Tag: tax

2015: TORY TRIUMPH,TERROR AND REFUGEES

 

 The year has been book ended by acts of terror that reminded us that however much progress we make in computerisation, medical research or space travel, mankind’s capacity for violence is still there. The murderous Parisian attacks on the satirical magazine Charlie Hebdo came in January, the one on the Bataclan Theatre in November. In between the arrival of hundreds of thousands of refugees tested the European Union to its limits. Linking the terror and the refugees was the widening war in Syria. It led to a decision that the UK should bomb Daesh with as yet unknown consequences for British politics.

What we do know is that in all likelihood 2015 saw the establishment of Conservative government in Britain until 2025. The run up to the contest in may was marked by squabbles over the TV debates and a skillful March budget by George Osborne where he determined that the Tories would fight the election on their Long Term Economic Plan. It was effective in reminding voters of the recovery that had taken place already and casting doubt on their Labour opponent’s economic competence. Ed Miliband made little headway with his plans for a mansion tax and freezing energy bills. However the Tories believed until the close of poll on May 7th that they had not done enough to win a majority. They were helped over the line by the surge in support for the Scottish Nationalists. The prospect of Ed Miliband and Alex Salmond running the country drove wavering voters into the Tory camp.

General Elections are always a time when the old guard hand on to new faces so 2015 saw northern legends like Jack Straw, David Blunkett and William Hague leave the Commons along with lesser lights like Grimsby’s Austin Mitchell and Salford’s Hazel Blears. The Class of ’15 will take time to build their reputations but quick out of the blocks has been left winger Cat Smith in Lancaster and William Wragg, the new Tory MP for Hazel Grove.

The year has also seen the final passing of two of the twentieth century’s leading Chancellors, Denis Healey and Geoffrey Howe. A miserable year for the Liberal Democrats was compounded by the death of their former leader Charles Kennedy.

General Election victory led to Tory hubris in the summer with plans for new laws curbing the unions, extra surveillance powers and cuts to tax credits. On the latter measure, by the autumn the Prime Minister was reminded that although he had a majority, it was only a slim one.

The most surprising consequence of the General Election was the victory of Jeremy Corbyn as Labour leader, the most unlikely holder of the post since the 1920s. A combination of reckless decisions by some MPs in nominating him was followed by a surge of support motivated by years of frustration at the approach of New Labour. The Oldham by-election has entrenched Corbyn’s leadership with most of the parliamentary party in frustrated murmuring revolt.

It has been a bad year for the European Union. The long drawn out crisis over Greek debt followed by the divisions over the refugee migration may help turn Brits against the EU in such numbers that we vote to leave.

Devolution has moved on erratically across the North this year with deals being struck in Sheffield and Liverpool but Leeds and Lancashire still mired in disputes with North Yorkshire and Wyre Councils before packages can be agreed. Tony Lloyd was installed as interim elected mayor of Greater Manchester and as the year ended it looked as if Joe Anderson would head up the Liverpool City Region in succession to Phil Davies of Wirral.

But for devolution and the Northern Powerhouse to mean anything to ordinary people, it has to achieve things that matter. It looks as if transport might be the first such activity. After “pausing” the electrification of the Leeds-Manchester line in the summer, the government ended the year with substantial announcements on rail investment.

Have a peaceful Christmas.

 

LABOUR OLDHAM WARNING AS OSBORNE MARCHES ON

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OLDHAM WARNING FOR LABOUR.

A Labour contact of mine in the Oldham West by election says on the doorstep traditional Labour voters are raising Corbyn’s leadership all the time. This could be significant as “Westminster bubble” issues don’t always resonate with voters.

The feedback from this northern seat is that Corbyn and his close advisers are all perceived to be from a London clique who haven’t a clue about the North. This impression will be compounded by Corbyn’s decision to cancel his planned Friday visit to the by election as he tries to sort out serious divisions over his party’s policy on bombing Syria.

All this means that we would be unwise to rule out UKIP doing very well next Thursday night in Oldham West and Royton.

OSBORNE FOR PRIME MINISTER?

