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Polly Toynbee

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  1. Gordon Brown: Son of Thatcher

    This was more than a horrible humiliation for the prime minister. This was the week that social democracy ebbed away in England. Those words had already slipped from Labour's lexicon, never spoken by its leaders in public, rarely spoken outside the privacy of Fabian meetings and Celtic parliaments. In 1994 Tony Blair and Gordon Brown purged socialism when they forged the New Labour project: Clause Four was indeed an archaic nonsense. This week Brown and Darling all but killed off social democracy too. We now have a centrist government in Europe's most unequal country. Our government stands somewhat to the right of Angela Merkel's coalition in Germany, to the right of economic policy in France, where Nicolas Sarkozy has absorbed social democrats. Fusion politics, like fusion music and food, is one description of this strange death of the centre-left. At least in Europe there are leftwing parties still to make the public arguments: in England, due to our malfunctioning electoral system, a political generation has barely heard the case for social justice. Fusion is turning out to be Brown's "change". To give the children of the well-off a £1.4bn inheritance bonus while the children of the poor only got another 48p a week in tax credits is symbolically far worse than that notorious 75p for pensioners. The halfway mark to abolish child poverty by 2010 will be missed by miles. Holding down public sector pay rises to 2% for three years, only half next year's expected private sector increase, will increase inequality. To cut capital gains tax on buy-to-let property, antiques, paintings and jewellery is as shameless as it is dysfunctional. The comprehensive spending review every three years is mightily important. There is no company, arts organisation, charity or function of the state that does not hang upon its judgment. It was even delayed several months to get it right, causing serious budgeting problems to many balance sheets. Then at the last moment in a few days of hysteria, it all seemed to be done on the back of a matchbox. One of the many unintended consequences of the rushed capital gains change, it emerged yesterday, was the adverse effect on SAYE schemes (save-as-you-earn share ownership, for lower-paid employees). Private equity types laughed all the way to their merchant banks, having expected a much higher tax than 18%. They still pay less than their cleaners. There is a stunned disorientation among Labour MPs, alarmed by both Brown's vision void and his sudden incompetence. Talk to ministers and wise old heads of Commons select committees, and they are reeling with shock. The backbenches sat through Darling's politics-free performance on Tuesday like the Animal Farm beasts gazing through the farmer's window in the final scene. Far too late they realised something awful was happening before their eyes: you could have cut their silence with a knife. How has Gordon Brown managed in such a short time to shipwreck himself and his party? The seriousness of it is only beginning to sink in after Labour's long hegemony. Bungling the will-he-won't-he election was a survivable self-inflicted injury. The intellectual injury is the real damage. Retreating armies raze the ground behind them to deny their enemy forage: but what Brown and Darling did on Tuesday was to flame-throw the ground ahead, right up to the far horizon beyond the next election. They have nowhere to go, nothing to feed on, no narrative path ahead, no clear political turf to occupy. Start with the character question - politically the most lethal. For his first three months Brown was "the change" the public liked - a welcome no-glitz, slightly clumsy but honest contrast in a celebrity age. But when Cameron threw "phoney" at him in Prime Minister's Questions, it stuck like napalm. He could duck the bottles thrown over his election funk, but "phoney" will stick because his comprehensive spending review smacked of panicky, comprehensive cowardice. He has lost his character just when he needs trust to strengthen his arm for the coming European treaty row. His party is suddenly gripped by doubt that the big brain has a strategy. Looking back on his content-light conference speech, it asks what he has been thinking this past impatient decade. Inheritance tax is a Labour talisman: it deeply pains social democrats to let the principle of posthumous wealth redistribution go. But it had become toxic in the 60 marginals - partly Labour's fault for never making the case for paying this or any other tax. It was too late to win the argument once the rightwing press had falsely persuaded even those with little that they were among the 6% liable. Here is what Brown should have said: "I understand this tax is widely if unreasonably hated, so we will cut it. Instead of well-off couples setting up trusts to double their allowances, we will give the same right to all without recourse to lawyers. But to be fair, the well-off must pay more in life, if not after death. So we will add a top income-tax band for earnings over £100,000." Then he should have said: "My mission is fairness, education success for all and the abolition of child poverty in our time. So I will hypothecate that new top tax rate to spend on tax credits and social programmes to improve children's life chances to reach that great goal." It would have dumbfounded the Tories. Instead Brown gave away much more than money: he gave away the argument. He let inheritance tax go for nothing in exchange, a missed chance to talk of growing inequality. We may have a centrist government, but this budget had good things only a Labour administration would do - foreign aid to be proud of, Richard Layard's therapy for