Deputy Prime Minister Nick Clegg, writing in today’s Financial Times (free registration required), champions the government’s commitment to fairness and explains why he believes yesterday’s IFS report is asking the wrong questions.
Fairness is about every child getting the chance they deserve, regardless of their background. Poverty and deprivation matter enormously but fairness also demands that what counts is not the school you went to, the jobs your parents did, or the colour of your skin but your ability to move beyond the circumstances of your birth.
…there is a bigger problem with the [IFS] analysis: it measures the impact of the Budget solely on the basis of how much money people could be receiving from and giving to the state at a single moment. This is a definition of fairness championed for the past decade and a half by the Labour party. It led Gordon Brown, as chancellor and as prime minister, to set statistical tests, based often on somewhat arbitrary measures, so that all government policy was dedicated to shifting people from just below to just above a line on a chart, sometimes only by a couple of pounds, with little evidence that it made any difference to their long-term chances in life.
Clegg goes on to give practical examples both of where he sees the IFS report failing capture the Lib Dems conception of fairness, and how Lib Dem policies – some already introduced and some on their way – will work to make Britain fairer.
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40 Comments
Pathetic, utterly pathetic.
Every newspaper, tv channel, the OECD, accounting firm assesses the budget in the same way.
This is tantamount to saying that we are taking money off the poor, but the private sector is going to come in and restore fairness.
It’s despicable and if he actually believes it then he is an utter fool.
Shameful.
I’ve just read NC’s full article in the FT. What he appears to be saying is ‘yes I know the budget is regressive in a traditional sense, but taken together with our macroeconomic policies the Government’s actions will lead to increased employment and incomes so the IFS analysis doesn’t count. And anyway – we did include some progressive measures so give me some credit…please! It’s time to re-define ‘progressive’ so it fits with our rhetoric…’
It’s more than unconvincing – it’s plain embarrassing and on several levels. Firstly – NC was quite happy to go along with the IFS’s understanding of the term ‘progressive’ when he was in opposition. Remember how he used to stand up at PMQs and describe how the income distribution had got more unfair under labour? That he wouldn’t take lectures from Brown given his record on this? Now he dismisses this as an intellectually-flawed ‘numbers approach’.
Secondly, his argument that coalition policies will lead to more people leaving benefits and earning a median income (that’s the example he gives in the article) is speculation, pure and simple. The macroeconomic outlook doesn’t bode well for it (since unemployment outstrips vacancies at the moment) and experience should temper his optimism: no government in the developed world has ever found miracle cures to the benefits trap – certainly not in a prolonged slump.
Keep digging Nick…
Face up to it LDV.
Cleggy is an embarrassment. Never backwards in using the IFS to hammer the previous government’s policies, he now turns round and says he won’t accept their findings when it’s against him and his neo-liberal, orange book stupidity. For the first and last time in my life, I find myself agreeign with Ed Balls:
“this Tory-Lib Dem Budget will see the poorest families with children lose more than any other group. This report is the final nail in the coffin for George Osborne’s claims to have delivered anything but the most regressive Budget in a generation.”
Between Cleggy and Hoborn – who managed twice yesterday on the BBC (Today and Newsnight) to appear categorically insane – the Coalition managed to appear not only evasive + disingenous around their awful budget – but decidedly economically illiterate.
Mind, when the boy Cleggy has to stand up and defend the boy Gideon’s economic lunacy – what do you expect?
I liked the article. The key point for anyone missing it is that individuals on benefits and low incomes benefit more from investment in creating opportunities for them, from the creation of more and higher paid jobs that they can take, than they do from having the equivalent money given directly do them, foregoing the investment and opportunities created.
How this applies immediately in the light of a shrinking state, cut backs in spending, redundancies and reduced public sector demand many will see as important; the approach only works should the private sector create more demand and opportunity than in the state is lost, or should we view the consequences of the coalitions actions as negative, but not as negative as they would have been had they not taken them.
In the long term I’m certain that he’s right, in the short term it’s a difficult sell.
……….But imagine the government helps that couple find work. Now they have a shared income of £20,000 a year and fit into the fourth decile. This, in IFS-speak, is not fairness, because the government has not changed anyone’s taxes or benefits. The fact that this couple’s lives are better disappears from the statistics the very second those improvements happen………………………
I am sure all those people whose jobs will disappear once the true nature of the spending review becomes apparent will be greatly relieved by these words! If this was an O-level economics student paper I wouldn’t give it 1/10. As a defence of the budget it really is ridiculous.
