A couple of post-budget polls show post-budget combined support for the coalition parties remarkably steady – one at 59% and the other 56%, but with a move from the Lib Dems to the Tories, with Labour also picking up a bit of support and “others” squeezed down.
Unsurprisingly, the budget is less popular with Lib Dem voters than Tory voters. It’s less popular with our activists too. Most Lib Dems recognise the need for tough action to sort out the mess the nation’s finances are in, and Nick and Vince have been talking about it for long enough.
It has become fashionable in the last few days to describe VAT as a “regressive”, and by implication unfair, tax. This is usually followed by complaint about how hypocritical it is of the Liberal Democrats to agree to an increase in its rate.
But VAT is not, by the simplest definition, a regressive tax. A regressive tax is one where the rate of taxation decreases as the value of the thing being taxed increases. A progressive tax is the other way round. Income tax is progressive, because those on higher incomes pay a higher rate of tax on it. Council tax …
Like many here, the idea of a coalition with the Tories goes rather against the grain for me. What convinced me to at least give the ‘new politics’ a chance was not the thought of David Cameron in Number 10 (and certainly not the idea of Boy George in Number 11), but the amount of positive inclusions in the coalition agreement.
Mark Pack has done a good job, here on LDV, of going through the agreement line by line. There is much for us to be happy about. What still causes me concern, however, is the amount that is not …
The Labour Party and the media in general are still figuring our how best to attack the Lib Dems – a party which, they all believed not so long ago, could be ignored, safe in the knowledge that it would never get near power.
Back then the strategy was simple: ignore when possible and insult when not. Rarely would you hear a mention of the Lib Dems in the press. As far as the tabloids were concerned, the party hardly existed except when some scandal erupted. Labour and the Conservatives rarely felt the urge to address …
Frankly, this Budget is ghastly. There are some consolations such as progress towards the 10k tax allowance, but overall it’s awful.
I don’t blame Labour for everything. While they made mistakes, they were right to bail out the banks. And it is true that most of the pain is due to the international economic crisis.
But Labour did make this crisis worse. After a few years of financial restraint, they flooded public services with money. They should have increased the spending more gradually, and coupled it with reform to improve productivity. Instead, productivity fell. This isn’t hindsight, the point was made at …
Largely overlooked in the Budget was the confirmation of plans to introduce across the state sector a new standard for fair pay. The intention is that the best paid will receive no more than 20 times the salary of the lowest paid.
There is a wealth of detail still to be worked out, though reassuringly much of that work lies in the hands of Will Hutton, who is heading up a commission on fair pay in the public sector. Particularly important are questions of how broadly the public sector is defined (similar to the questions raised by Freedom of Information legislation, whose remit …
With annual borrowing of £160bn and a massive blank where Labour’s plans for deficit reduction should have been, this was always going to be a tough Budget – arguably the toughest since the 1980s. Some extraordinarily difficult decisions have been made to avoid an even worse crisis. Foremost amongst these was the decision to raise VAT from 17.5 to 20 percent.
Through the election campaign, all three prospective Chancellors were asked about VAT, and we all answered in exactly the same way: we have no plans to raise it, but we cannot rule it out. In fact, that was my position …
It was never going to be an easy day. No-one enjoys having to make the kind of cuts the Coalition had to yesterday, but the consequences of doing nothing would have been far worse. I recall sitting in meetings of the Lib Dem Federal Policy Committee as we were costing the manifesto, and quickly realising that even on the generous economic forecasts of the Labour Government, it would be impossible to deliver every policy that we wanted, due to the incredible mess that the public finances had become.
There are a number of things we can take from the budget, Liberal …
There were two articles in The Sun the other day on public sector pay. One was headed ‘£240k boss search axed’ and was a reference to the fact that the Government has vetoed the proposed salary package for a new Chief Executive of the Audit Commission.
The other much more substantial article was over the LGA’s search for a Director of Communications on £124,000 a year.
(As someone who receives a shilling or two from both organisations I must declare an interest.)