depressives, a boost for the arts, help for working single parents, and children falling behind. The black hole at its heart was less the Institute of Fiscal Studies complaint about overborrowing, more the blurring of any inspiring contrast with the opposition. It failed to do enough for his first priorities. His centrepiece housing policy is in fact a cut, with less money for social homes. His education "passion" looks thin next to the populist necessity that gave health the lion's share. A review leading to the costs of better-off old people being paid will be popular, though there is no money for it for years ahead. And it redistributes to the better-off, another backward step on equality. Because we live in hope, Gordon Brown can pick himself up and start all over again, if he has the nerve and the political will. The Tories may crow now, but they too have real problems. What can they offer next? Tax cuts were their trump card, so now the party will press dangerously for more. Time is on Labour's side: mercurial political moods shift at the speed of light. Soon Brown could start to spell out a vision, with more authentic humility. He has tied his own hands financially, which makes bold moves hard but not impossible for next year's budget. What happened this week accelerates the need for a Turner-type inquiry into tax. Choices need to be aired so people can understand and support a fairer system where the poorest no longer pay a higher proportion than the rich. This much Gordon Brown owes to those he disappointed this week. http://www.guardian.co.uk/Columnists/Colum...2189462,00.html
  2. Unions and Inequality

    If once the overweening power of the unions was called the British disease, now the weakness of trade unions symbolises a very different British sickness - the tyranny of wealth and the hegemony of money. Once union power led to Britain's reputation as the basketcase of the west, racked by inflationary pay demands, begging for help from the IMF. Now the fragility of unions has helped Britain become Europe's offshore tax haven, boasting of both our "flexible" work laws and our flexible approach to taxing the rich. You should see some of the contemptuous things said and written about us now across the rest of Europe - and it's not the politics of envy but distaste for London's excess side by side with London's poverty. In a whirlwind of global capitalism more rampant than at any time since the pre-depression boom of the 1920s, there is no longer a countervailing force to stand up for people at work, the great majority of ordinary PAYE citizens. If unions had been stronger over the past 20 years, we would not have slid back to the same level of wealth inequality as 1937, nor would the top 3% own three times the wealth of the entire bottom half of the population. Union power may have made the country almost ungovernable in the 1970s, but never forget it also delivered increasing equality. Progress went into reverse the moment unions started to lose ground. http://www.guardian.co.uk/Columnists/Colum...2166423,00.html
  3. George Bush and Global Warming

    How brave is the government? The cabinet may need an Asterix potion of fortitude before it gets serious on climate change, judging by its recent chronic lack of bottle on anything difficult (except, of course, for Blair's war). Small but ferocious lobbies blow the government over at the first puff of controversy, even when public opinion is firmly on Labour's side. Last week, Alan Johnson's retreat over faith schools was as depressing as it was dangerous; he was forced to eat wise words still hot from his mouth. He should have stood his ground over obliging new faith schools to take 25% non-faith pupils in exchange for lavish state funding. The public is way ahead of him: for years polls show that the majority have opposed faith schools altogether. The "popularity" of Christian schools in this heathen country has been proved in study after study to be all about selection: faith schools screen out chaotic families who don't go to church, doubling the number of difficult children in next-door schools - and thus doubling the difference between them. Even while falling on their knees to get a place, parents still overwhelmingly oppose religious schools - by 64% in a Guardian/ICM poll. Parents faking Christianity is relatively harmless; far more alarming are the extreme faith schools for children of fanatical believers. Their leaders came out last week refusing to admit outsiders because they aim "to create the total Muslim personality" or because "the Jewish community needs to maintain its distinct identity and ethos, and has no interest in spreading its message to others". Catholics led the charge, with "Three days to save our faith schools" blazoned across the Catholic Herald. Every frocked and bearded man of faith rallied to the cause of absolute segregation, the Church of England moderates giving respectable cover to zealots. Standing firm would have struck a blow against all religious extremism: what could be more extreme than demanding that children of one faith and culture are kept in strict apartheid from all others? Some were even railing against the new 14-19 vocational diplomas that will mix schools for some classes. Refusing angry Christians, Jews, Muslims and Hindus equally would have sent a clear message about the secular state, but by giving way time after time on religious "rights", the pusillanimous government sets dangerous precedents. Alan Johnson was hung out to dry: the prime minister wouldn't have it; nor would some 50 frightened Labour MPs in marginal seats, terrified by priests in the pulpit organising local campaigns. Psephologists never found a single seat won or lost where Catholics tried to use the pulpit on issues such as abortion; the faithful still voted according to politics, not