Coalition government has some benefits for the Prime Minister:
– It strengthens his pre-election claim to sceptical voters that his party has modernised and indeed has now been rebranded the Liberal Conservatives, as he describes his new government.
– His Liberal Democratic partners are taking joint ownership of hard decisions on spending cuts.
– The coalition agreement also allows him to drop difficult manifesto pledges such as modifying the Human Rights Act, repatriation of powers from the EU and an inheritance tax break for the richer part of society during a budget crisis.
In addition, he still has room to move a little to the right of centre with Gordon Brown having already having shifted Labour a little to the left in cancelling the plans of Tony Blair to reform the welfare state and public services.
The Conservative right has been rewarded with right wingers such as Ian Duncan Smith appointed Minister for Work & Pensions and Liam Fox placed at Defence: the Conservatives have also secured the Home Office with e.g. the immigration amnesty of Nick Clegg having cost the Liberal Democrats many votes.
As a result, party management has become his top priority and having ignored his influential 1922 committee of backbenchers to force through the coalition agreement, he has also forced through a vote for it to accept ministers as committee members who can vote to elect its officers. However, he still needs the support of his party and natural Conservative supporters, not helped by agreeing to raise the income tax threshold to £10,000, paid for by rises in capital gains tax that will e.g. impact second-home owners. (He has even had to subsequently retreat in front of the 1922 Committee back-benchers by agreeing that after all his ministers will not be able to vote in their elections.)
Therefore, he is back talking in the media about mending the so-called ?Broken Society?, being at heart a ?low-tax Conservative? and promising to revisit the contentious issue of the 50% top tax band. This is very necessary loyalty building in the ranks with the Liberal Democrats not always natural partners for the future.
Archive for mai, 2010
Coalition Government
lundi, mai 24th, 2010Tax Policies
mercredi, mai 12th, 2010The brief on Tax Policies prepared by Michael Webster and discussed during our study group session last night can be found under Pages/Study Groups/Tax Policies in the right hand column index. Michael Barker who participated has added the following comments:
I thought the evening?s discussion went well though one thing we did not really explore was recouping public money thrown at banks to bale out their naked speculative greed and incompetence nor a possible taxation vis.à.vis joint-stock banks, investment banks, hedge funds and the like, and the huge quantity of daily transactions. I feel sure that there is scope for a small % take on such transactions, small % enough not to cause too much of a fuss from the money-makers but when the public see how huge profits are again being made by Goldman Sachs and the like, it would be popular with the electorate and seem like a move to make capitalism generally more fair for the common good and contribute to the pot. Given my ignorance of economics, I am probably the least useful member of the group to contribute to the debate, it is mostly my gut reaction.
I do think that there is a case for raising the lowest band of income tax to encourage people either on low incomes or on welfare support to move on to self reliance, small entrepreneurship and so on, and it would have a beneficial knock-on effect enabling them to climb up the ladder AND there should be made available a system of small ?seeding? loans which conventional banks avoid. Sadly it is too often not the indigenous British ? feather-bedded by the long-standing system of too-freely-handed-out benefits – but the immigrants, seeking to better themselves, who seem to have taken the initiative (though of course there also the free-loaders who take advantage of lax systems ? much in need of tightening up). If the ingrained British distaste latterly for being servants can be overcome (odd really, we all serve some master or other), the idea of giving tax breaks to not only well-off employers – but also the comfortably off – to seek staff, that seemed to me a good idea BUT given that many retired people who would probably be available but are on pensions though active and healthy (and probably a bit bored) – they would need to be not unduly penalized by the tax system, otherwise the incentives to resume working would be completely lost.
Clearly the Conservatives will have to bite the bullet at an early date – making it absolutely clear – without fudging the issues as the Socialists have ? and spell out the depth of the problem of debt in which Britain is mired and encourage a back-to-the-wall spirit ? the will to pull together and make some sacrifices ? promoting a new mood of freeing the people from state interference and nannying. It worked in the last war, this time the enemy is not Nazi aggression but a financial mess which affects us all and needs to be resolved with firmness. Not an easy task, there will be lots of backlash and whining. One can only hope that Cameron has the backbone to weather the forthcoming storms.
I am also convinced that the income tax system should be much more evenly graded (like the French system) to be put into a much higher bracket which reduces the incentive to succeed. As for inheritance tax, I rather agree with Michael Webster that the threshold should be raised substantially. It does not bring in that much revenue and is seemingly expensive to manage; philosophically it is perhaps a socialist-envy issue and I dare say rather outdated.
What does seem to me important is that there should be a sort of National Plan (albeit it sounds rather like Socialism) ? clearly laid out:- this is the problem we all face, these are the proposed solutions. Put to the people ? probably best in a Referendum ? they will respond positively I think to the need for belt-tightening. If not there will have to be another election and another mess. What does need to happen in my view is that systems should be made simpler and bureaucracy reduced.
Voilà – my thoughts for whatever they are worth.
Best wishes,
Michael
Less Tribalism
lundi, mai 10th, 2010In the end it was just too steep a hill to climb in order to completely recover the Conservative majority lost in the Labour landslide of 1997. However, now is not the time for a blame game on what might have been achieved with an aggressive approach to the election based on more traditional Conservative policies. As demonstrated by all three major parties in Westminster, the electorate in general was not judged ready for all the necessary tax rises and associated cuts in public spending required after the election to reduce the budget deficit within a time period acceptable to the financial markets. Having, therefore, retreated from their original more aggressive position on cuts the Conservatives were still able to differentiate their position somewhat and gain some traction particularly with the business world, in support of their proposed reduction in the national insurance increase of Labour. However, they failed in launching their one big idea of the Big Society which had apparently been untested on the public by focus groups and candidates also found difficult to understand, accept and, therefore, sell to voters on their doorsteps. On the other hand, the prime minister was forced on the defensive and reverted to the politics of fear and the old class warrior of the Left to shore up the traditional Labour vote. Despite surprisingly losing some seats the Liberal Democrats have emerged as the king makers and also demonstrated the power of a more simple concept with the electorate i.e. for no income tax on the first £10,000 of earned income, which also has the added benefit of attracting people off welfare support. How the Liberal Democrats proposed to pay for this was debatable but as a small example my son and daughter were sufficiently attracted to vote Liberal Democrat in their two Labour-dominated London boroughs.
Now is, therefore, also not the time for tribalism politics as the Conservative party obviously wants power and David Cameron has shown true leadership in putting the state of the British economy first in reaching out to the Liberal Democrats to secure a working majority in the Commons.