Is this the backcloth to Clegg’s tax cutting approach?
July 18th, 2008
What should the Lib Dems do when the Tories are advancing?
The latest Lib Dem approach to taxation and public spending is very different from what we are used to from the party - remember the penny extra in the pound for education and them being the only party at previous elections prepared to increase rates for the well off?
This is going to cause fierce debates within Clegg’s party but I wonder whether the new young leader is sensing that the nature of his party support is changing. Just look at the polling finding reproduced above and in particular the responses of Lib Dem supporters in the final column.
One trend that I track closely is the response to the monthly forced choice question in the Telegraph’s YouGov poll over whether voters would prefer a Tory government led by Cameron to a Labour one led by Brown. In particular I look at how Lib Dem voters split which is available from the detailed data.
For long periods the Lib Dems were mostly in favour of Labour. For several months, until June, LD backers have split fairly evenly on the question. In May it was 40-40-20 while in March and April Brown had a small lead.
The latest figures point to the biggest pro-Tory split on the question amongst declared Lib Dem voters that we have ever seen and undermines the conventional assumption that Lib Dem voters are as left-wing as many of the party’s activists.
This is perhaps the backcloth for Nick Clegg and his colleagues as they try to steer the right course between the big parties. How can they argue a distinctive approach that keeps both Labour and Conservative waverers on board? Maybe this explains what seems to be a major U-turn on taxation and public spending policy?
Seepage to the Tories particularly in the seats they hold is their biggest challenge at the next election and Clegg’s message on spending cuts seems designed to impede that. At the same time the other part of the package for the least well off could help in their Labour targets.
UPDATE 1045
Rest of the Day - For the rest of the day I am in London helping my son and his family move house so won’t be monitoring the site.
Scheduled to be published at 4pm is “PB Election Countdown: What makes marginals different?”. This is a re-run of a great guest slot from last year by Blair Freebairn which made me looking at the coming battle in a completely different way.
Automatic moderation of comments from posters the server does not recognise is still on. It might mean that there are delays in freeing them.
Mike Smithson
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It would be more fun if the SNP candidate’s name was Jason Mason (as was erroneously reported briefly a while ago). In 1991 Private Eye said that the Conservative candidate in Kincardine & Deeside was going to be Humphrey Dumpty, and I was disappointed when I found out it was only a joke.
Where is everybody? Have you all taken the overnight train to Glasgow?
Are those figures today’s Lib-Dems, or YouGov’s sample of 2005 Lib-Dem identified people, many of whom may already plan to vote Tory.
Nick Clegg is desperately trying to hold onto seats that are at high risk of going blue. Not a bad attempt. However, I think that the opportunity to really kick Labour out will prove too strong for many in Lib Dem / Tory marginals.
O/T - So the government can’t stick to their own rules, so the rules are gonna be changed. Quelle surprise!
http://news.bbc.co.uk/1/hi/uk_politics/7512972.stm
4. Can you explain how a LD/Tory marginal changing hands (either way) helps get Labour out? It does not affect the Labour majority at all.
Yes, bold move by Clegg but surely the right agenda for the right time. Looking at ID cards and this great phone call database, these are both things the Government could do but shouldn’t, on both civil liberties and cost grounds. While people are watching their spending more than they have for years, and the focus is on MPs expenses, any politician suggesting a tightening of the belt in Government is on solid ground - a brave move given recent policy, but skim-reading yesterday’s thread I didn’t see any LDs whining - I certainly wasn’t.
I suspect Mike might be right and Clegg might be wrong, which is to say that these figures (or the obvious dynamic that has produced them) is what’s behind the Lib Dem move, but that move is unlikely to work.
There are several reasons for this. Firstly, it’s a very defensive strategy, aimed at trying to hold on to as many Lib Dem seats that they won from the Conservatives (IIRC, over half the Lib Dems’ current total were won from Tories since 1992). These seats are clearly vulnerable to a Tory revival (some more than others), but is trying to seem a Tory-lite party the way to do it - especially when many of those seats will have been won with tactical Labour votes?
Virtually everyone believes the Conservatives are the party most committed to tax cuts. It’s one reason Cameron has been able to leave the subject more or less alone: Labour is now well associated with stealth taxes and the Lib Dems made a virtue of being in favour of some higher taxes for so long that many people will believe they still are. If a person wants tax cuts as a main personal priority, they will vote Tory. If the Conservatives do win the next election, Osborne (or whoever is chancellor, but probably him), will then get a bit of slack to deal with the economic situation, but will still be expected to deliver tax cuts. Only if he doesn’t do that might the Lib Dems’ policy about turn start to chime - though if he doesn’t, the probability is that the Conservatives will be a good deal less popular than at present enabling the Lib Dems to revert to a more comfortable ‘tax and spend’ position.
Another factor why I’m not sold on Clegg’s proposal is that I’m not convinced that the change in Lib Dem voters’ preferred choice has much to do with policy. Probably there is some move as ‘tax and spend’ has once again been shown to deliver less than expected for the resource increase and as taxes begin to bite, but I would suspect that most of the shift is down to preceived incompetence in the government, a favourable viewing of Cameron over Brown personally, and of Cameron’s leadership skills compared to Brown’s indecision and ineffective populism.
The third reason why this is a big risk for Clegg is that the Lib Dems’ policy is far more likely to be of interest to Lib Dem activists than their voters. Most people know that the chances of a UK Lib Dem government are close to nil, so might vote for them to express approval for a policy position, but are more likely to do so for local political reasons (candidate effectiveness etc), or as a protest against the other two parties - something that ties in with the Lib Dem campaigning style which is usually a combination of going very negative against their main opponents and a list of little local triumphs. To that extent, annoying much of the activist base may produce little in the way of electoral gain.
To me, the main thing this move shows is how the tide is moving on the tax/spending debate. The mood is swinging away from higher taxes and more spending (and hence away from ‘better public services’) and towards lower taxes. If the Lib Dems adopt what many will see as a Tory agenda, it is likely to do at least as much for the Tories - seen as being ‘in touch’ - as for the Lib Dems.
8 - yep, there will probably be an assumption that if the Tories can’t find a way to deliver tax cuts, then the LibDem numbers probably won’t add up.
