Category: Recession

Jim Pickard

You don’t have to be entirely cynical to wonder whether David Davis’s intervention over capital gains tax is a calculated political move designed to plant his flag firmly in the “Tory troublemaker” camp.

The coalition is planning to lift CGT from 18 per cent (over a threshold of £10,100 a year) to a level closer to that of income tax – which is paid at 40 per cent by high-earning middle classes.

The phrasing was originally that CGT would be “similar or close to” income tax levels. Now it’s “closer to” income tax levels, a subtle shift which could allow for a less radical move.

Despite this, however, Tory backbenchers are up in arms; on behalf of their constituents and not only themselves. John Redwood is also at the forefront of the rebellion, having written to the Treasury yesterday to ratchet up the lobbying for a taper to restrict the most punitive tax rate to assets that are not held long-term.

Jim Pickard

I still can’t get my head around the sight of Lib Dems wandering around the Treasury as if they run the place; which – of course – they now do. Vince Cable, sat in front of scores of journalists and senior civil servants, also seemed slightly bewildered at finding himself on podium with David Cameron, Theresa May and George Osborne.

The document is 33 pages long and can be found here. (It is branded as The Coalition - presumably a cross between the blue and yellow of the two parties). Drawn up by Oliver Letwin and Danny Alexander and produced in just 9 days, compared to 40 or 80 for some European coalitions, it is a seamless blend of co-operation, fudge, compromise and genuinely shared policy.

Not an effortless fusion,” as Cameron himself admitted. But he added: “Nick and I agree on the new policies…we’re all going to have to get used to a new world.”

For those with less time on their hands here are 10 of the points which jumped out at me: some are new, others are old but have been clarified.

1] “The deficit reduction programme takes precedence over any of the other measures in this agreement.” The document promises to “significantly accelerate the reduction of the structural deficit over the course of a Parliament”. The plan is still to do this more by cuts than by higher taxes.

2] A possible tax rise. The threshold at which first time buyers started paying stamp duty was lifted to £250,000 in the (Labour) Budget this April. The Tory policy had been to keep this permanently. But the booklet says: “We will review the effectiveness of the raising of the stamp duty threshold for first-time buyers”.

3] Some of the most sensitive measures will not be whipped. The Lib Dems will be allowed to oppose a vote on fox hunting, the nuclear power National Planning Statement, a new tax break for married couples. They will also be allowed to campaign for the alternative vote while the Tories will be allowed to campaign against.

4] The National Audit Office will be allowed “full access” to the accounts of the BBC; look out highly-paid celebrities, your remuneration package is now public property.

5] Some strict targets for backroom cuts; 25 per cent for the Ministry of Defence running costs, 33 per cent for NHS administration.

6] The coalition will not only cancel the Heathrow third runway but also additional runways at Gatwick and Stansted.

7] Old people are still being treated gently. Winter fuel allowance, free TV licences, free bus travel, and free eye tests all protected.

8] What has happened to the non-dom levy? The Tories had planned to charge £25,000 a year to non-domiciled residents. However – as Cathy Newman has explained – there were doubts about the Tory sums. Now it’s under review.

9] The coalition wants to inject private capital into the Royal Mail, as Vince Cable told the FT a week ago. (It’s also on the Guardian’s front page today). Prepare for a fight with the Communication Workers Union; although Vince told us that legislation would not be rushed through prematurely.

10] Political reform will include a referendum on the Alternative Vote and proposals for Lords reform. More curiously, money will be made available for parties to hold postal primaries to inject fresh blood into seats which have been bed-blocked for decades. The model for this was Totnes, where a female GP has replaced Anthony Steen after a ballot of all locals – ie not just Tory supporters.

If coming third in the polls and a seemingly collapsing campaign strategy wasn’t causing enough stress within the Labour party, a Labour parliamentary candidate from North west Norfolk has called Gordon Brown “the worst prime minister we have had in this country”.

According to the Lynn News newspaper, Manish Sood, who is contesting a Tory-held seat, said: “I believe Gordon Brown has been the worst prime minister we have had in this country … It is a disgrace and he owes an apology to the people and the Queen.”

Other choice quotes from the interview include:

“The role of ministers has gone bureaucratic and the action of ministers has gone downhill – it is corrupt.”
“The loss of social values is the basic problem and this is not what the Labour Party is about.”

UPDATE

He has also told Sky News – bizarrely – that the government should give “more power to the farmers”.

