The Fiscal Profligacy Of The Labour Party Is Not A Myth

Tony Blair Gordon Brown - Labour Party

 

By Ben Kelly, blogger and editor of The Sceptic Isle.

The Labour Party did not cause the economic crash or the recession, this is undeniable. Still, it is becoming a great diversion technique for those who are attempting to abdicate the previous government of all responsibility to focus entirely on this simple fact, and to exaggerate the extent to which people actually believe that they directly caused the crash.

Often those who deny that Labour were at fault at all for their economic policies then, in turn, completely oversimplify the actual causes by saying “it was the bankers”.  Clearly the global crisis was multi-layered and had may root causes including irresponsible and amoral behaviour from the financiers themselves, the central bankers and regulators who allowed them to behave in such a way and poor government policy and supervision of the whole debacle. It may make it easier to understand to simply blame one entity, but that does not make it true, or reasonable.

Still, Ed Miliband continues to deny that the previous government over spent and makes no apologies for its economic policy. This is deeply concerning because he and Ed Balls worked in the treasury and now want to run the country. The recent Question Time audience were not impressed by Miliband’s refusal to accept that Labour overspent, it may transpire that the wider electorate are equally unimpressed. I used to think it was spin, pure politics, but now I think he genuinely believes that the debt and deficit crisis we are now suffering has absolutely no connection to his own actions, or those of his chancellor Gordon Brown.

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With The 2015 Budget, It’s Finally Time For Labour To Put Up Or Shut Up

George Osborne Ed Balls Budget 2015

 

David Cameron’s Conservative Party may only be pretending to care about small government, strutting around in the borrowed robes of fiscal responsibility. But in their feeble reaction to George Osborne’s 2015 budget, the Labour Party – much like the proverbial emperor – have been caught wearing no ideological clothes, and possessing no real principles at all.

We have now experienced nearly five years of coalition government, a Conservative and Liberal Democrat joint venture, and throughout that time the Labour Party has squealed and bitterly protested every single action taken by the government to restore Britain to any kind of good fiscal balance.

One might therefore reasonably expect the Labour Party to be ready with a compelling, explainable and measurable alternative raft of policies to fix Britain as the 2015 general election rapidly approaches. But not only does it seem that Ed Miliband’s Labour Party have no alternative vision for Britain beyond carping about Tory meanness, neither are they willing to commit to reversing any of the coalition government’s spending plans, including those announced in yesterday’s Budget.

The Telegraph reports that Ed Balls will not commit to undoing a single Tory spending measure should Ed Miliband win the keys to 10 Downing Street on 7 May:

Ed Balls, the shadow chancellor, admitted that Labour would not reverse George Osborne’s Budget measures, including the flagship measures on savings and Help to Buy.

Speaking in response to yesterday’s Budget, he said “nothing had changed” because the Chancellor had produced an “quite empty” Budget, meaning Labour “wouldn’t need to reverse any of it” if the party was successful at the general election.

“There’s nothing … I need to reverse. What I will reverse are deeper spending cuts in the next three years than the last five.”

Pushed as to whether he would retain Mr Osborne’s widely welcomed plans to spare millions of savers tax and to provide new “Help to Buy Isas” – savings accounts for first time buyers which would be topped up with government cash – Mr Balls told BBC Radio 4’s Today programme he would, adding: “I think the Help to Buy Isa is an interesting idea. We’re not going to abolish it.”

This leaves two rather burning questions: why would anyone in their right mind vote for Labour now that Ed Balls has admitted that he would copy all of George Osborne’s ideas? And isn’t it about time the Labour Party apologised to Conservative and right-wing voters for having said such horrible things about the Evil Tories when they secretly agreed with David Cameron and George Osborne the whole time?

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Are Labour At War With Poverty Or With Success?

 

Well, now we have it conclusively. It has nothing to do with making the rich in our society pay their “fair share”, no matter how loosely you define (or indeed blatantly misuse) the word “fair”. Nothing to do with ensuring that essential public services are funded, either. No, Ed Ball’s announcement of the Labour Party’s intention to reinstate their punitive 50% top marginal rate of income tax has everything to do with punishing people for daring to still be rich, for having the temerity to succeed.

Daniel Hannan MEP, writing in the Telegraph, ponders the cognitive dissonance behind a proposal to raise taxes without realistic hope of increasing revenues, and wonders if Labour are right to stake their electoral hopes on the British people being motivated primarily by envy and a desire for vengeance:

Labour doesn’t actually think the 50p tax rate will make Britain more prosperous. We know this because, for all but the last few weeks of its 13 years in office, it kept the top rate at 40p. Yet it now brazenly calls a 45p rate “writing a cheque to millionaires”. On one level, this is too silly for words: even if  everyone earning £150,000 were a millionaire, on no conceivable definition does demanding less money from someone constitute “writing a cheque”. But Ed Balls has presumably calculated, as Iain Martin adroitly observes, that there are enough votes in envy to cobble together a majority under the uneven constituency boundaries.