Meanwhile Nick Clegg has been applauded by the Daily Mail for his comments on public sector pensions, calling them ‘gold-plated’ and …
Inspired by Journalism Grads: 30 Things You Should Do This Summer and prompted by Stephen Tall, last summer I ran a list of 30 suggestions for would-be politicians, particularly those new to public office or seeking it in the next few years. As it went down well, here it is back for a new summer and a new Parliament, with a new lick of paint, a few updates along the way and my thanks to those who commented last year:
Last week, people across the UK celebrated Refugee Week – a time to reflect on the contribution refugees make to their communities around the UK, and celebrating that refugees are welcomed and valued here.
As we approach the 60th anniversary of the UN Convention for Refugees next year, it is ever more important that the new government honour our proud tradition of offering shelter to those fleeing persecution in their own countries. It is clear that the main countries refugees have been fleeing from over the last ten years – Afghanistan, Iran, Iraq, Zimbabwe, Eritrea – are countries where …
People rather like to be able to blame someone else for the hard choices. Speaking to that angry customer at work, isn’t it so much easier to blame management or “the rules” for not giving her a refund. Isn’t it so much harder – and less pleasant – to explain to her that you’ve made the decision to deny her request and you could have decided otherwise, even though you’d rather like having that power.
Politicians are no different. We want to have the power, but it doesn’t hurt if someone else can take the blame for those unpopular choices.
With the current scramble by the new coalition to find savings and reduce the size of government, it is perhaps a strange time to be proposing that, in one area at least, the state should expand its remit, but the case for renationalising the railways has never been stronger.
I am certainly not a fan generally of nationalisation of anything, and still think that the coalition should flog the Tote, Channel 4, the Channel Tunnel Rail Link etc, but think that the British Railways must return to public ownership, not for reasons of ideology or sentiment, but simply because there is …
Nick Clegg has repeatedly promised in recent weeks that the coalition government’s deficit reduction plan will be fair. But it will not be easy to deliver on these words. ‘Fairness’ cannot be measured simple by considering the gap between the richest and the poorest: as the Institute for Fiscal Studies has shown, during the last three recessions, it was low to moderate income households who were hit hardest.
All the evidence so far suggests that it has been no different this time round. It is the working poor who are struggling most when it comes to the labour market, security of …
The Coalition Agreement stated under paragraph 15 on Foreign Affairs that, “We will work to establish a new ‘special relationship’ with India and seek closer engagement with China, while standing firm on human rights in all our bilateral relationships.”
Labour commentators have speculated that by making a distinction in UK’s relationship with the two Asian giants, India and China, the Coalition may be seeking to pitch one against the other.
I disagree and believe this careful choice of words was used to encapsulate the different historical links UK has had with these two countries and to point the way forwards.
It may sound a challenge, cutting £44 billion from public spending.
But actually, it’s easy.
Not only that, it can be done without hitting the least well off. Without cutting worthwhile public services. And if you’re so minded, you can even drape a “progressive” label over it all.
How to do it?
Simple.
You see, the last Labour Budget contained overall spending totals for the government that mean a cut in spending of £44 billion (using the calculations form the Office of Budget Responsibility). Now, because Labour didn’t publish any departmental spending total plans beyond the current financial year, we don’t know where those £44
It’s Refugee Week, and this year the British Red Cross is focusing on the issue of destitution among asylum seekers in the UK. A recent poll, commissioned by the British Red Cross, found that many people have conflicting, negative opinions and a lack of understanding of the legal definition of asylum:
Although 89% correctly said the definition of an asylum seeker is someone fleeing persecution in their own country, 28% still thought an asylum seeker is someone who has come to this country to illegally look for work.
57% of people thought that asylum seekers were given vouchers to cover living expenses up to £100 a week with 14% thinking the weekly amount was over £100.
In reality, asylum seekers receive accommodation and vouchers equalling just £35 a week. Refused asylum seekers on the other hand, do not receive any support at all.
This year’s Look Beyond the Label campaign is fronted by an interactive viral video featuring Hollywood star Dougray Scott, singer Karen David and stand up comedian Stephen K Amos. The video is hosted on a Facebook application, where people can click “like” to vote for an end to destitution in the United Kingdom. Viewers can also share the application on their own Facebook profiles, write comments showing their support, or click through to read other refugee stories.