6. Two ways:
In a hung parliament, a Tory MP is much more likely to vote to kick Labour out than a Lib Dem.
Voting in a Tory is a step closer to a change of government; returning a Lib Dem is not necessarily.
It is this difference that I think a lot of Lib Dems (and Labour supporters for that matter) miss. Someone posted yesterday that the balance between the incentives of winning office for themselves and kicking the other lot out is different between Labour and the Tories, and I’d agree with that. Labour is more motivated by ‘getting rid of the Tories’; the Conservatives more by ‘winning the election’. To that end, Labour is more prepared to use tactical voting to support other parties assumed to be relatively sympathetic (whether or not that one exists is of course a factor in that consideration).
Lib Dems tend to incline to the Labour viewpoint but the assumption that Tories will vote Lib Dem to get Labour out might be in vain; certainly the idea that replacing a Lib Dem with a Tory will make little difference will be laughed at. The important column is the number of Tory MPs, not the number of Labour ones.
re. 3 the numbers are current Lib Dem supporters
10. You made every point I was about to make.
But, on topic, I think Clegg has realised far more quickly than the other two party leaders that the public mood on tax and spend has shifted markedly, even compared to 2005. Unjustly, he won’t get much credit for this, but he may well demonstrate to the Conservatives that it’s safe to make the case for reining in public spending.
12, I agree that the public mood has shifted. However, Clegg can promise what he likes, he isn’t going to be Prime Minister. Brown and Cameron have to promise something at least approaching realism.
The example he gave on Newsnight (equalising pension exemption from tax) would actually increase the tax take.
However, I do agree with the general principle of lower taxes and a smaller state. But even the Thatcher government had to raise taxes to get the country on its feet again, and we have no idea what the finances will be like in 2010. Given the possible rewriting of the iron pyrite rule it seems like Brown’s simply going to borrow a fortune and mortgage the future of the country to try and bolster his own electoral hopes.
Bad news for Clegg - former Brown fan Janet Daley agrees with him !
http://blogs.telegraph.co.uk/janet_daley/blog/2008/07/17/nick_clegg_tells_the_truth_about_tax_and_spend
Shoud have the sandal brigade choking on their museli..
Seems Clegg has captured the mood pretty well. Brown getting slated all over the media for changing the rules on borrowing. Clegg has rightly judged that the public have had enough of tax and spend.
Oh and Mark ‘Soros’ Senior it seems that Vince Cable agrees with me about the collapse of government revenue and the need to increase borrowing (god forbid they should actually cut spending).
Vince was, as ever, very good on radio 4 this morning.
12. Always happy to agree with you, Sean
This is a very long overdue revue of the direction of travel for the Lib Dems and as a Conservative I can only welcome Nick Cleggs late conversion to the cause of a low tax economy.
I think the Lib Dems will suffer two immediate challenges to this however, 1) the credibility of leaping with one bound threough 180′ on such a fundimental cause as this may only add the the widely held belief that the Lib Dems are the ’sitting on every fence’ party and 2) their activists (and a lot of their MP’s) down in this neck of the woods are unreconstructed lefties who have slotted in to the vacancy left behind by New Labour and who will view this proposal with horror and not a little dismay.
I think it is too little, too late but we shall see.
Mike, you assume that Lib Dem voters have a political philosophy. My experience of them is the opposite. At a general election the Lib Dems tend to pick up the voters who “dislike” the main two parties, based on a wide range of issues. They may pick up votes because of the appeal of the leader, but to suggest that the average Lib Dem voter at a general election is positively voting for a their manifesto is massively wide of the mark. It also means that Lib Dem MPs can (and do) have a wide divergence of opinions on policy and it does not affect their national polling levels.
18. No, Marcus. As a ‘lefty’ Lib Dem activist, I am quite content with this tax policy (and thank you Mr Brown, for changing the borrowing rules so any ‘affordability’ question is now moot).
What most Lib Dem activists want from tax changes is re-distribution of the tax burden to those ‘with the broadest shoulders’.
Previously the policy attempted this as part of a net tax hike, which was easy to be attacked as a ‘rise for the average tax-payer’. I’m sure your 2005 campaign would have majored on this.
As part of a net tax cut, the Tory fox is shot, and the policy of re-distribution through progressive taxation is easier to sell.
For the LDs to succeed, they need to attack both the other two parties. But occasionally, one main party offends the public mood (Tories in 1997, Labour now). At this particular stage of the political cycle, there is no value whatsoever in criticising the likely new govt. Nobody wants to know.
‘We are at one with X party in that getting rid of this tired and incompetent govt is the number one priority. The LDs are important to try to limit daft excesses like….’ Or ‘a stronger LD party might have prevented…’
Actual LD policy is as irrelevant as ever.
The people who would gain from the Lib Dems change in taxation policy are the lower earning workers, apart from those in public sector affected by the £20bn of cuts. In recent GEs these workers will have mainly voted Labour and Lib Dem. The previous LD tax policy of removing council tax and replacing with an income tax would have also benefited lower earning workers.
Maybe this time around the tax policy will be more attractive because it is simpler? However it is true that a large part of the LD vote is a protest vote and is more volatile than the other main 2 parties. But the Lib Dems do lack the ability to communicate their national ideas to the public partly due to media time and partly due to their fragmented FOCUS network.
What we can expect to see is a more timid approach from the Lib Dems towards opposing cuts now that they have £20bn of their own to find. Is this the Lib Dems Clause 4 moment?
The LibDems can come up with whatever tax/spend policies they like - they will never have an opportunity to implement them.
At this stage in the economic cycle, it is wrong for any opposition to commit yourself to anything specific. Talk in general terms by all means but wait until you get a chance to look at the books before bringing forward detailed proposals.
Clegg is an opportunist who is trying to get some publicity. His period as leader has not been a great one - he is trying to find a voice.
So far, I am not convinced
re 19. I disagree with you very strongly. All the polling data on attitudes to different issues suggests that Lib Dem supporters have a distinctive philosophy compared with Labour and the Tories. They are much less hostile to immigrants, more pro-EU and very much against invading other nations which pose no threat without the sanction of the UN.