faith. But no one panics like a Labour MP in fear of their seat, though most are neither God-botherers nor genuine supporters of religious separatism. So Lord Baker's amendment in the Lords yesterday, calling for a 25% school quota of non-believers, never had a prayer: his own Tories and the Lib Dems joined Labour chicken-hearts to vote for faith separation. With Johnson's face-saver of a "voluntary" agreement on admissions to new schools, the progressive cause of abolition was thoroughly demolished. So here we are with religion as the greatest danger to the world after climate change, yet all three parties turn tail at the first whiff of incense. How about drink? Will the government get any braver on that? Patricia Hewitt's blindingly commonsense call for higher taxes on alcohol received a statutory Treasury rebuff. But the UK and Denmark are the only countries where drinking is on the rise. Its effects cost the NHS £1.7bn a year - £500m in A&E, with 80,000 drink-driven violent incidents a month. Drink consumption is highly price-sensitive, especially among the youngest pocket-money drinkers, yet alcohol now costs 54% less in real terms than it did in 1980. Drink sales fall in recessions: 10 years of unbroken growth means the chancellor has a duty to correct the alcoholic effect of his own success. Will he bravely raise the price enough to make a difference? Now, how about gambling? Again, public opinion is crystal clear; there is no popular demand for huge new casinos, let alone a supercasino. A million people in the UK now gamble online, and the number of addicts is rising, yet Tessa Jowell is beckoning foreign companies to come and register here to make us the offshore gambling den of the world. America has just banned online gambling by stopping credit-card firms processing payments to gambling firms. Why can't Britain do that too? Instead Jowell has been sharply critical of the US law. Yet it's rare to find a Labour MP who doesn't roll their eyes in disbelief at this Blair/Jowell infatuation with gambling, apart from those whose local councils are suckered by the myth of casinos as instruments for "regeneration" rather than degeneration. So why don't the spineless backbenchers just say no? A boozing, gambling nation politically intimidated by faith minorities may be a confusing moral legacy for Labour, but the real test of Labour's nerve is yet to come. Will the same wimpish timidity prevail over climate change, despite the Stern report? For 10 years Blair and Brown have all but ignored it, so will they really find the nerve to make tough decisions now? Brown proposes that the EU cuts emissions by 30% by 2020 - but that has to start right here to carry any persuasive weight. Yesterday's mad-dog press was frothing at the mouth before the report was even published: the Sun proclaimed the PM's intention as "I'm saving the world ... YOU lot are paying". The Telegraph said the state can't protect the environment. The Mail put up that renowned expert Melanie Phillips to stand at the last post against science: "The Royal Society, the government's chief scientific adviser Sir David King and a host of other ... grand panjandrums all claim there is no longer any scientific debate about whether man-made global warming is happening ... Phooey." This time Labour (and the husky-hugging Tories) need to hit back hard at Britain's know-nothing press; it could be the death of us all if it persuades voters that there is no problem, or that nothing can be done, or that no one need pay a penny more, or that tackling climate change is unfair to the poor. (Watch how useful the poor suddenly become in debates over green taxes.) Now, taking the press by the throat really would take nerve after 10 years of lily-livered, jittery subservience. http://www.guardian.co.uk/commentisfree/st...1935518,00.html
  4. Blair to be ousted as PM?

    'Rottweiler Warning," the headline flashed up on Sky News, just as John Reid stopped speaking. It turned out to be a dog-eat-child story, not the home secretary at all. One delegate was heard to hiss loudly: "I'd vote for Cameron if Reid won the leadership. I'd rather have the nice Tory than the nasty one." This must have been one of the most unpleasantly jingoistic, rightwing rabble-rousers a Labour conference has heard in quite a few years. This was Britishness as from the Millwall terraces. "No no-go areas," he boomed: "We will go where we please, we will discuss what we like." No fool, he's hard to fault on particulars: the poison is all in the sentiment and tone. How proudly he gloated that Cameron had found his policies too extreme. Indeed, if he was one of Cameron's team, that speech would have got him fired. Reformed old communists have this in common: when they swing the other way, they always go that bit too far. They never take off their combat kit: the progressive social democratic gene is alien to their psyche. So there was nothing progressive about his performance yesterday. Roy Hattersley will not be alone: his threat to shoot himself if Reid becomes leader could turn into a mass die-in of Labour supporters. But there was Tessa Jowell, first up within seconds to tell the BBC what a wonderful speech it was. Indeed, rhetorically it was a barn-stormer. So is this it, the last throw of the shrinking group of Blairites? Is this war, after all? No, take a deep breath. It probably isn't quite. But it is a sign of something almost as depressing. I lost count of the number of times Reid used the word "leadership" in his tough, tough, tough speech, as he put his marker down to be first among possible challengers. So far it's just a threatening gesture from the bruiser lurking in the alleyway. It smacks of both bullying and cowardice: without the bottle for a fight, he will hang about flashing that stiletto under his coat, hoping Gordon trips up all by