George Osborne

Britain (and the BBC) discover the length, width and depth of the shaft

Gideon has spoken and the Coalition government has finally passed sentence on the public sector, outlining £81bn of spending cuts over four years. The Chancellor delivered his long-awaited (feared?) Comprehensive Spending Review to the Commons yesterday in a carefully crafted statement aimed at blunting Labour criticisms of the severity of the cuts. Announcing a 19% cut across departmental budgets, Osborne drew a contrast with Labour’s pre-election plans to halve the deficit which would still have involved reductions of 20% across the same areas. (The difference will be made up by an additional £7bn raid on the welfare budget, we are told.)

In many respects the statement was reminiscent of the Gordon Brown Budgets after 1997 – expectation lowered in the press in the lead-up to the announcement, final proposals that don’t seem too bad compared to what was feared, and a well-spun political presentation of the end result. Brown’s Budgets also had a knack of unravelling in the days after the announcement as those in the know started to probe the detail, but we’ll have to wait to see if Osborne’s statement goes the same way.

In spite of the spin, there will still be savage cuts. Police budgets will be cut by 16% over four years, councils will face cuts of nearly 30%, and the Home Office and the Ministry of Justice will see their budgets cut by 6% a year. And, regardless of Osborne’s wearying claim that “we’re all in this together”, it seems very clear that those most well off (including those – like Gideon – who live off £4m trust funds) will hardly see the same destructive effect on their lives as will surely be suffered by those at the other end of the income scale. Indeed, the Institute for Fiscal Studies is already highlighting the review’s harshest impact (surprise surprise) on the poorest in society.

Submerged in all the talk of spending cuts, the details of the Coalition’s shafting of the BBC also came to light this week, thereby completing the first part of the Conservative Party’s Faustian pact with Rupert Murdoch. As the Guardian outlines here the licence fee will be frozen for six years, which represents a real terms cut of 16%, and out of the reduced budget the BBC will have to divert money to the World Service (currently funded in part by the Foreign Office) and Welsh language broadcaster S4C. It’s perhaps quite telling that the BBC had privately feared far worse.

The second, and potentially even more alarming part of the Murdoch appeasement plan is still to come and relates to the media giant’s desire to assume complete control of BSkyB – a move which will be decided on by the Business Secretary (and erstwhile darling of, well, just about everybody) Vince Cable. As David Puttnam passionately argued in The Observer last month, the delicate balance of the British media and therefore the framing of debate in this country is under serious threat from this proposal.

These are pivotal moments for the future of the media in the UK. Commercial broadcasters have always complained about the dominance of the BBC, often with some justification, but the Murdoch approach is a rather different beast altogether. Not content with a simple wrecking ball approach to the Corporation (enthusiastically wielded by the Coalition) he also wishes to consolidate his grip on the British commercial media at a time when no one is really certain about how broadcasting or the press will evolve in an age when the internet continues to expand at an almost exponential rate.

As the FT’s Martin Wolf argues, Vince Cable has a golden opportunity to try to restore some semblance of ‘fairness’ to the Coalition’s already tarnished reputation. One can only hope that he puts a stop to the impression of the timidity of the Coalition (and indeed, every government since 1979) around the Murdoch empire. The government has showed its willingness to ‘fearlessly’ wield the axe on public services – an ounce of that determination should now be directed towards resisting Murdoch. The consequences of the cuts are not yet fully understood, but protecting the plurality of the British media surely has to be that rarest of bonuses for the Coalition: a relatively easy win.

The Wisdom of George

Steve Richards of The Independent tweets that we should not be surprised if George Osborne performs a u-turn over the controversial Child Benefit cut for high earners announced at the Tory Party Conference this week. The point Richards makes is that, while in Opposition, Cameron and Osborne quite frequently ‘flip-flopped’, to use the dreadful American parlance, at the first sign of serious media scrutiny of policy. “They are weak” he writes and, for all the tough rhetoric on tackling the deficit, there is more than a grain of truth to the remark.

My sense from the outside is that Osborne will probably stick by the announcement on child benefit, in spite of the rage from certain sections of the press, and try to paper over the cracks by making the sort of vacuous, moralising intervention on marriage that has already been indicated. I may not know a great deal about Osborne’s mindset but experience demonstrates that, given a range of options, instinct normally leads him towards the wrong one.