Jim Pickard

Alex 10.50 Final post. An intriguing tweet from Evan Davis. Did any of the candidates actually win this debate? Or was it a dead heat? The polls indicate that Cameron prevailed. But the numbers are suspiciously close to broad voting intentions. Could it be that the public reverted to the person they were intending to vote for at the begining of the debate? I suspect few people would have had their opinion changed by the last 90 minutes. It will be interesting to see whether the post-debate spin has more of an effect.

Alex 10.47 Some final thought from Alan Schroeder, our US debate guru.

Debates do not always produce clear verdicts, and in my opinion this one qualifies as a three-way stand-off. Judging purely on optics and not on substance, I would call this Brown’s best debate of the three. I thought he handled the Mrs. Duffy gaffe with deftness, and I liked his lawyerly closing argument. Even Brown’s goofy smile at the very end came across as endearing rather than menacing.

Cameron has never quite come into focus for me in these debates. He’s obviously an intelligent, thoughtful, and well-spoken man, but from my perspective he doesn’t leave much of a footprint. That criticism notwithstanding, I would also call tonight Cameron’s best debate, and I wouldn’t be surprised to see him do well in the snap polls.

Clegg has consistently been the most interesting performer of the three, but tonight he seemed to be drawing from the same familiar well instead of broadening his message. One wonders if Clegg’s surprise win in the first debate may have caused him to peak too soon. A strong finish in round three might have given Clegg, in the immortal words of Spinal Tap’s Nigel Tufnel, “that little extra push over the cliff.” Instead, he allowed both Cameron and Brown to make gains on him.

Jim 10.46 Clegg should also brace himself for a row tomorrow over his claim that 80 per cent of immigrants into Britain came from the EU. Apparently the real figure could be much lower; closer to a third.

Jim 10.43 Also, how come no one mentioned Gordon Brown’s Achilles Heel – ie his claim to have extinguished “boom and bust” permanently? And how come the other two didn’t nail Clegg over the LIb Dem policy of joining the euro? And did Cameron have a lucky escape in not getting grilled over his opposition to rescuing Northern Rock?

Alex 10.32 One thing to note. Was Vince Cable ever mentioned? What happened to the great Lib Dem economic titan? Had the economy been the topic of the first debate, we’d have heard Clegg repeating his name ad naseum. Shows how much his confidence has grown as leader. He don’t need little old Vince any more.

Try it if you dare. The FT deficit buster — an online simulator of the next three year spending round — allows you to choose your own package of cuts. It should definitely carry a health warning.

The project started as a simple question: can we show what it would take to halve the deficit by making £30-40bn cuts? The answer exposes just how little all three main parties are willing to tell you about the looming spending squeeze.

Take the easiest option in the game: acting as your own chancellor, free of party spending commitments. In today’s splash, we include an illustrative package of measures to make savings in the order of £40bn:

A 5 per cent cut in public sector pay; freezing benefits for a year; means-testing child benefit; abolishing winter fuel payments and free television licences; reducing prison numbers by a quarter; axing the two planned aircraft carriers; withdrawing free bus passes for pensioners; delaying Crossrail for three years; halving roads maintenance; stopping school building; halving the spend on teaching assistants and NHS dentistry; and cutting funding to Scotland and Wales by 10 per cent.

Jim Pickard

JP 11.27pm Time for my last attempt at sober analysis of the debate and the aftermath.

What matters ultimately is who came out on top between Cameron and Brown. After all, the Lib Dems have no chance in the majority of seats in the general election. They may still be glad to increase their number of seats from the current 63. Those are the basic facts.

If the preliminary reports are correct – that Cameron was significantly ahead of Brown – that may, ultimately, turn out to be crucial.

Regardless of Clegg’s moment in the sun (“Clegg the outsider seizes his moment in the TV spotlight” is the Guardian front page tomorrow. And “shock victory for Clegg” is the Daily Mail.) It’s still about blues versus reds.

Jim Pickard

Curious to see David Miliband, former adviser to Tony Blair – and one of the key Blairites in cabinet – turning on Dubya. In a speech today, the foreign secretary compared David Cameron to George W. Bush in what can only be described as a negative way.

The words may be John F Kennedy but the policies are pure George W Bush,” said Miliband – in a reference to Cameron yesterday quoting JFK.

If this is an attempt to distance New Labour from Bush it may be a little too late, given how closely their paths converged during the Iraq invasion.

Incidentally, it’s not the first time the Brownites have sought to pour cold water on the Republicans, in contrast to their predecessors. John McCain complained about Brown twice appearing to endorse Obama during the US elections.