They are likely to be
lessmore opposed to hanging, detaining people without trial for long periods and are stronger on general civil liberties issues. The ID card is a case in point.20. It’s not the tax cuts that will anger activists (no-one like paying tax) it’s the cuts in services, and especially sacking thousands of civil servants/town hall staff where the Lib Dems traditionally draw a lot of support.
The merits of Clegg’s proposals are that they are right, that they reflect the views of a plurality of voters, and that they accord pretty closely with the views of Liberal Democrat voters (more of whom read the Mail than the Guardian).
But the popular element is surely the proposal to cut the number of MPs by 150.
All talk of tax cuts is nonsense at the moment. We probably need tax rises and big spending cuts. Changing the rules to ignore reality as Brown is doing today is disastrous, epsecially when you consider all the off balance sheet PFI schemes which really should be counted already. I.e. the figures are already in reality much worse than they appear, so moving the goalpsots (to a different bl00dy postcode) is catastrophic.
Nick Robinson on Radio 4 this morning was saying the govt needs to either borrow more or raise taxes. I nearly threw the radio out the window as i shouted “OR CUT SPENDING” but it just doesn’t occur to them.
More petrol on the recession bonfire. I despair.
25
Of course we shan’t be having the problem, of sacking thousands of civils servants, (cuddles please note) town hall workers etc. when Dave gets in, as he’s already admitted he’ll be raising taxes anyway: I respect his honesty!
The Daily Mash on the crime figures.
http://www.thedailymash.co.uk/news/society/government-releases-danish-crime-figures–200807181106/
24: “They are likely to be less opposed”
More opposed, surely?
26.The LD’s would have had a lot more credibility now if they had agreed with all of this (£20bn efficiency savings, cutting the number of MP’s by 150) when Michael Howard suggested it in 2005.
6 Can you explain how a LD/Tory marginal changing hands (either way) helps get Labour out?
I can only second what 10 said.
When a government is very unpopular, the voters want to kick it out and replace it. In 1997, that meant voting for whoever could beat the Conservative incumbents. In a Lib Dem / Tory marginal that meant Lib Dem.
Fast forward to 2010. The voters want shot of Brown, and the only real alternative is Cameron. In a Lab / Lib Dem marginal, they will probably choose to kick Labour by voting Lib Dem. In general however, the Not Labour party is Conservative. Voters will want to make sure that a stake is driven through the heart of the beast, and that doesn’t mean voting for a party that might be a coalition partner.
So in the Lib Dem heartlands, they will probably loose support but gain it where they are the alternative.
Iain Dale supports Clegg, he also seems to be calling for a coalition: I Think!
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/07/18/do1804.xml
28 You are correct about raising taxes. The country is bankrupt… the only option is to raise taxes to restore public finances. As ever a Tory govt will have to solve the disaster left behind by these socialist idiots.
Mike are you sure? - Lib Dems I know tend to be against hanging - even for Conservative Party members.
re 34. Thanks Icarus - Lib Dems are much more opposed to capital punishment than supporters of the other parties. I’ve changed it.
24 I’d be interested in seeing links to any polling data showing what are the general political beliefs of the supporters of the three main parties. One of the things that has struck me is that there seem to be a fair number of party members whose own political beliefs seem to have little resemblance to those of their party.
23 You have to give the public some indication of the direction you’re travelling in. I tend to agree with Matthew Parris that the Conservatives should be clear that we won’t be matching Labour’s public spending plans.
33….you can restore the public finances by cutting spending. you just remove a large chunk of the Brown client state. their contribution to the nation’s wealth is virtually nil.
37, also, massive and useless grand masterplans (ID cards and the NHS database) are either wholly unnecessary or can be watered down. They cost billions upon billions and do bugger all.
37,38 - Or you can do what the government seems hell bent on doing, tear up your fiscal rules and ignore the state of the public finances by piling up masses of deferred taxation.
33
Hmmm of course thats what Labour people say about Tory governments.
If Mr Cameron is being honest, then he should say before the election, which taxes and by how much!
Some of us, (Have to be careful, here Martin Day hates the past, believing as he does, ‘In the beginning was the word and the word was Dave’) remember 1979 when the Tories denied they would raise VAT and the almost doubled it in one go and put 2% on interest rates. Or John Major’s pledge, ‘I have no intention of extending or increasing VAT, then tried, (but failed) to put 17.5% vat on domestic fuel’
So if it is the intention of an incoming Conservative government to increase taxes, tell us all before polling day.
Also the Libdems should tell us, how much and what taxes they’ll be reducing.
36. Sean, the official party line is that we would have matched Labours *current* spending plans but clearly this commitment only lasts for this spending round which expires in November (and became obselete as soon as th election as off). Presumably whether we agree with Labours next round of spending commitments depends on what they are.
27 jon C quite right, the BBC and RedNick Robinson just do not understand that there is an alternative, CUTS. Maybe Nickinglesstaxes Clegg will help educate them?
Overall I have read about countries making mistakes by having their military setup to fight the previous war and not the next. The Conservatives GE 2005 manifesto does look like a manifesto to fight the following (2010) election. Ahead of its time and out of sync with the then voters.
It has not been all plain sailing for the Lib Dems, but one difference I have noticed when canvassing or just talking with friends is that unlike 30 years ago the “wasted vote” argument does not seem to come up. We are treated as a genuine alternative - OK in many constituencies were we are in third place the anti vote may go elsewhere, but there is perhaps the view that neither Conservative or Labour governments (or their MPs) have been that wonderful.
We have new gravitas from having serious sensible politicians like Paddy Ashdown and Vince Cable on board. If Nick Clegg can continue to push the line we have thoughtout policies and they are fair (Conservatives have no policies and the Labour government has not been fair), then given the exposure that we would get in a General Election campaign the result may surprise some.
If Gordon really is forced to hang on until the last possible date then the effective campaign will last about six months rather than the usual 3 weeks - The Lib Dems will be entitled to ask for equality of air time for all of this time.
How refreshing it is to see a thread specifically dedicated to the LibDem leader and his thoughts, it makes a pleasant change from the cursory footnote usually afforded.