Perhaps the middle class outrage at the (frankly quite messy) changes to Child Benefit is the start of something faintly encouraging. I don’t mean in the sense that Women’s Institutes the length and breadth of Britain will start to become more politically engaged, but that – finally – there is a flicker of scrutiny of Tory policy from the party’s friends in the right-wing press. This is unlikely to unleash a full-scale examination of the darkness at the heart of the Conservative world view – the Mail, Telegraph and Murdoch propaganda sheets know where their bread is buttered – but the press may yet find it hard to supress their natural instinct to hunt down an individual when they scent weakness. Osborne may have some difficult months ahead of him.

It’s hard to see how Osborne can find himself in a position to pull any rabbits out of the hat. The economic situation is bleak and by any measure he was a strange choice for Chancellor given the options available to David Cameron when the Coalition was formed. Both Vince Cable and Kenneth Clarke were clearly better qualified for the job and there can be little doubt that Osborne holds his position (arguably the first ‘proper’ job of his life) purely as a result of the personal loyalty of the Prime Minister. Such loyalty is worth a great deal of course, as the continual, bewildering survival of Andy Coulson demonstrates, but is it really doing anyone any favours?

The coming months will test the Coalition to breaking point. The government will inevitably become increasingly unpopular as the cuts start to bite, and much pressure will fall on the Liberal Democrat involvement, depending on next year’s elections and the outcome of the AV Referendum. Crucial at such times is the work and vision of the Treasury, as the fulcrum of the business of government. The biggest worry for the Coalition must be that so much therefore depends on the wisdom – or otherwise – of George Osborne.

The X Factor, Boring Politics and the August Blog Hiatus

The casual passer-by to this page might reasonably conclude that I have been terribly lazy throughout the month of August. It’s been a while since I’ve posted, and there are a number of reasons for this. First and foremost is the fact that my job (the one that pays the bills) is currently at full stretch with the height of the Cornish holiday season. I normally delight in telling people how easy my job is (loafing around behind the bar, making the odd sarcastic remark) but August is the month in which you could probably stretch it and say that I actually earn my money for once.

Of course, the traditional tourist rush isn’t the only reason I haven’t bothered to post here. As you will probably be aware, this blog is mostly (although not entirely) about politics, and the beauty of the free availability of blogging websites is that non-entities like me have every opportunity to vent spleen in a public forum about the poor misguided fools who aspire to run our lives.

The trouble is, after the General Election and the initial excitement of the first hung parliament in nearly forty years, politics has become rather dull again. The Coalition, while by its very nature containing some finely distilled elements of pure evil, is doing its best to be as insipid as possible. Pickles and Gideon only slither out infrequently, while even David Cameron seems to have temporarily parked the shrill, fat-faced toff act from the months leading up to the General Election. All of these things have served to keep my bile levels in a manageable state over these last few weeks. I can’t say this is a situation I entirely welcome.

The Labour Party haven’t helped matters much either. Their leadership election could have been a golden opportunity for a party, freed from the shackles of a long period in office, to capture the public imagination with an eye-catching and far-reaching debate over the future of the country and the role of the left. Fat chance. It’s been a bunch of dull people talking about dull things in a dull way. They could at least have organised some sort of nasty spat between a couple of the candidates but we haven’t even been given that pleasure. Deeply disappointing.

And so I find myself nearing the end of August with very little to write about. I can’t even summon any great sense of disgust about the return (tonight) of the single event that will over-shadow everything else for the next four months. I refer, of course, to the over-produced, overblown dung-polishing extravaganza that is the X-Factor. I wish it would make me mad, but I just don’t really care, to be honest. There’ll be bad auditions, heart-breaking back stories, manufactured spats between the judges, the annual assault on the Christmas Number One and the whole thing will be reported and tweeted about endlessly and watched by millions (although I won’t be one of them). But, to be honest, it’s part of the furniture now and Cowell’s dominance of the Christmas charts (Rage Against The Machine aside) at least spares us from Sir Cliff.

So I’m hoping that things will get back to normal before too long. Cameron, Gideon, Pickles et al will soon be back from their holidays (one pictures them all collectively attending some sort of giant reptile camp for the parliamentary recess) and my natural irritation levels will surely soar again. And who knows, the Labour Party might even do something hilarious and choose Ed Balls as their Leader. Here’s hoping…

Nope, still can’t muster any love for the Tories

I’ve noticed a trend among some Liberal Democrats lately of assuming that, because the party is in coalition with the Tories, they should say nice things about the Great Blue Evil and even defend Conservative Ministers when the inevitable (and probably not unreasonable) accusations of madness and megalomania are levelled against them. Sorry to opt out of this love-in, but a Tory is a Tory is a Tory.