You might be interested in reading my response to Nick Clegg’s analysis here:
http://www.touchstoneblog.org.uk/2010/08/nick-clegg-responds-to-the-ifs-another-new-definition-of-fairness/
It goes with my thoughts that if the North is feeling the cut of public money the most, what exactly did Labour accomplish for the North after 13 years in power? Apparently not much is the answer. It just threw money at a problem as usual and said it was all better. Using public money to bring equality & fairness is right, but not when you don’t actually change how things are.
Nicola – that is very interesting
Won’t do. It is of course standard practice for Tories to sugar-coat the pill when promoting their key goal of increased inequality, and to use diversionary tactics to hide what they are doing. However, Cameron’s “big society” flim-flam is somewhat less unconvincing in this respect than all this social mobility verbiage.
Nicola, there are clearly issues with the IFS methodologies with regards random or ‘proportional’ allocation of the costs of changes, and for overclaiming their accuracy; even the IFS themselves in their report expressed doubts and provided caveats. It’s a best guess, and it’s undeniably partial; it’s certainly not beyond criticism.
The man’s arrogance knows no bounds.
Now if only he had ‘St Vince of Cable’ defending the Tory economic policies that he has fully signed you up to. Providing St Vince hasn’t and doesn’t come out and say that he changed his mind on the economy but failed to tell his parliamentary colleagues, the wider party, and the electorate until after the election.
Unfortunately the voters have to wait until May to deliver their verdict. No AV and No LibDem – I have had enough!
Why is Clegg committing political suicide yet again ?
This was Osborne’s attack on the poor yet he pops up eagerly to take the blame and try to spin it for him and Cameron. Utter Madness.
Clegg is becoming a laughing stock and the line “he’s just a Tory” is gaining ever more public currency each and every time he does something stupid like this.
When the problem is you and your Party are getting hammered in the polls and by the public for being seen as the Tories poodles you DON’T go out of your way to praise their right wing regressive Budget.
Someone needs to have a long talk with Nick and explain that being Cameron’s best friend isn’t a good enough excuse to destroy the Liberal Democrat Parties image of fairness and concern for the poor that has been built up over decades.
If it has to be Simon Hughes or Kennedy, so be it.
As if being a Lib Dem wasn’t embarrassing enough, yet more yypical Lib Dem obfuscation appears in support of the great leader. And Cleggy.
“the approach only works should the private sector create more demand and opportunity than in the state is lost, or should we view the consequences of the coalitions actions as negative, but not as negative as they would have been had they not taken them.”
That doesn’t make sense on any level.
“It goes with my thoughts that if the North is feeling the cut of public money the most, what exactly did Labour accomplish for the North after 13 years in power?!
Erm…what has this got to do with Gideon, Dave ‘n’ Cleggy’s budget?
“When the problem is you and your Party are getting hammered in the polls and by the public for being seen as the Tories poodles you DON’T go out of your way to praise their right wing regressive Budget.”
Could not agree more. One of the most revealing pieces on Cleggy was last week’s interview on Today with the usually hapless Evan Davis. When he asked Cleggy “So what do you disagree with the Tories on then?” – Cleggy went quiet. He couldn’t name a single thing that he disagreed with. The strategy is appalling. Coalition in any other country means 2 seperate + unique parties working together + disagreeing publicly.
In this Coalition, Cleggy has just signed up to the Tory manifesto and refuses to discuss criticism.
Same old Tories…
Repost from Andy Cooke in the Political Betting thread on the IFS report:
[blockquote] I’ve had more of a poke around the IFS report. It’s an impressive example of how to present facts to support whatever case you want to make.
The important data is in Appendix A and Appendix B, as well as note 5 to the main paper.
Appendix A shows the Budget effects without their admittedly uncertain estimates of the effects of renewed DLA testing and the Housing Benefit effects, as well as the Tax Credit changes. Figures A.1 and A.2 (effects to 2012 and 2014) are the key ones.
If you pretend that Osborne had no power to change Darling’s pre-announced changes (that they are binding on him and were the baseline), then the blue bars are what you’ll concentrate on. If you want to see the overall effect of the Budget (assuming that Osborne had the power to implement whatever changes he wanted to, comparing the output of the Budget with what the state was before) then the black line marked “Total” is the overall effect of the Budget. Because that is the effect of the Budget. You’ll note that the poorest deciles are best off (1st 2nd and 3rd deciles are no worse off and in most cases better off), the middle deciles are slightly worse off (gentle downward slope from 4th to 8th deciles), a downward jump for the 9th and a big downward jump for the 10th.