O/T, Whether or not this volte face by Clegg appeals or antagonises the activists is moot, it will resonate with the electorate who vote, however, like Marcus @ 18, I too believe this action to be ‘too little too late’, already 45% of the voters believe the Tories have this angle wrapped up and Clegg’s new stance is well behind the bell curve. If ever the term ‘political opportunism’ could be thrown about, then this is it.
Keep trumpeting Clegg’s brilliant foresight by all means, but this is no more than hindsight and he’s already missed the train.
Sean 36 - you can see it in the detailed data from almost every survey from YouGov, ICM, Populus and ComRes. They break down all their responses to non-voting questions in line with how people say they are voting.
43 Cleggs tax hike on pension funding - 20p in the £ for everyone earning at higher rate will not endear him to many new voters - he is not only taxing higher earners more, he is taxing them twice - on their earnings and again on their savings. The Lib Dems should be honest and state that wealth and success are a bad thing and they will do what they can to scupper them.
43, the Lib Dems are taken more seriously than before, and rightly so. However, they are still a long way from becoming the official opposition, let alone the government.
It’s an interesting point about airtime. Personally, I agree with you. I suspect, however, that the BBC will do a Let’s Save Gordon campaign, which will involve pretending Brown’s super, denigrating Cameron and ignoring Clegg.
In fact, I think Cleggs pension tax hike is his 10p tax moment - badly thought through and with unforeseen effects (which I am currently foreseeing)
We are obviously hearing a different Conservative message, Simon. Osbourne has promised to maintain Labour spending on health and education and actually increase spending on the military (Clegg has said we will cut military spending and activity).
Yesterdays message from Cameron was quite clear. - It may be necessary to increase taxes. I trust the Paxmans and Humphreys to keep getting him to repeat this umpteen times between now and the election.
41
Bet y’do!
It’s going to be interesting for you Marcus, putting on your leaflets, ‘Vote Tory the party that is promising to increase your taxes, don’t vote Libdem, ‘cos those fibbers are promising to cut them’
But then of course if Mrs Dale is right you could be snuggling up to them anyway! So it might be, ‘Vote for me, (Not that the Libdem isn’t a really nice guy, who might even be in Dave’s cabinet) but I need the job’ I’d be convinced!
49 as long as they continue to pick away at the evident flaws in Cleggs proposals and remind everyone on higher rate who invest in a pension that they are getting a 20% tax hike that should be fine.
‘We might raise taxes as Labour have screwed the economy’ versus ‘I am an idiot who taxes success like a raving socialist nutjob’ is ok
I take it that the general concensus is that Clegg’s ‘tax cutting’ is not the sort of tax cutting that the Redwoods of this world would call for? Its more about taxing the rich via pensions to offer some sort of redistribution at the lower end and as such is a straight Labour core-vote grab?
It should, if anything, make Cameron’s journey to number 10 rather easier
52 I say ‘rich’ I of course mean ‘middle england’
I’ve seen nothing to suggest that Clegg is talking about tax cuts - because to deliver those the challenge would be to cut spending - but rather tax redistribution - taxing the poor less and the rich more.
The biggest extra tax on the rich is the dream of removing higher rate tax relief on pension contributions which was investigated, thoroughly, by Adair Turner’s Pension Commission, who concluded that while final salary schemes exist this change could only be made if you were prepared to tolerate significant unfairness or greatly increased complexity. The LDs have yet to say which they favour, preferring to continue to talk in generalities.
It is always possible that Dave will not be able to keep to his “Higher taxes may be necessary” policy. There will be lots of “old” Conservatives who will publicly ask for tax cuts now. Tax cuts for their friends, that is, Mr Letwin will have a job convincing us that Tories care about the poor! The Tory party may well go into the next election as a badly divided party.
On Clegg again, I think this potential change in strategy is a wise reaction to the London/C&N/Henley results. Clearly the Lib Dems cannot hope to beat the Conservatives in a face off against them and their best bet of maintaining a credible number of MP’s is to look to make gains in the North to compensate for losses in the South.
This policy will help hugely to position the LD’s to win tactical votes in Labour - Lib Dem marginals.
Clearly it will add to tactical unwind in pre-1997 Conservative seats like mine but Clegg must have assumed (as most commentators have been saying all along) that most of these seats are going to be taken blue anyway.
Disws - the flaw in your flaw-spotting about the pension credit issue is that the potential is there for high earners to receive a 40% tax credit for a pension that could only be taxed at 22% when it’s paid out (or presumably 16% if the Lib Dems have their way), which means they’ve receive more relief then they’re entitled to (the pension ‘tax relief’ is to ensure that the income is only taxed once).
Surely the issue at hand for betting chaps is that this rewrite of the golden rules finishes Browns premiership. Not one person is going to wander into a polling station and then into the booth and put his X next to the labour candidate.
The man is a liar and a cheat and Labour have no chance with him as leader……… even Labour supporting friends of mine openly say they wont vote for him.
What ever the truth, the fact that there is so much coverage of the issue, is a, ‘Victory’ for Clegg, what sort of ‘Victory’ we have yet to find out.
I’ve been very harsh about Nick Clegg, but I think that this is one of his better moves. He has relatively few chances to grab public attention, and his tax policy is a clear signal of his direction of travel.
A year ago I would have been surprised that the question at 6 needed to be posed, but I have been genuinely taken aback on this site how many Lib Dem supporters on here appear not to notice that the likelihood of ousting the current Government differs according to whether a constituency has a Lib Dem or a Tory MP. Of course, the more that the Lib Dems suggest that they would be inclined to look right rather than left, the safer it is for floating voters currently antipathetic to the Labour party to vote for them. That, by the way, is a category that I fall into.
57. Yes Woodpecker, we know that is a problem, but what is the solution, and how does it work for the 8 million people accruing benefits in final dsalary schemes? Abolishing higher rate tax relief on contributions (and that has to include employer contributions otherwise employee contributions will merely be re-directed) will only work with the massively increased complexity of working out exactly how much is paid into the scheme for every individual.
58: If everyone was wlel informed and had an independent brain then yes, but 25% of people will vote Labour come waht may, irrespective of whether the country has been utterly ruined.