himself during the next excruciating months of uncertainty. Only then might Reid, more hyena than rottweiler, scavenge up his 44 nominations from MPs, only making a move if he senses a smell of death around the Brown camp. What will be the effect of this lurking? It is designed to make sure Gordon Brown strays not one step from the Blairite straight and narrow: at home on the NHS and public-service reform, abroad on the war and Bush. He will make this interregnum yet more needlessly fraught, flashing that glint of a knife whenever Brown tries to shape his own style and agenda. If they hobble him sufficiently, he may flounder, and Reid can step up. Or some anyone-but-Reid challenger might charge through the middle, anything better than the old attack dog himself. Who knows? It will spawn enough conspiracy theories to keep the media happy and the voters bored and angry - deeply damaging to Labour. So what gave Reid the chutzpah to test the water? He must have been excited by a spectacular item on Newsnight. The US pollster Frank Luntz explored the popularity of Labour's possible leadership contenders. He showed brief video clips of each to 30 Labour-minded voters, who turned dials up and down as they watched each contender speak. Most of the candidates' clips seemed chosen for pallid dullness - except for the crucial two: one showed Brown a bit hesitant when interviewed under pressure after the coup attempt. The other showed Reid in full-on harangue: "Any court judgment that puts the human rights of foreign prisoners ahead of the safety and security of millions of British citizens is wrong! Full stop. No qualification!" Of course Reid beat Brown by miles. (Watch it yourself on the Newsnight website). As a piece of theatre, it was good TV. As serious polling, it was, according to Deborah Mattinson, the chief executive of Opinion Leader Research, "rubbish". She says she tested that "people meter" polling method for Labour 15 years ago. "It's very crude and you have no idea what they are approving or disapproving of. Of course the group went for the crowd-pleasing rhetoric. What's more, if you have cameras there, the loudest voices speak out and influence the rest." She was conducting focus groups with women last week. "Reid is seen as very aggressive. Scots, old, bald, and he's hardly known. Brown has undoubtedly suffered a bit in recent weeks - but these ordinary women voters hadn't noticed the coup. He has to be more cheerful, but he has enduring strengths with them." She is as critical too of the recent Guardian poll that assessed Brown and Cameron's personality qualities. "It's pretty meaningless to ask about a list of attributes. Most of these have nothing to do with how people actually vote for a prime minister. It's not an application to be a charming receptionist. Cameron may come out as nicer, but this isn't about niceness. If it was, Neil Kinnock would have beaten Mrs Thatcher easily. Mrs Thatcher was never seen as 'nice', but she was admired and respected. Gordon Brown need not be rattled by this stuff. Concentrate on his strengths. Some of this polling seems designed to trip him up." By the end of the conference, many seemed in an edgy, uncertain frame of mind. Despite Reid putting his fists up at the very end, there was a growing certainty that Brown was the destined man, standing so many heads and shoulders above the rest in calibre, reputation and experience. Even Blair grudgingly seemed to acknowledge it, with caveats. Peter Mandelson was sent out on to the Today programme with an only slightly thorny olive branch. Like it or lump it, the expectation is that Brown is the one. But what if he can't win? What if, in this celeb-struck era, the smiles do matter more than a strong economy? Even Brown admirers are nervy, alarmed by the polls since the failed coup. "Stable but fragile," a close Brown minister described the situation, no better than that. There is a fatalism, bordering on a death wish, hanging over some in the party right now. Just when new ideas and new faces are needed - and there are plenty around - everything hangs in suspended animation, delaying a contest that never comes, waiting for a hustings that never happens. Just when the probable next leader needs freedom to step out and show what he can do, he is kept gagged and hogtied until Blair finally sets him free. As they come up for air from the conference, probably nothing of interest reached the public. The odd announcement here and there by ministers falls on ears no longer listening to Labour. A new leader urgently needs to find a way to tell Labour's narrative anew. Meanwhile, the Tories gain a stronger foothold: their conference will give them another lift. Labour's navel-gazing must weary voters beyond endurance. Is this a party almost willing itself to fail? http://www.guardian.co.uk/Columnists/Colum...1883662,00.html Here they are, with only one serious candidate - yet bent on destroying his authority and reputation every day that goes by. If enough people really think that he is not a winner, then dump him now and choose someone else fast. Get it over. But if it is to be him, get behind him now. Build him up, don't pull him down. Much more of this and they will be staring certain and well-deserved defeat in the face.
  5. Swedish Elections

