk, They're sending out yet another signal that profit-focused businesses are not welcome here.

The bottom line? It's increasingly clear that Labour no longer expect to win the election. What's happening now is a series of  moves by factions inside their divided leadership to position themselves for the aftermath of defeat.

Which is fine, as long as they do indeed lose.

But WTF will happen if they win?

They've comprehensively lost the business support they once so assiduously cultivated, both here and abroad. A Labour win now would be greeted in the same way as business and the market greeted the Labour win in 1974. Sterling would tank. Gilts would tank. And this time, the equity market would also tank. We'd be facing that mountain of debt without even a shovel.

No. It really doesn't bear thinking about.

PS Oh go on then. Just for fun, here's Clarkson on what happens when governments prop up failing British companies, allowing them to put off difficult decisions:

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www.gudanggrosiran.com Categories: 2010 Election