Monday, 27 April 2015

A fractured Parliament could be an opportunity for a more adult politics

British politics is in a muddle. It has not been so unstable since the confusing 1920s, when Labour and the Liberals competed to be the main anti-Conservative Party on the left, and when the Liberals propped up a Labour government (even though it had come second in the December 1923 election) - a period that only came to an end in a dire economic crisis and an all-party National Government.

But perhaps there's an opportunity here. For 'Westminster', that much-maligned clique of 'politicians' and 'governors', to acquit themselves well.

For it's becoming clear that the House of Commons (above) that will be returned at this General Election will be a mixed bag indeed. We know - or think we know - a lot about what's likely to happen. The Conservatives will very likely be the largest party. Labour will make some progress in English marginal seats, particularly at the expense of the Liberal Democrats. The Scottish National Party will wipe most of their opponents off the map - and possibly, given their polling strength, off the face of the earth.

But that'll mean that politicians will have to act like grown-ups. The Conservatives and the Liberal Democrats might well not have enough votes to govern any more, except as a pair - though regular readers will know that this blog believes that a continuation of the current coalition is the most likely outcome of this election. They may have to call in Northern Ireland's Democratic Unionists, and perhaps 'phone the United Kingdom Independence Party for some help once in a while. On the other hand, it may be that a Conservative-led administration just can't emerge from the House of Commons, because there are 323 or more Opposition MPs dedicated to blocking them. Then Ed Miliband, Labour's leader, will just have to take up the burdens of office, even though Labour are some way shy of the Conservatives' seat total - and whether he likes it or not.

Now let's not get carried away. All parties are not equal. The Liberal Democrats' alliance with the Conservatives has seen them acquiesce in all sorts of needless cruelty. The Work Capability Assessment that has seen thousands forced to work beyond their physical and mental capacity; the disability benefit 'reforms' that have gone so spectacularly awry that thousands of Britons have been left waiting for what is rightfully theirs; the Universal Credit welfare system that is such a disaster that its death will swiftly follow the General Election; the 'bedroom tax' that has cut people's income just because they have a spare room (and can't find smaller accommodation, even if they try). This Government's treatment of working people has been worse than disdainful. It's been nasty, brutal, intimidating and swaggering. It's one of the reasons they're struggling with actual voters - a revelation that would help the Conservatives and Liberal Democrats no end, if they just opened their eyes.

Turning to other parts of the Commons, the SNP's economic prospectus is deeply injurious to their credibility - and they know it. It's such thin stuff that they've been trying to get away from it themselves over the past few weeks, downplaying all talk of Full Fiscal Autonomy or Responsibility for Scotland with the vague assertion 'well, it'll take years anyway. Why worry?' Any rational economist can only despair. But their very realism in this respect gives grounds for hope. The SNP know that Full Fiscal Autonomy isn't happening, and that they need to de-emphasise independence as well until they can win a Scottish General Election in a year's time. They may not even go for a second independence referendum (which they may well lose anyway) during the lifetime of that Parliament. In the meantime, both the SNP and the other Nationalist parties can all get on with some actual governing - including widening the base of the Scottish economy so that it doesn't depend on oil, gas, whisky and banking.

We could go on. No doubt we will. But even though potential partners may be few and far between (the Liberal Democrats have announced that they don't want to work with the SNP and UKIP, and Mr Miliband has ruled out any talks at all with the SNP) accommodations of some sort - even if implicit - will have to be reached. Money Bills have to be passed. Civil servants have to be paid. Threats to peace and security have to be met. The country has to be governed.

It need not be an existential crisis, as the more excitable elements of the press have pretended. We've been here before, between 1976 and 1979 - a period of some achievement (and, in the end, some disaster) when the UK came back from the IMF loan and the sterling crisis of 1976 with some vigour and vim. Jim Callaghan wouldn't have had any truck with curling up in despair, washing his hands of leadership, or getting his hands dirty with a load of behind-the-scenes deals (please pick the image and metaphor you like the best). And neither should we.

We should plunge out into our new politics with enthusiasm, saying 'well, the people have dealt us this hand - let's get on with it'. If there is a Labour-led government, for instance, why not have MPs from different parties on different Cabinet Committees? Why not stop pretending that the next stop is an overall majority (because without Scotland, in Labour's case it almost certainly isn't)? Why not inch forward, vote-by-vote, measure-by-measure, argument-by-argument? Let's face it, it's not as if we need more legislation anyway. Why not try to make the United Kingdom work, including the SNP and other Nationalists as the legitimate British parties that they are and always will be? It's got to be better than the hateful-in-tooth-and-claw attack dog politics we've seen from the Conservatives in recent weeks, including the poisonous attacks on the SNP that seem likely only to hasten the end of the Union itself.