Margaret O’Donnell, British Red Cross Head of Digital Media said:
“This year we are asking people to look beyond labels like ‘refugee’ and ‘asylum seeker’ and use their online networks to advocate for an end to destitution in the UK.
“Now, more than ever, people can make their voices heard by taking a stand using social media. Sharing, tweeting and discussing the issues of destitution and asylum, allows people to speak out in their own digital communities to ask for change to a process that results in thousands of people each year living in destitution.”
The connection between standing local election candidates and the AV referendum may not seem obvious at first, so imagine this scenario…
It’s quite likely that the referendum will be held on the same day as local elections, such as the May 2011 local elections.
The arguments over electoral reform will attract to the ballot box some people who don’t usually vote in local elections. If the pro-AV campaign goes well (and it starts with a lead) many of those people will be well disposed towards Nick Clegg and the Liberal Democrats.
And what will they find when they get handed another …
At the weekend Liberty held its AGM. Jo Shaw was there…
We are, as our esteemed director, Shami Chakrabarti said on Saturday “a gobby lot”. In that, the Liberty membership share much in common with the membership of the Lib Dems. Both share a tradition of being unwilling to shut up, of asking difficult questions and not necessarily toeing the line which might be expected or helpful for the leadership.
Liberty was formed 76 years ago in response to police brutality against protestors against hunger and unemployment. Police tactics at demonstrations and the politics of dissent are currently high in …
When the Coalition announces its Emergency Budget next week, attention will rightly focus on the Government’s plans to cut the deficit. But the Budget will also be a chance to set out an agenda for a more competitive economy and more productive private sector. With the Office of Budget Responsibility’s revised projections suggesting the UK’s trend rate of growth will be slower than was hoped for this Parliament, it is now more important than ever before to improve the UK’s business environment.
Even while running up huge debts, the last Government felt it necessary to set out an ambitious …
Running Canada a close second as the current country of choice to look at for deficit cutting lessons is Sweden. As I previously looked at the Canadian experience, now it’s the turn of Sweden.
The think tank Bruegel has published a pamphlet from Jens Henriksson about the Swedish experience of turning a budget deficit of over 11% of GDP into a surplus. He was a policy adviser to the Swedish government during this period.
The pamphlet spreads over more than 40 pages, though politically the most important point is made by him right at the start:
is not a paper about how to get rid of the welfare state. On the contrary, it is about how to strengthen the economic foundations for whatever kind of social model that is preferred. The budget consolidation in Sweden was dramatic but it preserved, and in many ways modernised and improved, the welfare system.
As with Canada, Sweden was able to tackle its budget deficit at a time of a much healthier world economy than the one that provides the backdrop to our own current efforts. Even so, it’s worth bearing in mind just how bad the Swedish economy had got:
Sweden experienced negative growth three years in a row between 1991 and 1993, averaging minus two percent. Over three years the debt almost doubled, unemployment tripled and the budget surplus turned into a large deficit. The combined effect of an exploding budget deficit, high interest rates and record-high levels of unemployment was staggering.
The ten lessons Henriksson lays out are:
Sound public finances are a prerequisite for growth. That does not have to mean an aversion to borrowing or major monetary expansion. Henriksson is happy with plenty of the former if the money is wisely invested and Sweden did plenty of the latter, but you cannot just forever put off dealing with public finances.
If you are in debt, you are not free. His underlying point is a sound one: if you are in too much debt then you end up in thrall to the international financial markets. However, becoming debt free is not the only way to avoid this problem; many countries (including Britain) have run manageable debts for long periods of time without running into that problem. So although the exact criteria may not apply to the UK, the basic point does – the less dependant you are on international borrowing to keep the government’s finances afloat, the more freedom you have to do what you want.
The one responsible must put her or his job on the line. The argument here is that this is what gets credibility with the public, financial markets, civil service and political colleagues. If they all know that person X is deadly serious, it then becomes easier to achieve the goals. For example, civil servants may be tempted to try to avoid having to make cuts in their budget and ride out the political impetus to curb the deficit. If they know that they can’t do that, they are more likely to offer up suggestions based on their detailed knowledge of the more obscure corners of the public sector.