    The fall of the Social Democrats in Sweden reverberates around Europe, but sends particular shudders through those close friends of Goran Persson in Labour ranks. As strangers occupy Stockholm's governing corridors, here is a chilly memento mori for Labour. What an irony that the victors - 41-year-old Fredrik Reinfeldt's New Moderates - modelled themselves on New Labour. They took power by ditching old promises to savage the welfare state, rebranding themselves as near Social Democrat clones. Reinfeldt won by doing what David Cameron does, sounding so Social Democratic no voter could take fright. Unsurprisingly, Cameron is in close touch with the New Moderates. Here is Labour's fear. How can a good government lose power when the country is flourishing? With a rising growth rate of 5.6%, low interest rates, thriving manufacturing and exports Britain would die for, how did it happen? True, unemployment is a problem - but hardly worse than in much of the EU, while Sweden's welfare system is the envy of the world. Abroad, Persson wasn't hampered by two unpopular wars with no end in sight. So why? Swedish Social Democrats held many sessions with Labour about "how to renew in office", swapping fall-asleep thinktank tomes on staying alive. Aware of the threat from a new young face after 12 years in office, Goran Persson tried to deflect criticism for staying too long by promoting fresh-faced young ministers, as Tony Blair has. But all to no avail. Sweden shows "the economy, stupid" is no longer enough to win. That is alarming to Gordon Brown whose claim to the top job is Britain's unaccustomed economic strength. The warning from Sweden is that when things feel so good, voters feel they can take a punt on a fresh new party. "Time for change" is always a potential winner: a natural democratic urge tugs voters towards throwing the bastards out after a while. Visiting Sweden during the campaign and talking to those ruefully picking over this week's result, I can see stern lessons for Labour. Persson's party ran out of steam. Its leader stayed far too long, a risk Labour faces if there is a seamless Blair/Brown continuity of more of the same, going on and on. Brown seems dangerously eager to emphasise "no change" on every policy of importance. But change or die is the lesson of Sweden. Persson forgot his wise maxim: in opposition the left must behave like a government, and in government it must act like an insurgent opposition. But in Britain and Sweden left-of-centre governments have fallen into the trap of micro-managing departmental policy, forgetting the lifeblood of politics. Bogged down in minutiae, devoid of infectious enthusiasms, parties forget their identity. Reduce the question to who manages best, and why shouldn't voters without emotional attachment give the other lot a try? Blair's four committees devising 10-year plans are unlikely to fill the vacuum at the heart of Labour politics. Here's the other great lesson from Sweden. They forgot about women - yes, even in Sweden. New Labour has won the past three elections only on the strength of women's votes - yet Labour too has forgotten the importance of connecting with them. Sweden's women ministers fumed during the campaign as Persson ignored the party's record on childcare and maternity and paternity leave, which should have been the Social Democrats' proudest electoral assets. He let the right set the agenda with traditional male politics when it is the women-friendly subjects that win the Social Democrat vote. Forgetting about women seems a peril of power. But in opposition look how Cameron's campaign is devoted to pleasing women, in tone, style, words and demeanour: the polls tell him women are more green, family-minded and worried about work-life balance. Never mind if it's all empty mood music, trading on what Labour has done without promising anything more than mild exhortation; Cameron has the right tunes. New Labour came to power understanding what women want - but they have lost it and Cameron is winning the women's vote. War has done Labour all kinds of damage - but especially among women voters. Even in realms where Blair was once undisputed champion of the women's vote, he has chased them away with strident emphasis on punishing children and blaming parents. Failure to work with the grain in reforming health and schools is alienating the women who staff them and use them most. Yet consider what Labour has done for women. Labour's best narrative is the story of its family revolution, with Sure Start for babies, universal childcare, after-school and breakfast clubs, domestic-violence laws, tax credits and the children's trust fund. Why has so much political capital on brilliant social programmes - noticed most by mothers - been allowed to vanish from the political radar? Sweden's Social Democrats are asking these same questions - far too late. It will take Gordon Brown more than intimate interviews about his children to recover this lost ground. Above all, Labour needs a woman as deputy leader. And not any woman, but the woman who persuaded the party that childcare was the only route to getting families off welfare and into work. That means Harriet Harman, to remind what's been done while pressing for much more. What a pathetic figure Ming Campbell cut in an ill-advised photo opportunity on the beach with his tiny cohort of women - only nine out of 63 MPs; yet the Lib Dems, like the Tories, still refuse to use quotas to get more women into parliament. Labour has 97 women MPs. Polls show that voters feel women are more "on their side" - yet Labour still fails to use their strength. The Swedish result warns that without the women's vote, Labour is lost. It's not an add-on: women are the main event. The last, brief rightwing government in Sweden left heavy footprints. It cut the welfare state and damaged education by bringing in private schools, leaving a far more socially segregated system. The New Moderates may deliver more of a shock than voters were lulled into expecting. If so, many may regret the decadence of throwing out a good government just because they were bored. But decadent or not, here is the wake-up call Labour needs: competent governments can be killed by boredom. People want circuses with their bread. In politics as in everything else, humans also need novelty and romance. http://www.guardian.co.uk/commentisfree/st...1875679,00.html