This more mature, more kaleidoscopic, more adult politics would send a message. That even in these twilight days, with the United Kingdom in what may be its dying fall, the British can still do things right.

Let's hope we can manage it, shall we?

Monday, 20 April 2015

A housing association right-to-buy: one of the worst policies ever ends up dead on arrival

Now the UK General Election's hotting up a bit, isn't it? Three UK party leaders, all on the precipice of a kicking in different ways. A (possibly) unbelievably successful Scottish National Party on the brink of a once-in-a-lifetime epochal breakthrough. A government (and an Opposition) on the edge. Well, exciting stuff - if you like politics.

But we're still going to go through the fine print of the actual policies that are constantly being 'offered' to the electorate - and there some real stinkers in here, you mark our words. 

One of the most rancid of the roadkill offerings is the Conservative Party's extension of a 'right to buy' to the Housing Association sector. It's a dud. It won't happen. It'll get junked so quickly in post-election negotiations with the Liberal Democrats that you'll never hear of it again - a bit like all those wiggly lines in Chancellor George Osborne's recent excuse for a Budget.

Let us count the ways that this one is a dud. Oh, let's just start with the fact that the Government doesn't own housing association stock, and it'll probably have to change the law to give itself rights over someone else's property - a deeply un-Conservative and un-Tory approach that will only get them into more and more detailed trouble as they nationalise a great big slice of the country's housing stock.

Let's continue with the fact that this looks likely to do absolutely nothing to meet our real crisis - the lack of housebuilding. As the National Housing Federation has made quite clear, the uncertainty and the upheaval involved might set plans back, not drive them forward. For Housing Associations are usually not-for-profit organisations who rely on their income and surpluses to attract new investment, as even a Conservative Housing Minister has admitted privately. Seize some of their assets, for an as-yet-to-be-decided subsidy from the Government (which probably won't materialise anyway), and you might fatally disrupt their capital flow. Who wants to invest in a business that has a Housing Minister (we use this emotive term under advisement, because a member of the clergy has already uttered it) actively stealing its money? Businesses don't like it, because it wastes money and spreads uncertainty in just the same way as all the other hard-to-credit ponzi schemes we're bombarded with at the moment - as any glance at the 'right' to withdraw your pension funds, Pensioner Bonds and inheritance tax cuts will tell you. It's wide open to fraud and abuse. It's a crude electoral bribe to swing voters in key areas. It makes no sense even in its own terms. 

It might be popular with tabloid newspapers. But Housing Associations themselves hate the idea, because they know it puts the whole sector at risk. Most Londoners, where the housing crisis is at its most acute, are less than keen, to say the least.

It has long been the Conservatives' aim to build up a fourth sector of the housing market - something to fill in where owner occupation, council housing and private renting don't work or aren't appropriate. The sector is what one might call the Big Society in action. Anyone remember the Big Society? Anyone? Keith Joseph, Conservative Housing Minister in the early 1960s, tried to shore it up against the formidable opposition of the Treasury and the Inland Revenue, suspicious of such unorthodox methods - and of engagement with the 'third sector' as a whole. Joseph raged to a colleague at the time: 'you cannot want to contemplate an endless vista of extending municipal ownership any more than I: but that is what we do contemplate if we cannot set up an alternative’. Alas, his ambitions went unheeded, and decisive moves to help Housing Associations had to await the 1980s and 1990s. All those ambitions, all those desires to build up a more complex and granular society of sharp shooters - Toryism personified - are now being threatened. For a few votes. Just like the Union itself, every time Conservative spokesmen think there might be a cheap rabble-rousing cheer in bashing the Scottish National Party.

The whole imbroglio appears to have originated with Work and Pensions Secretary Iain Duncan Smith, one of the usual suspects when it comes to spreading dunder-headed, forehead-slapping, blundering chaos across Whitehall over the last five years. Hopefully his officials - and anyone the Conservatives have to negotiate with after emerging as the largest party in May - have got some counter-proposals up their sleeves, because living with this one won't be pretty. 