In another column he also reflects on the results of a YouGov poll showing that an overwhelming majority of Labour supporters believe that a 50p tax band should be brought back even if it was conclusively demonstrated that doing so raised no additional revenues. The telling visual is here:

YouGovTaxpoll

 

Hannan goes on in this second piece to explain the motivations that may cause people to vote as they did in the poll, and has the humility to accept that he (and others on the opposing side of the argument, myself included) probably suffer from similar confirmation biases and reverse rationalisation on this and other matters.

But the inescapable fact is that the motivation for supporting a revenue-neutral or revenue-negative tax increase comes largely down to envy, and that ugly part in the minds of some in the Labour Party (fully accepting that the Conservative Party has other ugly parts of its own) that would rather everyone in the country be worse off and more equal than better off and more unequal:

Envy is an ugly and debilitating condition, but it seems to have an evolutionary-biological basis. The dosage varies enormously from individual to individual, but even toddlers often display a sense that, if they can’t have something, no one else should either. If they had the vocabulary, they would doubtless, like the 69 per cent of Labour supporters, explain that emotion “on moral grounds”. Few toddlers, and few Labour voters, openly admit to being actuated by vindictiveness.

Most policy positions are an expression of some ingrained tendency. For example, we have an instinct to care for the vulnerable, and also an instinct to value reciprocity, and our welfare system results from an interplay between the two. Similarly, the current row about deporting foreign criminals has less to do with their numbers or the nature of their crimes than with our instinct – again, a human universal – about hospitality and its abuse. We shouldn’t be surprised when people who suffer from envy elevate it into a political precept and call it “fairness”.

The concept of fairness has been much abused by politicians (generally those on the left of the political spectrum), particularly since the start of the Great Recession. The worthy desire of Labour politicians to ease the crippling, painful effects of poverty on those less fortunate in our society is not in question, but it is disconcerting when they cling to the idea that punitively high, revenue-neutral tax increases will do anything at all to help the poor other than to cheer them up with the knowledge that wealthy people are also feeling the pinch.

And while we are quibbling about wording, Ed Balls needs to be taken to task in the media for characterising George Osborne’s decision to reverse half of Gordon Brown’s 50p tax hike to a slightly more palatable 45% top rate as a “massive tax cut”. If a five-point reduction in tax rates constitutes a massive tax cut, surely the ten-point increase in income tax instituted in the dying days of the Labour government of which he was a part could only be described, using the same dramatic language, as a gargantuan, devastating, apocalyptic tax increase? And yet, come general election season 2015, it is certain that we will not see Ed Miliband or Ed Balls’ faces smiling down at us from billboards promising “massive tax increases”.

But let us return once more to the YouGov poll results. No other mainstream British political party – not even the Liberal Democrats or the supposedly crazy UKIP – has a majority of their supporters who believe in raising taxes for the rich just to teach them the lesson that hard work does not and should not pay. That distinction is reserved for the Labour Party, a party whose leadership and supporters are now – quite cheerfully, openly and stridently – acting in a dangerously irrational way.

Irrational, that is, if we take them at their word that they have the best interests of all the British people at heart.

Labour Reveal Their Priorities

Miss me yet?

 

It was heavily trailed, but now we know for sure – Labour, who have been feeling the heat as a result of their total lack of credibility on the economy and the fact that the Tories are finally starting to benefit from the fruits of economic recovery, have been forced into revealing some of their plans for the future. And what plans they are. They can best be summarised as “let’s return to how things were in the final days of Gordon Brown’s premiership”.

Whether this makes you want to get out or chequebook and make a huge contribution to the Labour Party or scream and and fall down on the floor in absolute incredulity depends entirely on your political leaning.

The Telegraph reports on Ed Ball’s major policy speech:

[Shadow Chancellor Ed Balls] said it was wrong for the Coalition government to have decided to cut the 50p top rate of tax to 45p from April last year.

“When the deficit is still high, when tough times are now set to last well into the next parliament, when for ordinary families their real incomes are falling and taxes have risen, it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut,” Mr Balls said.

“That’s why for the next parliament the next Labour government will reverse this government’s top rate tax cut, so we can finish the job of getting the deficit down and do it fairly.

“For the next Parliament, we will restore the 50p top rate of tax for those earning over £150,000 – reversing this unfair tax cut for the richest one per cent of people in the country and cutting the deficit in a fairer way.”