  6. The Corruption of New Labour: Britain’s Watergate?

    The arrest of Lord Levy, the prime minister's swag collector, sends a tremor through the Labour party. Could this be the way the Blair era ends? The rising tide of this scandal may yet drown him, if no other dangerous flotsam in a tide of troubles sinks him first. But if this is to be his nemesis, how tragically unnecessary. Many blame Tony Blair's bedazzlement with business, money and the glint of markets. Unfair, I suspect. Put this into the context of the many countries mired by this same conundrum: how do you pay for democracy when voters despise politics and won't join parties? To equate dubious party fundraising with "corruption" misleads the public into thinking this is about personal gain. But when a pair of undeclared cowboy boots can make the front page as an outrageous bribe, British politics is pretty clean. As for party donations for peerages, there is probably no prime minister or opposition leader who has not done it. That cuts no ice with police enforcing the 1925 Honours (Prevention of Abuses) Act - but it hardly makes Blair exceptionally venal. Party fundraising did for Chancellor Kohl, the man who united East and West Germany at great political and financial risk; he deserved a better end than to sink under such a scandal. President Chirac's tainted past also concerns the collecting of money for politics. As for the US, the stink of cash-raising in its electoral process makes it barely a democracy at all. Far too late, Blair now seeks a cross-party consensus with an inquiry lead by Sir Hayden Phillips. All parties are up to their eyes in unsavoury fundraising and questionable peerages. The Lib Dems' biggest donor faces 53 counts of forgery and perjury, while both Labour and Tories took secret loans. But agreement looks unlikely. The Tories' shamelessly disingenuous proposal to cap all donations from individuals, companies or unions at £50,000 is cunningly designed to destroy Labour while leaving their own funds untouched. (They have hosts of rich members, Labour has few.) The unions this week gave indignant evidence that the cap would cut their annual contribution to Labour from £8m to £800,000. Meanwhile the Tories glide along on a sea of money: in the year before the last election, 271 Tory constituencies raised £17m that they were free to spend alongside the official cap of £20m for the election itself. Wobbly Labour marginals watch anxiously as money is gushing in to newly selected Tory candidates buying a long, lavish lead-in to the next election. One marginal Labour MP watching his opponent says glumly: "To be frank, even if we had money for a big campaign, I'm not sure what we'd say. If we knocked on doors, what exactly would we ask people to join Labour for? Um, public service reform, nuclear power or what?" Labour's deep malaise - 10 points behind, and adrift until there is a change at the top - makes fundraising near impossible. http://www.guardian.co.uk/commentisfree/st...1820256,00.html
  7. Inheritance Tax

    The pips will be squeaking in the Commons today as Dawn Primarolo, the paymaster general, takes on the rich over the trusts designed to avoid inheritance tax. This is only one more tax loophole closed, as she and the chancellor stalk the avoiders, the state forever destined to plod several steps behind the sharpest tax lawyers. But from the shrieks of fury in the Mail, Telegraph and Express, you might think this was indeed revolution from Gordon Robespierre and Dawn Defarge. But it only brings in a modest £15m in year one, and £100m a year in a decade. Before plunging into the detail, step back a moment and look at the big picture. What is happening to wealth? First the good news: nearly 70% own their own homes, able to remortgage to give their own children that vital first step up on the property ladder, and many now inherit their own parents' homes in a midlife windfall. Yet even the average homeowner still doesn't share much of the national wealth - and certainly isn't touched by this new trust-fund tax. The median property value (where half are worth more, and half less) is £157,500. The average in the south-east is £192,000. But no one starts to pay any inheritance tax until the estate tops £285,000 - soon to be £325,000. How many people is that? Just 6% of all estates. What's more, this change to ensure that all trusts worth more than £285,000 should now pay a fairer share of tax will touch nothing like even that 6%, but the far smaller proportion of those rich enough to gift away more than £285,000 to a trust in their lifetime. So when George Osborne astonishingly claims that this modest tax change is "a wake-up call to middle England", frankly it takes your breath away. Middle England? It shows just how wildly out of touch the Cameron set can be with what is ordinary. Notting Hill is a stratosphere away. Do they know the median (middle England) salary is just £21,000? In personal property and liquid assets, the top 10% owns half of everything. The bottom 50% of the population owns just 6%. Count liquid assets alone, and the top 1% owns 63% while the bottom half owns just 1%. And this wealth inequality is growing fast, year on year. Money is not trickling down but gushing upwards. Julian Le Grand, economist and recent Downing Street adviser, looking at revenue for 1999-2000 found that total marketable personal wealth (not counting pensions) stood at £2,594bn - while what he calls the "pitiful" yield from inheritance tax was just £2bn. "Wealth passes almost untaxed between generations through lifetime gifts, through exempt items such as agricultural land and forestry, and through devices such as discretionary trusts," he writes. Since then, Gordon Brown has been tracking the cash, recouping many billions. He has obliged tax lawyers to register any clever tax-avoidance scheme being marketed so that new loopholes can be speedily closed. (A wheeze called dividend stripping was a new legal way to declare dividends as notional losses: it would have lost the treasury £1bn a year, but was quickly outlawed.) The stealth is all on their side. But tracing money is hard. The rich can pass on a private business 100% free of tax, ditto agricultural land. Plenty of fiddling goes on with offshore funds which the Revenue has little chance of tracking, despite new powers to snoop into suspect offshore accounts. But the main loophole is the extraordinary rule that you can give away any amount free of tax if you stay alive for seven years thereafter. It's like something out of a fairy story, that magical number seven. When will I die? Can I keep Granny's body in the airing cupboard and pretend she lasted the mystic seven years? It can intimidate the elderly into giving away their money before they want to: what if one of the children turns greedy and won't help