Apparently “progressive” doesn’t mean what I thought it did …
Appendix B contains the details of how they came up with their changes:
Housing Benefit: They use the DWP paper, whose core assumption is “assuming that they would be renting at the same rent level in the same property and with the same household composition. No behavioural changes have been assumed, such as customers moving to a cheaper property or landlords reducing their rents. As a result, when we report ‘losers’ or ‘losing out’, these could be actual losers (seeing their benefit decrease) or notional losers, meaning that they would not see any benefit decrease, but would receive less HB compared to what they would have done under the previous scheme. So, for example, a new LHA customer applying for benefit after measures take effect may ‘notionally lose out’, meaning that they would receive less than under the current arrangements.”
They then (in essence) assign the savings estimated amongst the claimants as if it’s coming out of their pockets.
The other two are done as follows:
Disability Living Allowance
“The Budget policy costings document says that the effect of this reform will be to remove DLA from around 20% of claimants. We randomly remove entitlement to DLA from the appropriate number of claimants in order to match the long run saving from this policy (around £1.4 billion).”
Tax credit reforms
“There is no way to identify those who will be affected by changes to the way in-year awards are calculated so we simply reduce all tax credit awards by the same percentage amount so that the total amount saved from the policy is correct (around £1 billion).”
These aren’t exactly rigorous techniques, so I’d say that the published headlines are not exactly sturdy. Even with all this done, they have to gloss over the fact that the richest decile still bear a far greater share of the impact than the poorer deciles (in table 2.1) and the expenditure tables in Table 3.1 (which they’ve previously argued (when exploraing VAT effects) should be taken as better indicators when indirect taxation is looked at (overcome effects of wealth-rich but income-low students, etc) still have a total effect that’s progressive pretty much throughout.
As has been pointed out elsewhere, the extrapolation to 2014 (on a static rather than dynamic basis, and ignoring the fact that we’ll have four more Budgets by then) is not one on which you’d want to hang your hat.
It’s intriguing how they’ve taken an analysis that shows that the Budget is definitely progressive up until 2012 and managed
to present it as “regressive”.
I’m rather disappointed in the IFS. The comments from those sympathetic to the “regressive” argument are understandable – confirmation bias is present in all of us, but the main news outlets (and the Coalition defence especially) is rather disappointing.
[/blockquote]
@Nicola Smith
A fair, balanced and powerful rebuke towards Cleggy’s rather bizarre re-definition of fairness.
The man is living in cloud cuckoo land.
Andrew Tennant.
I guess the question is whether an analysis that excludes a third of changes or one that takes account of all of them is more rigorous. By definition no model can be perfect, but the IFS provides a far better assessment of the Budget’s impacts on the poorest than HMT’s analysis which excluded significant changes.
The DWP data you critique above is being used by local authorities across the country to assess impacts for claimants they support – it is as rigorous as is available. And while you are right that there will always be concequences that no model can account for, that is true of any analysis – it’s perfectly possbile, for example, that CPI will not follow HMT’s forecasts, but that didn’t stop the Government modelling in the uprating of benefits by CPI (until 2012/13) to their distributional chart. Modelling change assuming that behaviours remain constant is also the way that the HMT distributional chart was worked out – for example it didn’t attempt to model any changes in unemployment or employment levels into its costings.
I also don’t agree with the other criticisms – if anything the IFS methods underestimate the impacts for the poorest. For example, taking away the Baby Element of Tax Credits means that the maximum total Tax Credit award for a family with a new child falls by £545. The only people who are eligible for the maximum award are the poorest. But the IFS has instead modelled the cuts by taking the same percentage cut from each award. That method undercounts the impacts on the poorest.
On timescales, the aim of the IFS analysis is to show the full impact of all changes announced in the Budget. To argue that there will be more budgets between now and 2014 is to miss the point – what IFS have done is what HMT did not, model all of the changes set out in the Budget rather than only two thirds of them.
That’s actually quite misleading Nicola; the question is whether a numerical analysis is more likely to be accurate when generated using purely known quantifiable data, or when generated through a combination of known quantifiable data supplemented by a number of speculative, untested assumptions. Exploring this question logically leads us to look at the basis for the assumptions and therefore to whether they are rationally justified; regrettably if there is an explanation it is not provided in the report, we look for the required logic and find there to be none.
@Andrew Tennant.
At risk of being moderated – you don’t know what you’re talking about.
Nicola is big enough to defend her own argument, but your post is patent nonsense.
Be honest with yourself for once. If the IFS were still criticising Labour budgets, you’d be jumping all over it. Now the IFS has shown the great leader and Cleggy to be lying neo-liberal idealogues and their economics discriminatory – you decide that you’re more qualified to comment on the ‘progressive’ nature of the budget than Robert Chote + those famed IFS socialists.