Now we shouldn't get carried away here. This is a symbolic policy, a re-tread or re-heat of those popular tunes hummed by Conservatives in the 1980s - the last time they won a durable five-year Parliamentary majority, by the way. It's the ghost of a memory of when they were popular - rather than just tolerated as a bunch of apparently necessary tough-guy accountants. Not that many tenants will take up the offer - certainly nothing like the 'up to 1.3 million' that the Conservatives announced. It'd be more like a few tens of thousands, on any measure. But it's still not a real runner - over-complicated, legally questionable, not all that helpful in addressing the real problem, and conducive only to uncertainty, confusion and backsliding.

Please take this policy away, someone. Anyone. It's so undercooked that it's basically a slice of pure poison.

Monday, 13 April 2015

Inheritance tax cuts are a cruel swindle

So, as the UK General Election hots up, the Conservatives have announced that they want every couple (and it is always 'couples' they talk about) to be able to pass on £1m in property, entirely untaxed, to their offspring.

It's a deeply misguided policy, though one on an established pattern. It's just the same kind of flawed policy-making that opened the Help to Buy scheme to all-comers - further inflating the pass-the-parcel housing bubble that seems to be all that the British economy does well. It's exactly the same naked bribe (with the voters' own money) that has given us 'pension freedom day' - a free-for-all with defined benefits pensions that will see retiring Britons subject to fraud, mis-selling and confusion. Before they return home to the taxpayer, shame-faced that they believed any government after the private pensions catastrophe of the 1980s and 1990s.

Because this new wheeze is funded by reducing richer pensioners' tax-free pension allowances (if you believe that it's being funded at all). The Whitehall that giveth with the one hand taketh away with the other.

What will be the consequences? Well, a more complicated Inheritance Tax regime that introduces distortions where simplicity (just raising the threshold as a whole, for instance) would have been better. Probably there'll also be further house price inflation given that this distorts the tax system to make owner-occupied property more attractive, yet again, causing older Britons (possibly wrongly) to scramble toward the buy-to-let market with their pension pots rather than an old-fashioned savings account. Just as Mortgage Income Tax Relief used to - and was abolished by a Conservative Chancellor for just that reason. London will be further hollowed out as a place where normal people can live and work, since that city's where most of these changes will actually happen. And social inequality will be boosted, given that wealthier parents will be able to give tax-free cash to their children - who will have done absolutely nothing whatsoever to earn it. Want to save for a pension? Don't bother: wait for your parents to die instead.

All to benefit the perhaps 10% of the population who would be drawn into this Inheritance Tax net (on death) by the end of the next Parliament. The richest 10% of the population, naturally. While the Government focuses on £12bn on welfare cuts for the poorest. This blog is not given to expostulation. It's dedicated to reasonable analysis. But this is breathtaking regression redistribution, and it leaves a nasty taste in the mouth.

You would think - wouldn't you? - that the real priorities for cutting taxes should be National Insurance, now far out of line with Income Tax thresholds and therefore probably a drag on job creation. Or maybe a cut in the basic rate of Income Tax, which would similarly reward work. Or perhaps assistance for small-scale savers with government matching funds - not the raise in the ISA limit to £15,000 and the creation of a pensioner bond, which (just like this announcement) help the richer and the older at the expense of the younger and the poorer - exactly the people who'll have to drag the United Kingdom out of its low-productivity equilibrium trap.

But no. Because we're in an election you won't get rewarded for, oh, let's be old-fashioned here and call it working and saving. You'll get rewarded for having wealthier parents who happen not to need a lot of expensive long-term care. You'll be rewarded on the basis of pure chance - exactly the opposite that we need if we're to reward thrift, hard work and self-reliance. What an un-conservative (and un-Conservative) idea - one, incidentally, that has professional financial advisers hanging their heads in utter despair.

The worst thing? It'll probably work, for although the actual change being announced won't affect many estates, older voters' aspirations and fears are being touched on here in the most visceral way. It worked before, in 2007, when now-Chancellor George Osborne (aboveused an Inheritance Tax cut announcement to forestall Gordon Brown's planned early election. It'll probably boost the Conservatives in the polls again, as they start waving billions of pounds around, safe in the knowledge that the voters think they're better at managing the economy frugally than the other lot. It's a win-win: until the post-election tax-raising hangover begins.

But it's wrong. And it's wrong on the soundest and the most austere of grounds: it encourages idleness, encourages speculation, lessens clarity and certainty, further erodes the pensions system. We could do with spending the money elsewhere.

Tuesday, 7 April 2015

Three party leaders looking into the abyss

The main emotion you can see in UK party leaders' eyes right now is fear, for all the parties are heading for defeat.

