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Gordon Brown: Son of Thatcher


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After a month of partying on deck, British politics is back in the engine room. It's the economy, stupid, again. But what a difference a good party makes. Yesterday's pre-budget statement by Alistair Darling was in truth George Osborne's first budget. All its most sensational proposals were headlined in Osborne's speech last week, including taxes on non-domiciled residents, taxes on aircraft, and relief of inheritance tax. Not since Labour adopted Thatcherism in 1997 has a new administration relied so shamelessly on its opponent for inspiration.

Darling was clearly in a bind. He had prepared a pre-election budget intended to shoot a number of Tory foxes, and was left shooting them to no effect. He also had to cover for the sorry inheritance left him by his predecessor, the prime minister.

Britain is entering a period of lower economic growth without the cushion of a budget surplus and with a heavy debt burden. It has the largest budget deficit of any of the EU-15, and borrowing that, though reduced, would make Brown's old mistress, Prudence, blush.

Given Darling's eagerness not to frighten the markets, he has increased taxes by some £2bn (thanks in part to the Tory proposals) but continued the cutbacks in public service increases of previous spending rounds. Only health has an above-inflation award, lower than previously experienced but possibly higher than the NHS can spend wisely.

Darling even turned to the Tory mantra of efficiency savings and "cutting government waste". He claimed to have identified a staggering £50bn of waste in the public sector over the current decade, presumably again Brown's doing. These figures are rarely specified, but they do not include the now weekly revelations of collapsed agencies and defunct computer projects.

We heard nothing of £16bn on ID cards, £12bn on an unnecessary NHS computer, £6bn on a defence mainframe, and further billions blown on offender management, rural payments, abandoned hospitals, tax-credit losses and consultancy fees. Someone might even care to cast a sceptical eye on the ludicrous sums being splurged on the out-of-control Olympics project, conservatively costed at £9bn. This is all serious money, the price of sheer incompetence in modern British government.

It was extraordinary that Darling could find nothing to sweeten the pill bar what he read in Osborne's speech. He was forced to acknowledge the most strident message that went out from this year's conferences, that taxes matter. The Tory tax proposals, not Cameron's conference speech, are what blew away the polls. Taxes rewrote whatever Darling had originally intended to say.

This message needs handling with care. The public certainly hates inheritance tax, despite it being the fairest impost in the book - a tax on windfall, unearned wealth. But it has become identified with taxing thrift, family values, home and hearth and even bereavement. No tax carries more emotional baggage. The Tory focus groups picked this up and Labour's did not.

Less easy to read were the other changes. Those to non-domicile taxation were overdue. This avoidance dodge was politically indefensible. You cannot excuse the rich from taxes because they might go and work in Monaco, and then tell ordinary mortals to cross-subsidise them. For 10 years Brown had this loophole staring in his face, but was so busy cosying up to the rich and famous that he believed their blackmail - or rather bluff - that Britain's financial services would be devastated if he closed it. It was like registering the City of London in Liberia.

The same scam operated for private equity operators. One, Jon Moulton of the aptly named Alchemy Partners, was reported as telling a chartered accountants' conference that many private equity punters, resident British citizens, paid no tax at all. To be in the non-dom and private equity game is clearly to be excused all fiscal duties. Brown clearly shared the view of the New York society queen Leona Helmsley, that "only the little people pay taxes". He has now had to be taught a lesson in redistributive politics by the Tory party.

Yet all this is playing in the fiscal foothills. It does not approach the great mountains that tower over public finance, those of pensions, social security and care of the elderly. Here the costs are astronomical and, as a result, unmentionable. The remedy lies only in a seismic shift in income tax or a redistribution of social services from centre to locality and from central to local taxes.

This is the tax equivalent of Mordor, before which both Brown and Cameron are quivering hobbits. The public will not tolerate new personal taxes when they do not trust those receiving them to spend them wisely. They suspect, with good reason, that extra taxes will be blown on doctors' pay or useless computers, on police bureaucracy or extravagant academy schools. They crave accountability and do not get it.

Evidence from across Europe (gathered in the government's 2004 "balance of funding" review) suggests that the public will pay more taxes only when they can see what these are for. They will even accept variations in service levels provided they have voted for them directly, and given some equalisation between rich and poor areas. They no longer regard council tax as meeting that remit. It is a central tax in all but name, and hugely unpopular.

The way forward can only be the European way, to devolve a major slice of spending on public services back to where it was before the mid-1980s, to local authorities. There it must be covered by some element of ability to pay - as bravely proposed by the Liberal Democrats. Darling cannot go on financing central programmes with above-inflation rises in a partly regressive property tax. There is no alternative, one day, to some form of local income tax. Council tax could be cut by a quarter with roughly one pence on income tax. Scotland is even now contemplating such a proposal. Yet ask Brown or Cameron for a view on such fiscal devolution, and they will look as if you wanted to murder their cat.