Rather than being an adult + engaging in a debate – you’re just playing games.
Hi Andrew – I think we’ll just have to agree to disagree as to whether the IFS’s assumptions are of any poorer quality than those of HMT. To my mind assuming that a third of changes you have announced simply aren’t going to be implemented is the worst assumption of all, but I fully respect your right to disagree! Best, Nicola.
What gets me is that the CGT raise for example was plain ignored by the IFS report. It may not be a fortune but seems a fairly strong move targeting the better-off.
Andrew.
i suggest you read this: http://www.neurosciencemarketing.com/blog/articles/why-politics-is-hard.htm?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=neuromarketing
It explains why you and Cleggy are making fools of yourselves and the Party.
@Cuse
An interesting, if short article – a copy of the relevant paper would be nice; I would be intrigued to see any further research done as to what extent members agree universally with their elected party’s policies. There are a number of areas in which I could perceived as distant from my chosen party; I think it false to assume members of a party are all uniform and would start with the same opinions.
Don’t trouble yourself, I’ve found it.
The principle remains Andrew, regardless of the universality of perceived opinion or otherwise, that it is somewhat easier for political alliances to be front of mind when assessing one’s own party’s policies than it is to assess or criticise them.
The Coalition budget is a case in point. And it is distressing that rather than face this somewhat upsetting truth – Cleggy and his followers have simply decided to disengage from the debate and question the IFS’ moral + intellectual authority.
If Liberals don’t wake up the latest 12% polling will seem like the glory days in the next 6 months.
If you take the emergency budget as a top up on the previous Labour budget, the IFS report is harsh and, reading it, there does seem to be an anti Government narrative running through it. Wholly fair you may cry, but I think it would carry more weight if, as an independent body, the IFS had given more nods to what the coalition are trying to do in bringing down UK inequality through incentives to work.
I must just add that I have yet to meet all these Lib Dem haters in the real world. Out on the doorstep since the election in all sorts of different areas (in London), the majority of people I meet , though not all of course, are pro the Coalition and pro LD and want us to sort things out. They don’t spend their time soaking up the anti Lib Dem invective in the national media and, almost on a daily basis, this site, I’m sure. Things may change in the future but at the moment the perspective presented by the cognoscenti does not, to me, appear to be accurate.
Chris,
Admittedly I live in a Conservative held seat with the Lib Dems in second, but my experiences post election have been similar to your own.
Even where I work, in the Social Services department of a Labour run council, people are pleased to see the back of Gordon and are giving things a chance; though they don’t have much nice to say personally about Michael Gove.
Erm…
I live in one of the strongest Tory seats in the Country. The LDs come a distant second – and Labour often don’t put up candidates in Council elections.
I hear nothing but disdain for the Coalition. Respect for ‘their man’ in Cameron, but nothing but bile for Clegg. I’ve heard him described variously as ‘pathetic’, ‘weak’, ‘Socialist’ and ‘a bit of a prat’. The Coalition in itself is seen as at best an oddity and at worst an aberration.
It’s nice that you boys aren’t hearing that, but on a doorstep level – we’re getting killed in my constituency.
We, by contrast, are in a very strong Labour area and are third in all three of our local constituencies. Labour have run the council, practically uninterrupted, for 70 years and, like most of London, had a very good 2010 election but post election and post Budget we are just not getting the push back you would think deserved, reading all the IFS/Media/Blogs etc.
We all know that it will come down to the timing of the impact of the cuts versus the performance of the economy over the next two years and how these two relatively impact on people.
Conference, Nick Clegg, 2009.
“We know what happens when you simply squeeze budgets, across the board, until the pips squeak. We know, because we lived through it before, under the Conservatives. We remember the tumble-down classrooms, the pensioners dying on hospital trolleys, the council houses falling into total disrepair. We remember, and we say: never again.”
Where’s the fairness in that Nicky-boy?
So “fairness” now means Reagan-style trickle-down economics; it doesn’t matter if the budget is regressive, so long as the wealthy beneficiaries of it use their gains to create wealth (since only rich businessmen create wealth, you see), which will in time benefit the mugs in those lower deciles.
I am frankly astonished to hear Lib Dems spouting such nonsense.
“I’ve heard him described variously as ‘pathetic’, ‘weak’, ‘Socialist’ and ‘a bit of a prat’. “
You’ve heard Nick Clegg described as a ‘Socialist’?????????????
Chris Smith
I must just add that I have yet to meet all these Lib Dem haters in the real world. Out on the doorstep since the election in all sorts of different areas (in London), the majority of people I meet , though not all of course, are pro the Coalition and pro LD and want us to sort things out.