Set goals and stick to them. Once again the theme of strong public commitments making the overall job easier features in Henriksson’s list. Here he argues that just as public targets for inflation make controlling inflation easier, so too do they for a deficit.
Consolidation should be designed as a package: “An ad hoc hodgepodge of measures will only have a limited chance of success. Presenting the consolidation measures in one package makes it clear to all interest groups that they are not the only ones being asked to make sacrifices … If a consolidation package consists of both tax increases and expenditure cuts the distributional effect can be fair. When studying the distributional consequences, do not only use the income distribution perspective. There are other dimensions that also are important, such as for instance gender, age and geography.”
Act structurally but be consistent. Perhaps the most surprising recommendation in the pamphlet, this point in Sweden meant a uniform 11% cut from all budgets – a very different approach from the Canadian one of looking at each area of government activity and deciding if it is necessary. The downside of a flat rate cut across the board is that there is no particular reason to believe that the least desirable expenditure is equally distributed across the board. Against this Henriksson argues that only flat rate cuts really get an understanding of the absolute need to find efficiencies seeping in to all corners of the state. It also avoid problems with some sectors feeling they have been picked on unfairly compared to others. In this respect, our coalition government, with its ring fencing of certain expenditure including the NHS, is going for the Canadian model rather than the Swedish one.
Do not leave the problems to the local authorities. Again, this contrasts with the Canadian approach of displacing many issues from the federal government to lower levels. Henriksson’s warning is based on the Swedish experience where local authorities faced a really tight squeeze: “In Sweden it meant that we saw big cuts in schools, healthcare and childcare because they are financed through local taxes. This created enormous political problems.”
Be honest to citizens and financial markets: “Never say that it won’t hurt. Never say that it is peanuts. Having been honest about the effects will not make it much easier, but being dishonest can lead to disaster. This will help ordinary people to plan ahead and to limit shocks.” The comments of Cameron, Osborne and Clegg neatly fit this lesson.
Stick to one message. Tackling a deficit is not simply about producing a list of items to cut or taxes to raise; it’s also a communications challenge to bring the public with you and to win confidence from the financial markets. That makes mixing in tax cuts with the rest of the package tricky: “At one time the government decided to cut down on expenditures to finance a tax cut in VAT on food. The result was that people became furious. ‘You are not cutting down because you need to. You are cutting down because you want to’. That was an impossible argument to handle, since the message was budget discipline, but the action was .” On this point (and the linked argument against making any spending increases, even small ones in popular areas), the coalition government is taking a very different course from Sweden – looking to use tax cuts and targeted spending increases to garner wider support for the tough measures and also because they are justified in their own right.
Stick to it. Once you have sorted out the deficit, make sure you reform the systems that caused the problem in the first place.
Overall there are many similarities between Sweden’s approach and the current British one, but also some notable differences – no across the board percentage of cuts and a mix of the tough measures with tax cuts and spending increases. On both those fronts the British approach looks to better suit our circumstances, provided that the rest of the package delivers the necessary financial changes. Whether or not that is the case will be much clearer after the forthcoming budget.
You can read the full pamphlet from Jens Henriksson here:
The Lib Dems’ Federal Policy Committee (FPC) operates under the Chatham House Rule: you can repeat what was said, but not who said it. But often what happens at FPC goes completely unreported.
In some cases this is understandable, people throwing their toys out of the pram isn’t something we really want to report (oh not that often, honest!), and sometimes it is just because we are discussing issues (such as the manifesto) that we quite rightly want to keep under wraps until it is launched.
But someone (who of course will remain nameless) made the point at last week’s …
When should the Government’s promised referendum on AV be held? That’s the question causing a fair amount of debate at the heart of the coalition.
From the simple good governance point of view, the answer is as soon as possible – because the sooner it is held, the more time there will be if AV is passed to get the law and then the administration right in good time ahead of the next general election. Late changes to election rules have been the bane of the electoral system far too often in the last decade.