out if I live long and need help? Gambling on how long you will live is a kind of tontine. It's time to tax all lifetime gifts, above a set allowance. The row today is over taxing interest in possession trusts, so they end up paying the same as inheritance tax - a fair plan. (Remember we are only talking about a tiny proportion of the rich.) The only oddity is that if they tie up money until a child is grown up, they will pay the tax but if they gift it outright and survive the magic seven, then they pay nothing. But it's the seven-year rule that is out of kilter. Time to kill it off. There are scores of good ideas for fairer property and riches distribution - another subject for another day - but some could be very popular plans, if only Labour would start an open discussion about the danger of infinite inequality escalation. Just think how rich you have to be to create a trust worth more than the tax threshold of £285,000 in your own lifetime with money you don't need. You would have to be in the top 0.5%, which Cameron and Osborne certainly are. No wonder they don't know what "middle" is when Osborne storms: "This is the single most iniquitous and damaging of all the tax measures ... This is ordinary taxpayers who have saved and built up assets and want to leave them to their children in a responsible way." He called on history: "Trusts originated at the time of the crusades when knights departing for the Holy Land wanted to ensure their families were certain of a regular income." The Telegraph wrote of "the subjugation of the family to the will of the state"; others in the same mad vein describe as "normal" those families who are abnormally rich. When you spell out the trajectory of future wealth gushing up to the top, almost everyone is alarmed. Whatever people might set as their own idea of fairness, most think that there must be some cap on inequality. Yet you don't hear the government argue the case. Brown didn't mention the tax on trusts in his budget speech, let alone explain why it is right and fair. No wonder the right can frighten the living daylights out of middle England so easily, when the left says nothing about excess. Redistribution by stealth wins no arguments. http://www.guardian.co.uk/Columnists/Colum...1812151,00.html
  8. The times are out of joint. Parties are all wearing each others' clothes and voters have no reason to believe any of them. Nothing is what it seems. Tony Blair threatens his 47th get-even-tougher criminal justice bill while John Reid throws paedophiles to the local mobs to deal with. Gordon Brown risks his dignity by inviting the enemy Mail on Sunday in to watch football with him to flaunt his macho Eng-er-land cred while Cameron talks so softly on relationships that Brown calls him "namby-pamby". The Lib Dems swerve right and abandon their totemic 50% top tax rate just as a gaping vacancy opens on the left. What's really going on? Beneath the surface of this confusing political landscape is a confused electorate, as populist politicians try to follow them, however confused, instead of leading with their own visions. Crime is only the worst example, but it is a paradigm for other Labour policy disasters. No one tells the voters that crime is falling: let them stay scared senseless. No one says we are already the most punitive nation in the EU, so prisons burst because of political cowardice. No one tells the truth about what really works in cutting crime and reducing reoffending: the answer is rarely prison. Horrible crimes stick in the mind, but there is no increase in knife murders. Who dares say the blindingly obvious: there will always be murders, child sex horrors and boys with knives? We will never run out of the stuff of nightmares. A risk-free human society is not only impossible but undesirable. Calm down. Things are not getting worse. Instead, Reid and Blair fight the fire with petrol. That is why Mori finds that, of all G6 nations, the UK public has least confidence in its government "cracking down on violence and crime" although it "cracks down" hardest. Checking for things people get wrong, Mori found that 83% wrongly said violent crime was rising, 80% wrongly thought the number of asylum applications was soaring and 68% wrongly thought truancy was at its highest ever. Blair's "tough on crime" pigeons are home to roost, no longer a passport to success but a political calamity. Most people don't even believe police numbers have risen. Ipsos Mori's annual State of Britain seminar made very grim listening for Labour this year. Here is new, uncharted political territory. Here is a country that feels good about itself and its prospects yet really hates its government. It gives government no credit for anything good. For a start, forget the old slogan "It's the economy, stupid": it no longer seems to apply. Mori's new international study finds the UK has the most economically confident citizens in the G6 - more than the US. When people are asked how they feel about their own future standard of living, 64% are confident, against 36% in France. Yet, when asked if "this government's policies will improve the state of Britain's economy", they give an overwhelmingly negative answer: only 38% agree, half as many as in halcyon 1997. It's the same story again when asked what they think about the overall state of education and the NHS. The British top the poll of nations for satisfaction - but, when they are asked if the government's policies will improve public services, again the government gets a monumental raspberry - only 33% agree. At any mention of the government, everything suddenly turns negative. Only a third, or many fewer, believe any of these true things: there are more doctors, nurses and teachers, fewer children are killed on the roads, class sizes are smaller and all four-year-olds have free nurseries. I suspect that is because all that many voters hear from the top is Blair fighting to "reform" everyone who has achieved these things. What else can people conclude but that his government is failing? Ben Page, Mori's chair, finds Blair's own rating at its lowest ever. He is as hated as Margaret Thatcher at her lowest point. Only 64% of Labour's own supporters now want them to win the next election. How bad is that? http://www.guardian.co.uk/commentisfree/st...1801624,00.html
  9. Pay Rates