Why is there not MORE ANGER about Brown and his wrecking of our economy? I am beginning to think he has given up on winning, and just wants to wreck it so badly that the tories can’t do anything about it and have a nightmare when they get in. He’s going the right way about it.
Labour: Empty heads vote them in, empty wallets vote them out.
Just exactly how bad are GOvt finances, is it 50 billion, 60 billion PSBR? never mind the off balance sheet stuff of Northern Rock and the PFI stuff. Gordo will never cut a penny off spending.
This could get really nasty for the ordinary taxpayer.
The only show in town this morning is the admission by the government that the fiscal rules are going to be scrapped to allow Brown to borrow more. Not content with running up huge debts (aswell as stealth tax increases) during the (debt-fuelled) boom years, Brown now has to borrow even more to maintain the illusion of prosperity for the near-term.
The ever-loyal BBC may be spinning this in positive terms as “it means he doesn’t have to put up taxes”, but it will lead to the ruination of what’s left of the UK economy and will leave a poisoned chalice even worse than the mess left in 1979 for an incoming Tory government in 2010.
62 Quote of the day
“Labour: Empty heads vote them in, empty wallets vote them out.”
re 46. I agree completely with that. The whole concept of pension taxation is that you should pay when you receive the income - not when you make the contribution. If it’s such a good idea why didn’t Gordon, who was very happy to raid the pension funds, do it?
As you get closer to retirement pensions are such a massive issue particularly if, like me, you have suffered as a result of a company I used to work for later going bust taking almost all of its pension scheme with it. To have faced extra taxation in my final employment years as I tried to remedy the situation by paying in large parts of my income would have made me very bitter.
This is very dangerous territory. Such a move ought to be part of an overall look at pension policy - not just a means of grabbing some extra taxation to suit a political end. The Lib Dems have got this wrong.
57 - You’re thinking about it the wrong way around. From the individual’s viewpoint, he doesn’t get any money in hand until the pension gets paid out, and giving him the lower marginal tax rate at that point when he receives lower income is logically correct. Your concern about giving too much relief is probably based on a subliminal idea that the pension investments might do “too” well. If the investments do very well, the likelihood is increased that the individual will pay tax at a higher marginal rate. That has to be a good thing all round, surely?
There is a warp in the tax system, which is that on retirement a tax free lump sum is usually paid out. Nigel Lawson looked at scrapping that over 20 years ago, but bottled out in the face of an intense campaign. A principled political party would charge that at the individual’s marginal rate, but principled political parties don’t win that many votes.
59. Well its certainly got the Tories here in a spin.
They don’t know whether to attack it by:
saying the Lib Dems won’t be in power to implement it (which is a back-handed compliment to the policy); or
attack it from the right by saying it punishes the ’successful’; or
attack it from the left by saying that are no efficiency savings to be made in the Whitehall bureaucracy, and it means ‘cuts’.
Clegg:
1. Why should any voter trust a policy that has been drawn up on the back of an envelope by the party leader, that appears contrary to everything previous leaders had proposed, that is the result of zero consultation with MPs, Councillors, activists or supporters?
2. Does Cowley Street not possess a diary? Why launch a major new policy direction when the entire country is on holiday or is about to go on holiday?
Do they think we will all sit comfortably in front of Radio 4 and the Six O’clock News saying: “Ooh look, that nice Mr Clegg is changing the entire political philosophy of the Liberal Democrats. Let’s spend our hols talking about how we will benefit and how we’ll refrain from voting Tory now that he’s woken up to the importance of tax cuts.”
[55] - “The Tory party may well go into the next election as a badly divided party.”
I would wish that to be true, but I think it highly unlikely. People like yourself had similar hopes over grammar schools, but that all died down. One or two figures may well pipe up in such a fashion, but not nearly enough to qualify as divided, let alone badly so.
I’m sure there were Tories who convinced themselves that New Labour were badly divided in 1997 because Arthur Scargill criticised Blair, but in reality they were united in their eagerness to drive the Tories from office.
The Tory response to Clegg should be simple..spin it entirely as a Brown like raid on pensions. There are a lot of high rate tax payers in Libdem/Tory marginals who will vote accordingly.
Hmm. I’m in a Lib Dem/Tory marginal, held by a Lib Dem. I have no inclination to vote Tory, which would exchange a fairly helpful Lib Dem MP for an unhelpful Tory councillor.
Such tenuous evidence as I have that there are any politicians who give a stuff whether I live or die suggests that they will not be Labour or Tory, but that they may, possibly, be in other parties.
Its good to see an unavowedly Liberal policy being put forward by NC, mainly because its the right thing to do. And also good when you have someone like “High Voltage” to back it up, rather than “Squeeky Gideon”
To those talking about Con/Lib battles and the effect on a Labour government, one argument Matthew Parris used to put forward was the “Vote Lib Dem in this case to ensure there’s a brake on the socially Conservative side of the Tories”
57
As Mike says at 66, pension savings are from net income - therefore 40% tax payers have already been taxed at 40% on what they save to a pension plan - the whole idea of pension tax relief is that in order to ease the state burden the state rewards pension saving - you get the tax ALREADY PAID effectively back on pension contributions - you are then taxed again on payment of the pension at the appropriate rate.
Its a 20% tax hike on people (hard pressed families, lol) in Middle England who are trying to ensure they are provided for in retirement and not forced to rely on the State….
Well done Clegg, bravo - this is even worse than a 50% banding.
Does anyone know what (if there have been) the Labour and Conservative responses to this is?
75 Nick Who?
42. so you think the electorate will be won around to a racist, pro-iraq war viewpoint eventually?
Public sector deficit figures for June are out, and predictably, are awful. Borrowing is up £10bn on a year ago, and looks set to spiral higher still. Revenue growth half last year’s while spending growth actually rising. Oh dear.
78 - Yes hence the Treasury running around scrapping the fisal rules.
75
Yes, Both Labour and Tory spokespersons, have said, ‘what a wonderful idea, wish we’d thought of it first, we are going to recommend that everyone in the country votes Libdem at the next election, in fact we’re not even going to bother putting up candidates’
78
If one assumes Gordo has been getting lots of extra money from fuel duties, it makes the extra 10 billion defecit a very scary figure. Economic activity must have been dramatically cut to see these sorts of figures.