Of course, we have just had a general election and people are hoping the new government will work. We are, nevertheless dropping in the polls. We are not getting our message across that we are a distinct force. Nick Clegg is doing very little to give assurance to those of us who are LibDem supporters but are unhappy about much of what the government is doing that he is fighting as hard as he can for our corner. We are capable of accepting that the government is in a difficult economic situation, so some uncomfortable spending cuts are necessary, also that Nick Clegg’s negotiating position is not that strong – but can he please stop looking so smug and actually give the impression he realises there’s a lot being done that we’d rather not have done if we could help it? Can he also at some time also admit “Sorry, we lost the battle with the Tories on that one”?
If he thinks his job is to try and act as an ambassador from the Tories telling us party members and supporters why their polices are really Liberal Democratic underneath, well, maybe that’s a job for someone to do, but it’s not a job that can be done simultaneously with being Leader of the Liberal Democrats.
In this article, what he needed to do was drop a few comments that suggests he has reservations about some aspects of the budget, but accepts them as a necessary compromise. It wouldn’t have had to be much, just a little to give that reassurance that underneath he’s on our side, doing a tough job in somewhat hostile territory.
It reminds me so much of the general election. I’ve never liked Clegg, I know, but of course I wanted him and us to succeed in the election. And I just kept watching him and wanting to cheer him on, wanting him to deliver that knock out message that gave me confidence in him – and he didn”t. So, though this coalition was not what I would have preferred, I’ve accepted it as a necessity, and defended it very publicly on those grounds. I deperately want it to work, to show that we Liberal Democrats have a point, to show that we can work seriously in government and stick to our principles while there. So, like the election, I’m waiting and waiting for Clegg to deliver that knock-out speech or write that knock-out article that leads me to say “Yes – he’s my man”. And he hasn’t, instead he’s looked increasingly stumbling and out of his depths with the big boys.
Most ordinary people aren’t very political, so probably haven’t thought that much about government since the election. To us who are activists, it seems an age ago, so much has happened, to the ordinary person in the street it probably still seems as if it just happened the day before yesterday. Also, Labour have been pretty hopeless – they haven’t got any sort of alternative message, they say “stop the cuts” and “LibDems are yellow Tories for supporting them” but have nothing whatsoever to say about what they would do instead. So at the moment, making LibDem acitivists feel uncomfortable is probably as best as they can do in terms of practical politics rather than going out and winning votes from ordinary people. However, it’s a good way forward – knock out the weakest supporters of the coalition first. Once it’s back to politics being “Labour v Tory”, they’ll start the fight for the popular vote seriously, and I’m afraid even if this government’s policies work as they promise (that’s a big if), there’ll be a lot of discontent building up over the next few years.
@ Anthony Aloysius St
In my borough, not owning a second home marks you as a pinko subversive.
Imagine what they think of me…
“In my borough, not owning a second home marks you as a pinko subversive.”
Sounds rather like Lib Dem Voice these days …
You say that Anthony, but to others it seems the most significant shared characteristic amongst posters on LDV these days is vocal Labour membership.
Before the General Election the IFS was hammering the Labour Government and the Blue and Orange Tories and their media running dogs were strenuously asserting the independence, objectivity and infallibility of the IFS and contrasting its pronouncements with the partiality and bias of such Labour supporting economists as Blanchflower. How gratifying it is to see Clegg’s Orwellian rejection of the IFS’s response to Osbourne’s ideological, doctrinaire budget.
“You say that Anthony, but to others it seems the most significant shared characteristic amongst posters on LDV these days is vocal Labour membership.”
Does it really not occur to you that what you’ve just posted is the perfect illustration of my point?
Least we forget, after 13 years of Labour government, this country has higher levels of inequality than it did after 18 years of Conservative governments.
Under Labour the number of people in extreme poverty (defined as living on less than 40% of median income) remained more or less constant throughout the first eight years of Labour government, then increased. There are now 700,000 more people in extreme poverty than when Labour took office, and incredibly more than at any point since records began. These figures remember all came before the credit crunch, deficit and recession.
Being in coalition with the Conservatives nationally isn’t going to be comfortable and at times leave a bad taste in the mouth, for me and many other Liberal Democrats; but it’s a thousand times better than either an unfettered Labour or unfettered Conservative government.
Least we forget, after 18 yeaars of Thatcher – Major government, this country had much higher levels of inequality than it did previously. And yes, things then got still worse under the next 13 years of Labour.
That’s why Charles Kennedy was right. Britain does not need three conservative parties. Sadly, that is now what it’s got.