Jim Pickard

What to make of Brown’s new mea culpa over bank regulation in the run-up to the crash?

The prime minister has told ITV (in a programme to be screened tonight at 7.30pm) that in the 1990s the banks begged to be free of regulation and Labour in effect accepted this.

It’s a striking confession. Until now Brown has usually sought to shift the blame on to failures of international – rather than national – regulation of financial markets. And of course he has insisted that the credit crunch was imported from the US.

Alistair Darling has also blamed the banks instead of the regulators as recently as last summer.

Jim Pickard

So much for an end to class warfare in British politics. At this morning’s press conference the Labour trio (Mandelson, Balls, Burnham) insisted they were not in the business of negative campaigning, despite evidence to the contrary.*

Soon after Lord Mandelson said:

“We know also what they would do for what Mr Cameron describes as ‘regional stuff’. Regional investment, regional jobs, regional infrastructure, but he looks down his rather long toffee nose at the regions.”

* Burnham on the NHS: “At a stroke they’ll take all this away.”

Mandelson: The Tories are giving “no detail of the pain ahead in what they would do to public services.”

Balls: “Labour stands for guarantees…the Tories stand for abandonment.”

UPDATE

On the subject of negative campaigning, Paul Waugh has the latest Labour videos for Scotland and Wales.

Not exactly positive. (Tories are supposedly the party of unemployment, repossessions, decay, poll tax, factories closing down….”they even took away our school milk!”) Labour fails to mention that manufacturing has declined faster under Labour than it did under the Tories.

Jim Pickard

Lord Mandelson has just described the manifesto as “Blair plus”. But how radical is it? We have trawled through the document (70 pages of it) and have found a few new policies and a few old ones dressed up to look new.

Jim Pickard

I ran into a Tory frontbencher about a week ago who said he had had been asked to go through his department with a fine toothcomb to find potential savings which could be made after the general election.

I asked if he had seen John Redwood’s blog suggesting that cuts of 10 per cent could be instigated without too much pain. He replied that he had got close to that number without too much difficulty.

We didn’t write it up as a news story because it seemed like an obvious and sensible thing for the Conservatives to be doing.

The FT house view is that politicians would be better off coming clean about the deficit – and need for sweeping departmental cuts – rather than dancing around on the head of a national insurance pin. In private, Labour and the Tories alike must be drawing up the slide rule over which programmes, benefits or salary bills to cut and when: surely?

Don’t expect the manifesto from either party to recognise this, however. The troops are still in their trenches; the real fiscal war hasn’t happened yet.

Just picked up a first edition of The Observer and it’s leading with Nick Clegg warning that Britain faces “serious social strife” if a government without a popular mandate starts wielding the public spending axe.

It’s certainly a novel twist on the standard arguments about a hung parliament. Clegg’s pitch is basically that a minority government would be good for the country because it better represents the split of the popular vote.

A narrow victory for the Tories or Labour would wreak havoc because they would be sacking public sector workers, slashing programmes and freezing wages after having secured as little as a quarter of eligible votes.

Westminster blog

on the UK political scene

About this blog Blog guide
Jim Pickard and Kiran Stacey, FT Westminster correspondents, share the latest news and analysis on the UK's political scene.

Follow the latest news on the UK coalition government.

To comment, please register for free with FT.com and read our policy on submitting comments.

All posts are published in UK time.

Contact the Westminster blog team: Jim Pickard, Kiran Stacey, Nicholas Timmins, Elizabeth Rigby and Helen Warrell.

The illustrations of Jim and Kiran are by Nick Hardcastle.

See the full list of FT blogs.

The authors

Jim Pickard joined the lobby team in January 2008. He has been at the Financial Times since 1999 as a regional correspondent, assistant UK news editor and property correspondent.

Kiran Stacey is an FT political correspondent, having joined the lobby in 2011. He started at the FT as a graduate trainee in 2008, working on desks including UK companies and US equity markets before taking over the FT's Energy Source blog.

Contributors

Elizabeth Rigby, the FT's chief political correspondent, joined the lobby team in September 2010. Elizabeth has worked at the FT for more than a decade and was most recently its consumer industries editor.

Helen Warrell is the FT's UK reporter, covering home affairs, crime and policing. She joined the FT in 2008 and has spent time as a reporter in the Brussels bureau and more recently, editing the paper's Asia coverage on the world news desk.

Archive

« JanFebruary 2012
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
272829