Rest of the Day - For the rest of the day I am in London helping my son and his family move house so won’t be monitoring the site.
Automatic moderation of comments from posters the server does not recognise is still on. It might mean that there are delays in freeing them.
62. you don’t live in a safe Con seat do you, by any chance? never seen a Lab voter? oh, on the telly.
Morning all. Excellent piece, fascinating thread.
I don’t rate Clegg, and I am fairly agnostic on tax as an issue, so I am only interested in this electorally.
It is a good tactical move, and a poor strategic move. Clegg has recognised that the country is sick of tax (political titan that he is) and that the Tories are not filling this space (promising to share the proceeds of growth is a few apples short). It may help some of those semi-marginal LibDem seats where they are facing a new model Cameroon A-list Tory that the constituency isn’t too keen on, and wants a straight-forward tax-cutter. It may not matter, but i can see the logic.
I think the problem is that trying to steal Tories is going to be like running into a tidal wave - the policy in the South needs to be ‘hold on’. Gains and positive movement needs to happen to the Left - where activists are, where disillusioned Labour voters are, in the North where Cameron can’t reach. This won’t chime as well with them, because it re-enforces the view that foppish Clegg is Tory-lite.
I am not surprised that LibDem supporters prefer a Cameron-led Conservative gvt to a Brown-led Labour gvt, as that is true of at least half the Labour party members I know as well. I don’t think that implies that they are more amenable to the right generally, or that they will welcome what looks like a move to take the party to the Orange Book wing.
Essentially, even if Clegg wins the support of the Lib Dems he has now, what is more important is whether he can win the potential Lib Dems - be they the other 8% who supported the party under Kennedy, or a different 8% (which I think will still be to Clegg’s left rather than his right).
How does this affect the election? It makes the possibility of a Hung Parliament coalition with the Lib Dems more palatable to the Conservative Party, meaning that even when the ‘tack right’ strategy loses the LDs seats, they will still stand a better chance of seeing their leader in the Cabinet.
The only other way this affects the election is that it may induce Cameron to grow bold enough to offer tax cuts of his own, knowing that there won’t be a joint LibDem/Lab barrage of criticism about ‘Tories cutting Public Services to fund tax cuts’. The Lib Dems taking this position gives him cover, making Labour look yet more out of step, and it would be an easy way to energise the base (rationalised as ‘there won’t be any proceeds of growth to share if we don’t cut some taxes’).
I think the winner out of this in the long-term will be Cameron, Clegg will get a brief filip in the polls (maybe) but fundamentally this is still the wrog strategy - the Right is strong, Labour is weak - he should be tacking left.
To qualify Mike’s view on LibDem voters - I think there are actually two quite distinct groups. There are core LibDem voters who are pretty much as he describes (with the normal variations that individual humans always have), but at least as many who simply see them as a ‘not the Tories or Labour’ vote, reinforced by ‘my local LibDems do a good job in keeping me informed with Focus leaflets’. The latter group doesn’t have views that are very distinct from the general public, hence results like the Times June poll on 42 days, which showed Tory and LibDem voters virtually identical (both moderately in favour with some reservations) and not very different from Labour voters.
At multi-member local elections you see all kinds of odd voting combinations, including people who vote for a LibDem and the BNP candidate (you see the same for Labour and Tories and even Greens).
But I’d think Clegg can probably take risks with his core vote. It’s only an experience of actual government that makes most core voters question whether the party’s got it right - up to then, people ascribe to their party the virtues they want, and try to ignore contrary evidence.
So only 2% of Tories are satisfied with Brown’s performance as PM. I’d have thought it would be much higher! Still, can’t accuse them of putting tribal loyalty before the country.
There does seem to have been a sea-change in public opinion, but i think that is down to confidence in the Government, not to do with tax rates. Any Lib Dem tax cuts must be targeted at the poor and the long-term strategy should be to replace Labour not be Tory-lite. Such a strategy might help some of their MPs at the next election, but it won’t do much beyond that.
Public finances are grim looking at this morning’s announcement:
http://www.forexfactory.com/news.php?do=news&id=96690
77 I don’t think the electorate will be won round to supporting the Iraq War.
Generally speaking the electorate do want much lower levels of immigration, which you regard as “racist”.
Mike, thanks. I’ll have to dig through the data.
88. are you thinking what i’m thinking?
84. this tax announcement can be spun to Lab voters as “tax cuts for the poor” and to Con voters as “tax cuts”. a classic LD strategy, surely?
90 Doubt it.
91 - everyone gets a tax cut, but the poor benefit proportionately more.
@90:
Yes. You have a filthy mind. There’s no way you’ll get all THAT in THERE. Tsk.
84. Superb!
87. Other news today is that oil has dropped by about $12 a barrel in a week. With the Tories’ new policy of stable fuel prices, by how much would they be raising fuel duty to compensate?
96 Presumably by an amount that still results in a noticeable fall in price - but something less than the 9% that represents.
As it is, has anybody seen petrol prices fall yet?
96 - one question I haven’t heard answered about this policy is this:
If the Tories promise to reduce fuel duty whenever there’s an increase in the oil price, what’s to stop the oil companies putting up prices knowing that tax will drop and their profit will increase?
84 - Morus, I disagree - the long-term winner from Clegg’s move is Labour (if not GB himself).
The Lib Dems are choosing to try to defend what they have (understandably popular amongst the Parliamentary party, I suppose), rather than focus on targeting what looks likely to be an absurdly weak and demoralised Labour Party. Short-term they may end up with slightly more seats at the next election; long-term they are missing the chance to supplant Labour as the party of the ‘left’.
97. that fuel price plan is bonkers. the more i think about it, the more it can’t work.
the volatility of oil prices is legendary - so _when_ exactly does this thing apply? if the tax is immediate, then tax and therefore petrol prices must change every hour! if not immediate, it presents loads of opportunities for middlemen to cream off profits and avoid tax. similar problems surrounding who is taxed? the petrol station? carriers? dealers? oil co.? etc.
99. how does this policy prevent them picking up Lab seats?