 

George Osborne’s shameless U turn on tax credits and police cuts will be long forgotten if his gamble in believing in a continuing world of low inflation and interest rates pays off. In his six years as Chancellor, he has shown himself generally to have a pragmatic and politically sensitive approach. Made a mistake over pasties or tax credits? Make a change and move on. His upbeat approach at all three budget statements this year raises the morale of backbench Tories who think he’s a winner. They also like the ideology which runs underneath the pragmatism. Osborne is determined to create a smaller state. By 2020 it will have shrunk from 50% to 35% of gross Domestic Product.

This is most clearly seen in housing policy. The private sector is to be incentivised to build 400,000 homes with a strong emphasis on making them available to buy not rent. Along with the right to buy for Housing Association tenants, the thrust of government policy is clearly away from social housing to home ownership. First time buyers with incomes of up to £80,000 in the North will be able to benefit from the subsidies offered. The policy will not help the poor who are most in need of housing.

On education George Osborne explicitly said the days of local councils running schools would be a thing of the past. 500 new free schools are to be built.

So ideology to please the Tory backbenches, pragmatism to please the voters, could this be a combination that allows George Osborne to see of Theresa May or Boris Johnson in the leadership election? At the moment he has to be favourite but what if things go wrong.

THE GAMBLE.

The Treasury are spinning that this isn’t the end of austerity. Well a strategic decision has been taken to take advantage of the more optimistic outlook offered by the Office for Budget Responsibility to ease the cuts in the early years of the parliament and breach the welfare cap. There is a heavy reliance on continued low inflation rates and growth of around 2.5%. If “events” happen like a further downturn in the Chinese economy, Osborne’s gamble could unravel just when he’s seeking to become Prime Minister. In that respect it is strange that he has decided to defer more painful cuts till nearer the election rather than getting them over now.

WHAT IT MEANS FOR THE NORTH.

Sir Richard Leese, the leader of Manchester City Council had challenged the Chancellor to put the flesh on the bones of the Northern Powerhouse particularly in relation to transport. Well there is £200m for transport including £150m for an “oyster” card system. This is brilliant news. Anyone who uses London Transport knows that card makes the use of public transport so easy. The M6 between junctions 16-19 is to upgraded. The motorway which enters the north through the important gateway of Cheshire and Warrington is often overlooked when connectivity is discussed. There are major investments in science and nuclear power. New Enterprise Zones are being created in Leeds, York, Greater Manchester Life Science Park, Cheshire Science Corridor and Hillhouse Chemical on the Fylde.

LABOUR VICTORIES.

Labour can claim to have forced the government to retreat over tax credits and police cuts but they still shoot themselves in the foot.

Liam Byrne’s 2010 message left on a Treasury desk saying there was no money left, Ed Miliband’s headstone and Shadow Chancellor John MacDonald’s brandishing of Chairman Mao’s Little Red Book are a woeful series of unnecessary public relations gaffs.

The tragedy is that the issue that MacDonald was trying to raise, the worrying amount of our infrastructure owned by the Chinese is a valid one.

 

WHO CUT YOUR HOLIDAY MOBILE PHONE CHARGES? EUROPE!

 

CAMERON PREPARES TO SHOW HIS HAND

There wasn’t a great deal of coverage in the papers about the European Parliament’s victory over mobile phone roaming charges. But then it was a good news story about a body they like to pour contempt on rather than treating it like the impressive democratic forum of 28 nations, which it is. Anyway you will soon find sending home your selfies when you are on holiday a lot cheaper because the Members of the European Parliament have used their collective power to stop the mobile phone companies ripping you off.

Enjoy the benefit while you can because its increasingly likely that in 2017 we’ll be out of the EU on our own in the world. As soon as David Cameron announced the referendum in 2013 I warned that it would coincide with the mid term of the next parliament when  governments are unpopular. Never mind the issue, people from hard working doctors to those who’ve lost their tax credits will want to take it out on the Prime Minister. Cameron and Osborne will be campaigning to stay in, so many people will want to give them a bloody nose and will vote to come out.

We could see this begin to play out in the Oldham West and Royton by election on December 3rd. UKIP have chosen John Bickley. He’s a candidate for all seats having already fought Wythenshawe and Sale East and Heywood and Middleton. I profoundly disagree with his politics but he is an able candidate and will give Labour a run for their money.