Ed Balls calls cutting the top rate of income tax from 50 to 45% a “huge tax cut”. Let us leave aside for a moment the ludicrous presumption on Balls’ part that taking a full half of the incremental pound that someone earns in income tax alone (never mind National Insurance, indirect taxes and VAT) could ever be proposed in a sentence together with the word “fair” and be taken seriously. I am more interested in what Ed Balls and the Labour Party had to say when Gordon Brown decided to raise the top rate of income tax from 40% to 50%. I’m pretty sure that they didn’t call it a “huge tax increase”. In fact, I know that they didn’t sell it to the country that way. So if increasing the top rate of income tax by ten pence in the pound is not a huge increase, how can a partial rollback of five pence be considered a huge tax cut? The answer, of course, is that it cannot.

So a friend of mine had this great idea on tax...
So a friend of mine had this great idea on tax…

 

In what was doubtless intended as a ringing statement designed to assure us of Labour’s new-found commitment to sensible economic management, Balls also committed to eliminating the budget deficit by the end of the next Parliament, in 2020:

Mr Balls announced what Labour said would be a binding commitment to balance the books, deliver a surplus on the current budget and get the national debt falling in the next Parliament.

Quite why we would want to exchange a government that tried and failed to manage this feat in the lifetime of the current Parliament for one that never displayed an interest in doing so until now but which suddenly claims to be able to achieve it in the next Parliament if only they are given the keys to power is never fully explained.

Neither does Balls acknowledge the fact that even when the budget deficit is eliminated, the national debt will remain intact and ominously large – he makes no proposals about running a future surplus to begin paying down this debt and lowering the nation’s interest payments. Neither, of course, does George Osborne devote much of his time to that niggling fact – but if Ed Balls really wants to seize the mantle of economic trustworthiness from Osborne he needs to aim higher and show that he has a better grasp of the longer term picture than his counterpart.

The reaction to Balls’ speech from the business community – who Labour like to malign, but are actually the ones who create the jobs and pay corporation tax and National Insurance contributions – was predictably scornful. Words and phrases such as “absurd”, “disaster”, “unmitigated disaster”, “putting our economic security at risk”, “unhelpful” and “political posturing” were often deployed.

By contrast, the Unite trade union saw Balls’ announcement as a fantastic development, and urged Labour to ever more destructive heights of foolishness and irresponsibility:

However, the Unite trade union, Labour’s biggest donor, welcomed the policy but warned it was only “a beginning”.

A Unite spokesman said: “The commitment to restore the 50p top rate of tax is a sign that a future Labour government understands the need for a fairer taxation system in this country.

“This is a beginning; we would urge Labour to also tackle the disgraceful abuse of the system by the evaders and avoiders too.

You know what would make tax avoidance really difficult, unnecessary and socially unacceptable? A flat tax. But somehow I don’t see Unite advocating for that any time in the near future. Because, though they do not like to admit it in public, high taxes are not a regrettable but necessary evil to people like Ed Balls and his cheerleaders on the left. For Ed Balls, higher taxes are a desirable end in themselves, a last line of defence to ensnare anyone who defies the odds and manages to break through Labour’s dragnet legacy of mediocre standardised education, burdensome regulations and big government and succeed in spite of themselves.

With regard to Labour’s brave new economic stance, the British electorate will cast the only verdict that matters in May of 2015. But I think David Cameron and George Osborne will be sleeping a little more easily in their beds from now on, warm in the knowledge that Ed Balls has set Labour on a firm course back to 2010.

Budget 2013 Drinking Game – The Results

Well, Budget 2013 is now behind us, though the frenzied analysis continues unabated.

We heard George Osborne’s more-of-the-same speech.

We heard Ed Miliband’s “I would do roughly the same, but make things slightly worse” rebuttal (despite the deputy speaker’s unfortunate rhetorical question asking Labour backbenchers why they didn’t want to hear their own leader).

It’s time to check our scorecards and see how we fared in the Semi-Partisan Budget 2013 Drinking Game!

Semi-Partisan Budget 2013 Drinking Game - The Results!
Semi-Partisan Budget 2013 Drinking Game – The Results!

 

Well, the results are in and it looks as though I have done rather well.

The most magnificent triumph, of course, was my correctly predicting that George Osborne would have a “Marco Rubio” moment mid-speech, and urgently grasp for a glass of water. I awarded myself extra points for that prognostication.

Some, of course, could not be proven one way or the other – the ridiculous rules which still govern the filming of Parliament mean that you rarely get to see a full shot, so I’m not sure who was throwing their order papers, or popcorn, or kicking the seat of the MP in front of them.

But I will take 18/25 as a good result any day. The middle square, of course – an actual sensible policy proposal – was always out of the bounds of possibility, and needless to say did not come to pass.

I hope that you had fun playing, and I would be very interested to hear of any other similar Budget (or other politically) related games that readers may know about. Please do share them in the Comments section underneath this post, or send them to me @SamHooper.

A “fiscally neutral” budget. Rearranging the deckchairs on the Titanic (to use a very tortured metaphor).

Happy Budget Day, everyone!

 

Semi-Partisan Sam