Giving taxpayers some scope to determine the level and quality of their public services is the only way to sustain future rises in public expenditure. That scope can come only through the local ballot, over health, police, education or whatever. Local income-related taxes exist in almost every country in Europe. They are intelligent taxation. Only in Britain do they scare party leaders witless.

http://business.guardian.co.uk/prebudgetre...2187404,00.html

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Guest Stephen Turner

All parties constantly play to the "undecided minority" in the marginal seats, this means that all policy is forced to kow-tow to the supposed predjudices of this relatively small group, hence inheritance tax proposals. The only other option open to Labour is to reinvigorate its natural core vote, this could be achived by forcing the rich to pay a fare share, as opposed to no share at all, bringing an end to the ludicrous failure of PFI, and returning these public institutions to the public purse, and scrutiny, bringing a timely end to the Iraq farce, and a firm promised to never take this Country into an unconstitutional war again, scrapping the Thatcherite anti Trade Union laws, and so forth. But as all of the above is anathama to the Neo-Con,Neo- Labour shills and placemen, we will continue to enact policy that only serves the interests of the true Elite, and the swing voters of the Home Counties marginals.

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All parties constantly play to the "undecided minority" in the marginal seats, this means that all policy is forced to kow-tow to the supposed predjudices of this relatively small group, hence inheritance tax proposals. The only other option open to Labour is to reinvigorate its natural core vote, this could be achived by forcing the rich to pay a fare share, as opposed to no share at all, bringing an end to the ludicrous failure of PFI, and returning these public institutions to the public purse, and scrutiny, bringing a timely end to the Iraq farce, and a firm promised to never take this Country into an unconstitutional war again, scrapping the Thatcherite anti Trade Union laws, and so forth. But as all of the above is anathama to the Neo-Con,Neo- Labour shills and placemen, we will continue to enact policy that only serves the interests of the true Elite, and the swing voters of the Home Counties marginals.

So true. What has surprised me is the way Labour MPs have gone along with this. I know Blair kept a tight control over the selection of parliamentary candidates so ensuring that socialists did not become MPs. He then refused to promote anyone who showed they were willing to question Blair's leadership. We therefore have a fully integrated Thatcherite Labour Party that is under the control of the media barons and the fat cats in industry.

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Guest Stephen Turner
All parties constantly play to the "undecided minority" in the marginal seats, this means that all policy is forced to kow-tow to the supposed predjudices of this relatively small group, hence inheritance tax proposals. The only other option open to Labour is to reinvigorate its natural core vote, this could be achived by forcing the rich to pay a fare share, as opposed to no share at all, bringing an end to the ludicrous failure of PFI, and returning these public institutions to the public purse, and scrutiny, bringing a timely end to the Iraq farce, and a firm promised to never take this Country into an unconstitutional war again, scrapping the Thatcherite anti Trade Union laws, and so forth. But as all of the above is anathama to the Neo-Con,Neo- Labour shills and placemen, we will continue to enact policy that only serves the interests of the true Elite, and the swing voters of the Home Counties marginals.

So true. What has surprised me is the way Labour MPs have gone along with this. I know Blair kept a tight control over the selection of parliamentary candidates so ensuring that socialists did not become MPs. He then refused to promote anyone who showed they were willing to question Blair's leadership. We therefore have a fully integrated Thatcherite Labour Party that is under the control of the media barons and the fat cats in industry.

I believe that the coup, following John Smiths death was so sudden, and so complete, and the victory that followed so spectacular, that most left leaning members were cowed into, if not submission, then shameful silence. nobody, for awhile at least, asked the question, was the victory atributable only to Blair, or because the tide had turned for the Tory party, and a much more radical stance would also have won the day.

People easily forget the fear that surrounded the 97 Election, that the hated Tories would somhow sneak back into Number Ten. Hindsight, of course, proves how unneccassary, and ultimately damaging that fear proved for progressive politics.

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All parties constantly play to the "undecided minority" in the marginal seats, this means that all policy is forced to kow-tow to the supposed predjudices of this relatively small group, hence inheritance tax proposals. The only other option open to Labour is to reinvigorate its natural core vote, this could be achived by forcing the rich to pay a fare share, as opposed to no share at all, bringing an end to the ludicrous failure of PFI, and returning these public institutions to the public purse, and scrutiny, bringing a timely end to the Iraq farce, and a firm promised to never take this Country into an unconstitutional war again, scrapping the Thatcherite anti Trade Union laws, and so forth. But as all of the above is anathama to the Neo-Con,Neo- Labour shills and placemen, we will continue to enact policy that only serves the interests of the true Elite, and the swing voters of the Home Counties marginals.

So true. What has surprised me is the way Labour MPs have gone along with this. I know Blair kept a tight control over the selection of parliamentary candidates so ensuring that socialists did not become MPs. He then refused to promote anyone who showed they were willing to question Blair's leadership. We therefore have a fully integrated Thatcherite Labour Party that is under the control of the media barons and the fat cats in industry.

Let's be honest, the Labour Party effectively died in 1994 with the death of John Smith. They have since contrived to transform themselves into "Tory-lite", which has resulted in the Tories scrambling to change their fortunes around by metamorphising firstly into "neo-Tory-lite", then "green-neo-Tory-lite". And still the dance continues.

I think the way forward for British politics, is for policies to be put to the British public in the form we find most easily digestible: an X-Factor-style TV show. MPs will come on the show to promote their policies with all the ritz and razzmatazz of a Saturday Seaside Special, the judgely-huddle of three (Dennis Skinner, Boris Johnson and Nigella Lawson) will ruminate, cogitate and digest, then the Great British Public will get the final say as to whether it becomes enshrined in law (calls cost 25p above your normal network rate). Co-producers at Blue Peter will get to decide what actually happens in the event of technical mis-haps.

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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

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