Labour is saddled with an unpopular leader that is the number one reason voters give on the doorstep for refusing to back Labour's early return to power (though his numbers have started to get a little better). That party's still widely blamed - with some justification - for the economic crash of 2007-2008, though again here recently its position has somewhat improved.

The Liberal Democrats are tarred with the tag of 'traitor' and 'liar' for entering into coalition with a right-wing partner, and tearing up all those pledges about abolishing university tuition fees that they made with such aplomb in 2010.

So far, so obvious. You didn't need us to tell you all that, did you? Except that the fear, and the defeat, are everywhere. The United Kingdom Independence Party thought that they held a winning ticket, riding a wave of discontent about mass immigration and the European Union. Their polling numbers have been gently falling all year. The Green Party enjoyed a 'surge' when it looked as if they would be excluded from the party leaders' debates. Then their leader blew it, caving in so spectacularly that no voter could ignore it.

The sense of universal defeat is indeed endemic, but it's especially evident in the Conservative camp. That's strange, when you think about it, because they are on course to the largest party after the May 7th General Election. But everything they do shows what they really think of the electoral landscape. The Prime Minister announces that he will not lead his party into a third election, betraying his need to hold off his rivals with the constant proximity of a leadership election. The Government launch a ridiculous comic-opera coup against the Speaker of the House of Commons, in case they need more control over the Commons' chair in a balanced Parliament. The Prime Minister puts in a robotic, dial-down-the line performance in the main televised leaders' debate, looking for all the world as if his heart's not in it any more. The Conservatives have started hammering the Scottish National Party, all the better to fire up the SNP in Scotland and to drive increasingly Scotophobic English voters away from Labour south of the border. Are the Conservatives any longer a unionist party? Not really: such are their dire circumstances that, as usual, they seem to be willing to do anything, and say anything, to cling onto power. Even tear up their supposedly 'prized' unionism.

The smell of decomposition, and of desperation, is in the air. When the electoral smoke clears, Labour will have been defeated, perhaps awfully routed, in Scotland. The Liberal Democrats will have lost half their seats. The Conservatives will have gone backwards. UKIP will not have 'broken through'. The Greens will be lucky to add one seat to their present single MP. Only the SNP, riding the wave of that remarkable insurgent 'Yes' movement from last year's referendum, will be able to smile - and even they might feel a bit of a come-down if they 'only' win (say) 40 seats, so high are expectations at the moment.

It's actually revealing to look at this election as a 'wisdom of crowds' problem. Think about it. What do the voters really, really think and want, as a whole? Close your eyes. How would they go about achieving it? We can furnish some examples: in 1997 the electorate really, really wanted shot of a Conservative administration they thought had become old, stale, corrupt and self-serving. So they voted for just about anyone to get rid of them - reducing the Conservatives to a rump the size of which they had never even dared fear in modern British politics. In 2001 they wanted Tony Blair to finish the job he seemed to have successfully started - yoking economic capability and economic growth to a sense of social conscience. In 2005 voters wanted to punish Mr Blair for the Iraq War, plus any number of off-beam policy failures (think: not reorganising Railtrack in time to avert disaster). But they didn't find the alternative - a renewed period of Conservative rule under Michael Howard - very appealing either. So they chose to give Mr Blair another chance, while drastically reducing his majority. In 2010? Well, voters liked the look of Mr Cameron, but still distrusted his party. So they gave him a limited pass to the corridors of Whitehall and Westminster, provided he checked in with those nice Liberal Democrats every day. And so on - and on.

What do voters think now? Well, basically that politicians have had their day. That they're a self-appointed elite of power-hungry manipulators who, if not exactly in it for themselves, certainly don't know or care how normal people live. What do they want to do? Make sure that all the leaders suffer.

From this it's only one small stepping-stone away from our conclusion: the voters will impose a very balanced, almost deadlocked Parliament in which no one bloc, let alone any one party, can enjoy the perquisites of office. To punish and to bind 'the elites' they think don't listen to them any more. In which they'll have to creep forward, day-by-day and vote-by-vote, without any certainty or rest. Given the Fixed Term Parliaments Act, they may well have to live within that unpleasant prison for five long years. Serves them right, most voters will think - until they want immediate and decisive action in a crisis, and find it acutely lacking.

That's why all the party leaders, with the sole exception of the SNP's Nicola Sturgeon, are looking into the abyss right now.