Today, the Social Liberal Forum has published an open letter to Nick Clegg and Danny Alexander expressing our concerns prior to the emergency budget which will be unveiled next week. By coincidence, Simon Hughes, Malcolm Bruce and Lord Oakeshot are reported in the FT today expressing similar sentiments on capital gains tax.
The SLF letter covers a lot more ground than CGT including socio-economic inequality, income tax and VAT. But it is a fundamental issue which, more than anything else, will determine the future direction of the coalition. For the past month, Tory backbench MPs and the rightwing press …
A common thread running through the Press Complaints Commission’s defence of its work is that it has been primarily created to deal with individual complaints, rather than being a regulator whose role is to improve the press overall. That’s why, for example, the PCC emphasises the proportion of complaints made to it which are concluded with the complainant happy with the outcome rather than, for example, focusing on how widespread certain practices are and whether they are increasing or decreasing.
To give an example: if a blogger were to complain to the PCC about a newspaper taking their work and reusing …
It’s been interesting to see the final list of nominations for Labour Party leader which, for those that missed it, is:
Diane Abbott
Ed Balls
Andy Burnham
David Miliband
Ed Miliband
The response from all quarters about the list first that its very ‘samey’, with much said about tokenism and the inclusion of Diane Abbott, not because she’s black or a woman but because she represents the old left of the party. That got me to thinking about who would be the best from a Lib Dem point of view.
A Leftie
Dianne Abbott is the only real left leaning candidate. A Labour party under her ministrations would …
A simple enough question to pose for today, with the Queen’s Birthday Honours in the news: should honours go to people who have already received wide-spread public acclaim and wealth such as Catherine Zeta Jones or should the honours be reserved for otherwise unrecognised people? Over to you…
There are many things, in policy terms, that rank and file members will be expected to swallow as a result of the Coalition. There are Lib Dem red lines drawn in the agreement. There are abstentions arranged for the Parliamentary Party on particular issues. The cuts are to come, and we have Danny as Chief Secretary, with the enormous responsibility of managing this process, and making sure that Lib Dem guns are stuck to.
It is a huge opportunity and an unenviable task. What is more, the rationale for the various cuts have to be clear, and the PR of it all has …
Simon Hughes caused quite a stir by setting out his priorities for how Lib Dem MPs should behave if they are not in the government.
Clearly there is a balance to be struck between supporting our party’s attempt to deliver strong-yet-compromise government in a time of national, and indeed global, emergency, and living our principle that dissent is not weakness. The push-and-pull of coalition government is not the time for hiding our values in the name of unanimity, but voicing them louder than ever to strengthen Nick’s negotiating stance and affecting change that we want to see.
On the surface, David Cameron is the first Prime Minister in generations for whom ‘The Ireland Question” is down the list of priorities.
The Good Friday Agreement has been a glorious success, with the recent devolving of policing powers to the Northern Ireland Assembly the final piece of the power-sharing jigsaw and the birth of a more conventional policy rather than tribal politics in the province.
The 2010 general election saw the Alliance Party gain a seat, the moderate nationalist SDLP doing better than expected and the the failure of the anti-power sharing Traditional Unionist Voice (TUV) party to make gains seems …
Mick Taylor Nonconformistradical. The whole thrust of our complex and bewildering tax code IS to protect the rich. The Tories don't want to change it. Labour are in hock to...
Nonconformistradical "The real scandal is not the rates, it is a tax code so complex the wealthy can tiptoe round it while the rest of us can not. "
Indeed
"Shouldn’t “faire...
Tristan Ward The argument about Russia's not being successful in Ukraine is a bit of a red herring. Ukraine has survived (to date) thanks in part to significant financial ...
Geoff Reid More important than William's erudition is his wisdom! It woudn't do us any harm to look at the language used in other European countries when debating tax leve...
Tristan Ward Sorry - here's the Dan Neidle link: https://taxpolicy.org.uk/2026/06/05/taxing-other-people-uk/...
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Has the Chancellor set the tone for a Burnham administration?
"His glamour tarnished, his boorishness came to notice": On being the monarch's second son
Mick Taylor 
Nonconformistradical 
Tristan Ward 
Geoff Reid 