    What is anyone worth? Since people trust GPs above all others, it may reflect popular will to super-pay some of them £250,000, with their average £100,000 doubling since 2000. But if you want proof for the counterintuitive truth that more money doesn't make people happier, then the miserable doctors are a good example. Neither consultants (68% increase) nor GPs seem one jot happier for their recent windfall. Their union, the BMA, pumps out ever angrier anti-government press releases complaining of "vindictive treatment" in this year's "shocking" pay offer as they demand another 4.5%. So don't expect gratitude. Mori research into attitudes towards employers shows that of all workers in the public and private sectors, GPs and the police are most prone to rubbishing their employers and their service: teachers are most likely to talk positively about theirs. Doctors may be hard-working, but they do whinge. If higher pay does not lead to happiness or gratitude, how people feel about their pay is complicated and exceedingly important. Research finds the absolute sum matters less than the way people perceive fairness and transparency in pay. So when a dazzle of daylight was shone on the pay of BBC radio stars, it sent out a frisson of shock. Bloggers and letter-writers fulminated about the BBC licence fee - one grumbling that his 30 years of fee barely covers one hour of Jonathan Ross. And that was before the news that a bidding war for Ross has just risen to £15m. News like that makes people stop and think about pay, reward and merit. Where to begin? The first rule should always be transparency. The BBC should reveal all fees to ensure there really is a genuine market in talent out there. And that should be a general rule, not just in public bodies but everywhere. People do know more or less what everyone else earns in the public sector, so why not make it compulsory for all? In Norway and Finland, anyone can summon up anyone else's tax return on the internet - and why not? The shock at first would be seismic, with eruptions of rage and embarrassment all round. But it would put a stop to secretive employers who divide and rule by spreading uncertainty and insecurity about what the person at the next desk might be getting. Making tax returns public helps to stamp out fraud and tax evasion, risking exposure of any undeclared income. After the initial shock, people would soon get used to the idea. As it is, money is the great taboo. People are more likely to reveal intimate secrets of their sex lives than ask someone what they earn. Shocking facts emerge from time to time: chief executives who in 1979 paid themselves 10 times more than their workers now pay themselves 54 times more. Such revelations cause intermittent indignation, but it soon subsides into a "nothing can be done" gloom. Margaret Thatcher's deadly legacy has been to spread her Tina economic fatalism. "There is no alternative" has entered the British soul, leaving a sour sense of helplessness that iron economic laws shape our destiny: we ignore them at our peril. But there is no iron law, there is only political choice. The Nordic countries, with far more successful economies, refuse to suffer our unjustifiable pay gap. Nations can and do choose differently how they share rewards: that's politics, not economics. For example, the Work Foundation proved that the globalised market for CEOs is a myth. Most top CEOs are not only British, but bred within their own companies. They pay each other these stonking great sums by mutually agreed cartel, all racing to prove they are top dog for no extra productivity or risk. Their pay distorts the public sector with odious comparisons, especially now that the division between the public and the contracted-out is blurred. Envy and discontent spills over through failing to nurture a sense of a distinct public ethos in the public sector that has its own honourable rewards. Even with pay briefly having risen faster than in the private sector, public employees are still paid less than the private workforce. The old compensations of secure pension, stability, security are exchanged for constant turbulence and badly managed "reform" at risk of Gershon down-sizing. So what's the upside, if they sit beside some outside private contractor or consultant earning far more? The Work Foundation finds that the happiest employees are not the best paid but the best respected. People who work collaboratively, who profit-share. Teams deciding their own work practices and rewards are the most content and stay the longest, even if pay is higher elsewhere. Mammon is not king. Performance-related pay is another Thatcherite hangover: she tried to get written into Major's Citizen's Charter that all employers must "reward the good and punish the bad" before they earned a charter mark. (Remember them?) Her spirit of cut-throat competition remains the prevailing management dogma, though there is no research evidence that it increases productivity one iota. On the contrary, research finds performance-related pay detested by the managers administering appraisals with half-hearted embarrassment, and by the workforce on the receiving end of arbitrary judgment. Most extra sums earned are piffling for the affront caused. Or they become automatic, like the fat City bonuses now so predictable that mortgage companies accept them as part of regular pay. This evidence-free management mantra persists, despite proof that it is collaboration, not pay competition, that best retains the best people. The greed-is-good culture, unchallenged by Labour, corrodes trust and social solidarity, spreading dismay and unease. Am I getting enough? What is enough? What am I worth? The myth of a rational market in pay is mainly a cloak for rewards that make little sense. To be sure there is a transparent, functioning market for a few scarce skills: plumbers are hard to find, there is only one David Beckham and probably one Jonathan Ross. Admired entrepreneurs such as Richard Branson are reckoned to deserve whatever they have created. But the great majority of people work in markets that are artificial, dominated by tradition, where no one can explain quite why x job is worth more than y. Women's jobs are marked down because women traditionally do them. Unspoken cartels operate: employers need not illegally conspire to keep cleaning, checkout and care jobs at rock-bottom wages even when there is a shortage, preferring to go short-staffed rather than up the local pay rate for all. Because the highly paid command the citadels of public debate, they grossly distort the true picture of the way most people live now. Knowing only people like themselves, they refuse to believe that fewer than 4% earn over £52,000 - or that two-thirds earn less than the average £28,000. There are questions that need asking. Is there any good reason why any public servant (including the head of the BBC) should earn more than the prime minister? Making sense of reward is difficult - but the debate has to begin by throwing open the books. It wouldn't hurt much if everyone had to do it together. Let's see how the culture changes when we can all read each other's tax returns. Why not? What's to hide? The most equal countries do it. http://www.guardian.co.uk/commentisfree/st...1758105,00.html
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