Let’s not forget the people we’re dealing with here: George Osborne, who simply couldn’t wait to crank VAT up to 20% and start slashing public services; Michael Gove, who has wasted no time in making a complete lash up of the schools rebuilding programme; Iain Duncan Smith, who brought back not-so-fond memories of his Chingford predecessor Norman Tebbit with his reworded ‘on yer bike’ solution to unemployment; Eric Pickles, who plans to fillet local government and bring back a good dose of Christian values to public life (except the one about bare-faced grasping, of course).

And then there’s Cameron himself, the craftiest and most slippery of them all, a man who – as far as I can tell – believes nothing at all and is more than willing to let the idealogues around him get on with their dirty business.

The Tories, lest we forget, are only in this for one thing: looking after the small minority of the population who hold most of the wealth. Much wind has already been expelled about the cost of benefit fraud, for example, but there seems to be little interest in tackling tax evasion which is estimated to cost the Treasury fifteen times more. No, far easier to leave your party donors alone and get your mates in the right-wing press to stick the boot in to the less well-off on your behalf instead. It’s like the eighties all over again – the Tories will never change because they have no concept of what the word means.

Yes, I know there’s a coalition here and that compromise is part and parcel of the deal and yes, I know some people from my party signed up to it. I also accept that the party leadership didn’t have too many options considering the parliamentary arithmetic and the need to prove that a hung parliament needn’t be a recipe for instability.

But I curse, pretty much on a daily basis, that the Tories were the only show in town. And whatever the arrangements, however much the coalition is supposedly a vehicle for worthy Lib Dem policies, I’m never going to be able to muster any love for the Tories.


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If you lie down with dogs…

If you lie down with dogs there’s a good chance you’re going to get up with fleas. With that in mind, I don’t suppose I should be in the least bit surprised at the nature of this week’s Budget, not least the inclusion of the Tories’ favourite tax, VAT.

I’m also fully aware of the nature of coalition. There are those who express surprise at the amount of Lib Dem election manifesto commitments which have either disappeared or been completely reversed, but I guess these people haven’t grasped the concept of being the junior partner in a coalition. The Tories have the lion’s share of the seats and so the government’s agenda is basically theirs with a few added Lib Dem bells and whistles (movement towards a £10,000 tax allowance, for example, or a referendum on limited voting reform).

But I still can’t get past the thought that the price of these noble policy aims has been to accept a regressive Budget from a Chancellor who clearly doesn’t give a damn about those less well off than himself (in other words, most of the rest of us). I deliberately didn’t post in the immediate afterscorch of the Budget for fear of bursting out with a purely emotional response to its provisions, but three days on and my view of it is pretty much the same.

I can accept some of the cuts for the simple reason that as a country we can’t simply keep on spending money we clearly don’t have. Contrary to what the Labour Party will tell you, running a massive deficit is not a progressive policy because someone will have to pay for it in the end and the longer we wait the more it will cost, both in terms of cash and public services. That said, there has to be a balance between controlling spending and making sure such cuts don’t damage the wider economy. I think the nature and timing of the cuts will put the economy at serious risk and that the coalition has taken this leap for ideological rather than pragmatic considerations.

Inevitably part of the ‘medicine’ comes in the form of increased taxation, but here is the most glaring case of Tory ideological fingerprints all over the Budget. (I know I’m running the risk of turning this blog into a continual rant about VAT but I really do believe it is a most unfair revenue-raiser which disproportionately punishes those who can least afford it.) I think I could probably have lived with much of the remainder of the Budget had the Chancellor looked towards Income Tax as his source of increased revenue, but that was never going to be on the cards. Throughout the campaign the guarded comments of both George Osborne and Alistair Darling can have left no one in any doubt that, whichever of them was Chancellor, they would look to VAT to balance the books. What has been surprising is how meekly the Lib Dems, who rightly spoke out against the tax during the election, have allowed the rise to 20% to be nodded through.

I can’t pretend I’m happy about the Budget (or the coalition for that matter) but none of that stops me being a Lib Dem, albeit on the progressive social democrat wing of the party. I’m also relieved to have an excellent local Lib Dem MP (Dan Rogerson) rather than a Tory alternative. I’m certainly not going to jump ship – Labour are, let’s not forget, the authoritarian, warmongering joke that helped get us all into this mess in the first place – but equally I have no intention of being an unquestioning apologist for the coalition. I will happily applaud them when they do well, and there is already much they can point to, particularly in the area of civil liberties. But I’m no longer prepared to stay silent when they indulge in the morally indefensible, as they did this week with Osborne’s Budget.