Europe is poorly reported by our media generally. Not only did the European Parliament’s victory over roaming charges get little publicity, there was virtually no coverage of the Treasury Select committee’s inquiry into the actual consequences of our withdrawing from the European Union. I sat through two hours where witnesses who knew what they were talking about outlined the complexity, cost and uncertainty of what detaching ourselves from our friends and neighbours would mean.

Next week the Prime Minister is due to clarify what he actually wants from the EU in order to campaign to stay in. He will get an opt out from ever closer union and possibly a formal recognition that the £ will always exist alongside the Euro. He may get the ability for the Westminster parliament to “red card” some EU measures. But to convince Eurosecptics he wants a four year ban on EU migrants gaining access to in work benefits. Immigration is the big issue Cameron wants to deliver on and what he wants is illegal under European law because it discriminates against people because of their nationality.

That’s why I fear people will vote “no”. Cameron will be ridiculed for not stopping what some people call “benefit tourism” . Ironically the “living wage” project of the government will make it more attractive for foreign workers to come here to cut our lettuces, clean our streets and support the National Health Service.

 

MERSEYSIDE BOWING THE KNEE TO CHANCELLOR?

 

DEVOLUTION.

If Merseyside councils outside Liverpool are recognising the power of George Osborne, they won’t be alone. The concerns of Wirral, St Helens, Sefton and other councils that an elected sub regional mayor will mean domination by Liverpool are valid and need to be addressed. But the Chancellor restated in the Summer Budget that the only way to substantial devolution for city regions is by accepting the new role.

The Tories and George Osborne are at the zenith of their power. The Chancellor gave a confident performance as he set out his vision for a higher wage, lower welfare economy. It was more than the annual stock keeping on the country’s economy. It was a statement of the Tory vision, the like of which we have not seen since Chancellor Geoffrey Howe began implementing Mrs Thatcher’s economic architecture in the eighties.

Leaderless Labour see their policy of a living wage shamelessly pillaged by a Tory government that now seems to believe it’s the government’s job to meddle in what private firms pay their employees. The Scottish Nationalists are challenged by Osborne to use their powers instead of bellyaching for more and the Lib Dems, who used to have Danny Alexander at Osborne’s side as Chief Secretary to the Treasury have become an irrelevance.

In these circumstances it is unlikely that concerns about the governance of the Mersey City Region are going to get much of a hearing. The chair of the Combined Authority, Phil Davies, says they will be setting out their demands next week. However Treasury Minister Jim O’Neill tells us the councils have agreed on an elected city region mayor in principle and the talks will be about the timetable and powers.

George Osborne also made clear that similar talks are under way in South and West Yorkshire so there is a real prospect that in 2017 elections will be held for powerful city region mayors across the North.

So it is full steam ahead for the Northern Powerhouse? By no means. A government that reneges on a promise to electrify the Leeds- Manchester rail line can’t be trusted. Liverpool Mayor Joe Anderson complained that the Budget contained no commitment to HS3 connecting Hull to Liverpool, “we could end up with a house without power.” Indeed we could. By their deeds we will know them.

WAR ON THE YOUNG.

The Chancellor wants to cut drastically the welfare state and abolish tax credits but he was careful to avoid the criticism that his measures were totally unbalanced in favour of the rich. So whilst we had a four year freeze on benefits and a 1% public sector pay rise over the same period we also had measures against Non Doms, tax evaders and wealthy car owners.

But Osborne has not taken a balanced approach to the young. They will be losing housing benefit and tax relief on pensions, not getting the £7.20 living wage, and maintenance grants for the poorest students are being turned into loans. A dangerous gap is opening up between how poor young people and wealthy pensioners are being treated.

WAGE INTERVENTION.

Tax credits were allowing some firms that could afford to pay better wages to get state subsidies but the planned increase of the living wage by 10% next year and up to £9 by 2020 is going to put a strain on some smaller businesses that genuinely can’t afford it.

It is a big increase at a time when inflation is at 1%. Politically it is an extraordinary move by a Tory government. In the seventies Harold Wilson’s government loved its Prices and Incomes Board. The state meddled in companies’ affairs for a pastime. Margaret Thatcher wanted the market to decide these things. But George knows best.