99 - except that the policy benefits people who might switch Labour to Tory and helps them to look at the LDs, and in Lab/Lib seats encourages Con -> Lib tactical voting (which has not really existed as a phenomenon before).
That looks pretty good electoral strategy to me.
100 In principle, it could make sense. If we consider it’s sensible to reduce our dependency on oil (and thus, our involvement with World’s most volatile countries) then keeping the price at a level that will achieve this, without letting it get to ruinous levels, makes sense.
100, 101 - ed, stop it! That’s two similar posts!
101 - it doesn’t, but they won’t pick up as many (nor get as close as they might in safer Lab seats - much like 2005).
This tax policy will disintergrate in an election campaign. It has tactical merit bt at a strategic level Clegg has just taken the party off a cliff.
Tax revenues are falling, the economy is slowing with the possibility of full blown recession. The party still has a wish list of extra spending pledges. The Government has a large and growing structural deficit. benefit costs will rise in a slow down. Inflation in adult social care is running at 5% to 8% a year, aquisitive crime will rise with a slow down putting pressure on police budgets. The cost of NHS drugs can’t be mantained by RPI levels of budget increase every year. we have a £100bn of PFI ebt off the balance sheet but still costing
In this context committing to £20 bn of spending cuts funded by “waste” is insane. To properly fund income tax cuts this waste needs to be ongoing revenue no one off cancellations like ID cards.
If he can list £20bn of onong revenue expnditure he can cut with out hurting services and still juggle all the other budget pressures then I’ll cut my head off with rusty axe.
And if he can’t then the journalistic class will evicerate him. It will be the prism through which he’ll be viewed just at the non election defines Brown.
Ok the direct mail might save 10 to 15 southern marginals bu at a very siignifgant price. I’m also suspicious that some eople will be able to digest the speed of this change. On December 18th the day he was elected we were broadly happy with overall government expenditure. In march he moved to sharin the proceeds of growth. now he wants less state spending than the Tories.
A lot of people will feel very dizzy for a while.
£20bn is c.3% of government expenditure. If you were told to cut your own expenditure by 3%, I’m sure you could manage, and I’m sure you manage your own finances more effectively than the government does theirs.
So Ken Livingstone will definately stand for mayor in 2012.
http://www.guardian.co.uk/politics/2008/jul/18/livingstone.london
He’s 10/1 with Ladbrokes. Clearly two elements to this - will a Labour candidate win in 2012 and who will challenge Ken for the candidacu. It’s quite likely that a Labour candidate for London can win under a Tory Government. Boris may not enjoy the same levels of popularity as now. People may reminisce about ‘how it was in Ken’s time’ as they did when he led the GLC. Who might challenge Ken for the Labour ticket or match his profile? Alan Sugar?!!
once an item is taxed,like fuel,it does not follow that if the tax is reduced then the price falls.
105 - Do you really think that the Lib Dems would have the slightest chance at present of supplanting Labour as the main party of the left?
Political forces are tugging all of the parties rightwards, and it would be odd for the Lib Dems to paddle against those forces. They would be better advised not to intrude on the Labour party’s private grief; the strains on the Labour party’s structural integrity would be exacerbated in a vacuum on the left. The Lib Dems could pick up the pieces later (just as they did in the 1980s).
For those of us fascinated by the US election campaign, this is a great take on what’s happening. Great video, one of the best I’ve seen of its type
http://sendables.jibjab.com/
108 Unless he screws up very badly, or Cameron’s government does, I think Boris Johnson will win fairly comfortably next time.
PA reports:Home Secretary Jacqui Smith faces the possibility of becoming the most high profile General Election loser after Tories gained two council seats in her Redditch, Worcestershire, powerbase.
Their candidate Juliet Brunner won in the county’s Arrow Valley East division which has more than a quarter of the constituency’s electorate.
The swing was 14.2% since the last shire contest which took place on the same day as the 2005 General Election.
A shift of just 3.4% since then would be enough to unseat Ms Smith.
A small boundary change is expected to make her even more vulnerable.
There was slightly better news for her party in a Redditch Borough by-election at Batchley.
Tory Brenda Quinney gained but there was a 4% swing back to Labour from Conservatives’ high water result this May when they had won another of the ward’s seats.
However Ms Smith would still face defeat even on the basis of this result.
Elsewhere, Tories missed another gain by just 22 votes as Liberal Democrats held on at Uckfield New Town, Wealden District, East Sussex.
Labour easily defended a Townfield seat at West London’s Hillingdon Borough where the party candidate’s nomination papers were signed by Hayes and Harlington MP John McDonnell.
In a result from last week Labour’s Deirdre Campbell, wife of Blyth Valley MP Ronnie Campbell, defended a Croft ward seat on the borough council.
RESULTS:
Derwentside District - Castleside: Ind 297, C 64. (May 2007 - Ind 428, C 81, Lab 69). Ind hold.
Hillingdon London Borough - Townfield: Lab 1031, Lib Dem 506, C 445, BNP 186, National Front 74, Green 33. (May 2006 - Three seats Lab 1503, 1379, 1358, C 743, 657, 637, Lib Dem 352, 324, 323). Lab hold. Swing 10.6% Lab to Lib Dem.
Redditch Borough - Batchley: C 630, Lab 539, BNP 299, Lib Dem 121, Ind 25. (May 2008 - C 968, Lab 709, Lib Dem 205). C gain from Lab. Swing 4% C to Lab.
Wealden District - Uckfield New Town: Lib Dem 311, C 289, Ukip 56. (May 2007 - Lib Dem 410, C 237). Lib Dem hold. Swing 11.7% Lib Dem to C.
110 But that should not preclude aggressive targetting of a number of Labour seats where the Lib Dems aren’t far behind.
112. Johnson is 5/6 with Ladbrokes to win the next mayoral election. I think it’s perfectly sensible to back Boris at that price as a saver.
103. i think the sentiment may well be sound, although politically the main reason is not the one you state but to alleviate the anger of white van man at high fuel prices.
in a free market it cannot work [it has also been tried under communism with disastrous economic consequences]. it incentivises oil companies to raise their prices.