Ed Balls: dishonest or delusional?

Ed Balls is right. As he wrote on Thursday, an increase in VAT would be unfair to the poorest and damaging to jobs and the economy, and the coalition will be making a big mistake if George Osborne’s budget includes such an increase.

Balls has said, in an email to Labour Party members, that “Raising VAT is hugely unfair. The VAT rise will hit the poorest households harder than the richest and will hit pensioner couples and ordinary families hardest of all. It is simply not right.” His parliamentary question, tabled ahead of the Budget, asking for the distributional impact of a VAT rise is a smart political move which gets to the very heart of why VAT is wrong, and his stance on this issue has helped to set him aside from the other candidates in the Labour leadership contest.

But does he honestly think that if his great mentor, Gordon Brown had won the General Election Labour would not have increased VAT? Ever since 1992 Labour have been terrified of increasing the headline rate of Income Tax – clearly the fairest way of raising revenue – and all the evasions during the election campaign clearly pointed to a VAT hike as their preferred tool for dealing with part of the deficit. Yes, Alistair Darling – rightly – increased the top rate to 50% in his 2009 Budget, but this can clearly be seen as the act of a dying government which had suddenly found a lost reserve of courage. It certainly wasn’t a typical example of the New Labour approach to fiscal policy.

Balls’ posturing on VAT is of course naked opportunism, designed to bolster his bid for the Labour leadership, and I can’t blame him for that. The party’s leadership contest has yet to burst into life and hasn’t come anywhere close to engaging the wider public. Perhaps Balls has found an issue which can resonate with many who are sceptical at best about Osborne’s “we’re all in this together” nonsense.

None of that changes the fact that VAT is a thoroughly regressive tax and that it will be a particularly appalling day for the coalition (and in particular the Lib Dems) if Osborne is allowed to push through a hike.

But had Labour pulled off the impossible and won the General Election they would certainly have increased VAT – no question about it. As Balls himself admits, all of their campaign rhetoric pointed in this direction. For him to claim now that there would have been any other outcome demonstrates that he is either plainly dishonest or deeply delusional.

VAT: the sneakiest tax

I suppose the bedrock of any coalition must be the readiness to compromise. It is for that reason that the Lib Dems have had to swallow (among other things) the Tories’ aggressive cuts agenda and Michael Gove’s potty ‘Free School’ nonsense in return for progress towards a £10,000 tax threshold, limited political reform and the ability to restrain the mouth-foaming wing of the Conservative Party.

Within the culture of compromise there still have to be red lines, however. With George Osborne’s ‘Emergency’ Budget on the horizon, first and foremost among these should be a Lib Dem refusal to countenance any increase in VAT.

As I’ve written before, VAT is the worst tax of all. It gives the impression of fairness (no one is exempt, the more you spend the more you pay in tax) yet disproportionately punishes the poorest because they naturally spend a higher proportion of their income (VAT accounts for 13.6% of the gross household income for the poorest 10%, compared to 4.1% for the wealthiest 10%). In addition the wealthy can afford to have their accountants play with the books and claim large chunks of VAT back from the taxman – those on the minimum wage cannot.

Let’s not forget that the Tories spent most of the election campaign bitching about the rise in NI contributions (in fact, they could barely squeeze a sentence out of their over-indulged mouths without uttering the campaign’s most irritating soundbite – “Labour’s Jobs Tax”) yet now there’s every chance they will impose an additional cost on small businesses in the form of VAT. Never mind, at least the super-wealthy won’t be too badly affected.

Of course, Labour supporters will erupt in faux outrage if and when Osborne raises VAT on Tuesday, conveniently ignoring the fact that their standard defence when asked about an increase during the election campaign was exactly the same as the Tories – “We have no plans to raise VAT” or “You can’t expect me to reveal what would be in our first Budget”. They will try to have a field day on this issue, but anyone from the Labour Party who tells you they wouldn’t have raised VAT if they’d won the election is either dishonest, deluded or both.

Lib Dems are naturally opposed to regressive forms of taxation such as VAT – or at least, they should be. There’s little dispute that, allied with a certain level of spending cuts, taxation will have to rise to offset the deficit left by the last government, but surely the fairest – and most honest – way of doing that is via Income Tax. This most straightforward of taxes is based on what you earn, and is clearly outlined in your payslip. It is universally regarded as the most ‘progressive’ form of taxation and, while no one particularly likes paying it, at least we would all know where we stood. Why then are the Coalition so scared of it?