110 - Absolutely, though they should have started laying the groundwork in 2001. Old Labour hasn’t won an election since 1974, and their original raison d’etre has been thoroughly undermined by the shift in nature of Britain’s economy (and also the related neutering of the trade unions).
114 - I’m not suggesting otherwise. I live in one such seat, and may well vote Lib Dem next time. I’m still considering which party is closest to my views and what I am looking to achieve with my vote.
99 - Actually, I don’t disagree with you. I just hadn’t seen it that way.
110 - All parties are being tugged rightwards, which is precisely *why* the Lib Dems should move Left now. The population is sick of Labour, but the Left hasn’t disappeared. You can’t win voters on the Left away from Labour when they are strong, and you can’t win voters on the Right away from the Conservatives when they are in the ascendency.
If the Lib Dems ever want to be more than third party and hypothetical coalition partner, they need to overtake either Labour or the Tories as either the main party of the centre left, or as the main party of the Centre Right.
You get few chances to do that, usually when the Big Two are at a point of unparallelled weakness. For the Tories it was in 1997-9, for Labour it is now. I suspect that, given the activist base, it would be easier to go Left now than it was to go Right in 1997.
Labour are on low-to-mid 20s and have two years left of Government if they can handle it. They have alienated the Left and the working classes, and are notorious for two policies that should be LD keepers - civil liberties and the Iraq War. There are few natural pockets of support for them - who is speaking to them, except the unpalatable hard left.
Swim with the tide to the right, and the LDs remain a minnow party. Tack hard to the Liberal Left, and they could overtake a Labour Party is as weak as it has ever been.
Must be another great day to wake up and be a labour supporter……….. all together now
“Things can only get better……”
110 - Actually, in light of Aaron at 117, I re-read your post.
Are you just saying its a timing-problem?
on London mayor betting: didn’t Boris pledge to introduce term limits? and wouldn’t that preclude Livingstone from standing again?
morus as I read this thread I wonder if this is not an attempt to have the tax cake and eat it.
Clegg wants to shout he is in favour of tax cuts headline to attract soft blue LibDem votes, but says that he will at least partly fund it through higher taxes on higher earners and so trying to attract pink soft Labour voters.
The problem with this is that he is likely to be rumbled by both, and be seen as two faced.
Secondly, he will have to rework an awful lot of the mountain of LibDem policy to make it all fit in the very variable economic weather we are suffering. He can’t do that in any immediate time frame, so his opponents, external and internal, will easily find ammunition to demonstrate this is an ill thought out opportunist mess.
Question: Mr Clegg, how will you fund your tax cut for the lower paid when the economic downturn is particularly effecting the middle classes whose pensions you want to tax more to pay for your policy?
I honestly don’t believe that the LibDem’s package will any discernible impact in the polls/public opinion/by-elections etc one way or another. Whether Kennedy’s travails, the Ming interlude, and now Clegg, the party remains has remained within its 16-20% rating, while the ascendant Conservatives are consistently polling 40% or above. I see no reason why that those basic positions should materially change for the foreseeable future.
OT. Good news, the drugs cheat, Chambers, has lost his case
Has Clegg explained how the removal of higher tax rate relief for pensions could be implemented in a way that is fair between this in defined contribution schemes and those in defined benefit schemes?
For those (mostly private sector workers) in defined contribution schemes it is easy to see what the extra tax would be paid on - the amount you save in your pension scheme each year.
But for a headmaster or MP or judge in a defined contribution schemes what would the extra tax be paid on? Would they really be taxed on what it would cost them to buy the pension entitlement they accrue each year if they bought it privately?
@122:
Boris can’t introduce term limits even if he wanted to. I very much doubt he’ll want to stand again in 2016, but mainly because he’ll be angling for a senior cabinet job by then.
127. i’m fairly sure he said he did want to, and the outcome is very important if you want to take 10/1 on livingstone.
are you sure he can’t do it?
125 That has to be the right outcome, or people would just have two careers - their drugged-up first one until they got caught, then their “clean” second career.
Should oil companies own or monopoly supply petrol stations? Would it be better for petrol stations to be owned by companies, (franchises) who buy off the spot market?
One of the problems I saw with the, ‘Gas Market’ was that suppliers would nominate gas to cover their customers. I always thought that a simpler and more efficient system would have been a bidding system.
The pipeline operator, (Transco) would cover demand by buying gas from suppliers, cheapest first,(when demand reduces, expensive off first) suppliers putting their gas into a pool, price per KWH would be secret, any supplier attempting to rig or game the market, would be subject to the criminal law.
Gas companies would buy their gas from Transco, all Transco’s costs would be transparent with the regulator adjudicating any disputes.
The saving to the Gas customer, would be to buy from the company which sold on at the lowest price.
The link between gas/oil should be broken, it only goes back to 1980 when the government of the day, (guess who) gave into the oil companies who were losing the heating market to gas which was much cheaper. The government introduced the gas levy, gas prices were raised by 9% above the rate of inflation for four years.
http://news.bbc.co.uk/1/hi/business/7513309.stm
Does this news about highest June borrowing push things towards Labour losing in Glasgow East ???
@128:
Yes, it would require an act of parliament amending the Greater London Authority acts.
124 - They polled noticeably higher under Kennedy, and as much as Ming and Clegg have had similar scores, there was a good deal more range to them under Ming.
I think the bigger danger than strategic mistakes (such as lurching right when Cameron has just made the Tories resurgent) is the danger of just stagnating.
See here
119. this analysis relies on a general public split left vs. right, two positions and three parties, and the LDs must try to squeeze the weaker of the two.
arguably there are in fact two axes, economic and social, and therefore 4 basic extremes and three parties. in this scenario LDs actually hold a stronger hand than that. they are always screwed over by FPTP voting, but ideologically they always have a choice of which flank to attack on.
Term limits for Mayor would need primary legislation. Given John Howells Age Boris may well go back to henley in 2018.
108
Ken must be mad! Oh! if you want to see the rest of that photo tis ‘ere
http://davehill.typepad.com/.shared/image.html?/photos/uncategorized/2008/07/17/kenmunira.jpg
Poor girl doesn’t know whether to turn left or right!
136 is that Commie Huq?