No new era, but the sound of an elite sharpening its axe

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The Cameron and Clegg show won’t seem so cute once the cuts bite, but if Labour backs another Blair, it will fail to benefit.

We are at the threshold of a “new era”, David Cameron declared yesterday, in the rose-kissed dawn of a “historic and seismic shift” in British politics. It certainly looks like coalition politics could be here to stay, given the historic decline in support for the main parties. But any idea that the new Tory-Liberal Democrat government represents a challenge to Britain’s power structure, or even a break with some of the most shopworn politics of the past decade, was swept away as the ministerial carve-up was revealed.

With Liam Fox as defence secretary, William Hague at the Foreign Office, George Osborne as chancellor and Michael Gove in charge of schools, you have a quartet of throwback enthusiasts for US neoconservatism unmatched in today’s western world. For all the talk of the brilliance of the Tory modernisers’ coup, the prospect of the new home secretary Theresa May – who voted against abortion and gay adoption rights – heading up the government’s equalities agenda, or Iain Duncan Smith dragooning the sick and the jobless into privatised cheap labour schemes is a sobering measure of the new reality.

The administration unveiled yesterday is the product of an unalloyed elite “I’m all right Jack” Britain, supported by the most socially unrepresentative parliament since the 1930s. And welcome as it is that the Conservatives have had to put on ice a couple of their most egregious pet projects, such as slashing inheritance tax for the wealthy, the Liberal Democrats have secured none of the first-rank departments they might have expected for digging Cameron out of the hole of his own election failure.

All over Britain, the sound of scales can be heard falling from the eyes of Lib Dem voters who had hoped they were backing a progressive, even left-of-Labour, party. Instead, they’ve got a right-of-centre government, in which the Conservatives will unequivocally call the shots and the knives are already being sharpened for the deepest spending cuts since the second world war.

The new coalition can probably count on an early surge in popularity, at least while the novelty of party rivals working together lasts. Many non-Tory voters will be relieved at the thought of a Lib Dem counterweight to the Conservatives’ most divisive reflexes. But how long that will survive the impact of Nick Clegg’s “savage” retrenchment in public services is another question.

The austerity regime is due to kick off with the immediate £6bn round of cuts that Cameron promised during the campaign, but Clegg opposed – and which will now be implemented by the Lib Dems’ leading free marketeer, David Laws. That’s small beer compared with what’s coming.

If the Tories had ended up as a minority administration, they’d have held back from piling on the pain until after a second election. But now they’re planning on a five-year, fixed-term parliament, the imperative will be to bring forward cuts and tax increases in the hope that the worst will be over by the time the two parties expect to face the electorate again in 2015. The impact of that onslaught on the Lib Dems in particular is likely to be gruesome. Even if the coalition survives, expect Lib Dem defections and splits in the years ahead.

Was all this avoidable? The Lib-Lab option, representing a majority of voters who rejected Cameron’s Tories, was worth a shot. But the numbers were barely there and the dangers to Labour in particular – of a short-lived coalition followed by a runaway Tory election victory – not surprisingly provoked a backlash across the party.

But what has now become clear is that the decisive factor in the negotiation breakdown was the Lib Dems’ determination to go for a coalition with the Conservatives regardless. Clegg used the short-lived Labour talks as an effective bargaining chip.

Look back at the statements and actions of the man dubbed by his rival Chris Huhne as “Cameron’s stunt double” over the past couple of years and the warning signs that he was preparing for coalition with the Conservatives are obvious. The market liberalism he and his anti-unionOrange Book allies espouse anyway gells closely with the politics of the Cameron crowd.

For Labour, there are clear compensations in losing office at a time when, as the Bank of England governor Mervyn King reportedly argued, whoever holds it is likely to be out of power for a generation. As the main opposition party, it should also be able to benefit from the backlash against a government of what elsewhere in Europe would be called the bourgeois parties, reclaim the progressive mantle and reorientate itself after the self-inflicted wounds of the New Labour years.

It can only do so, however, if it faces up to the causes of those wounds. Last week, Gordon Brown helped prevent a Labour meltdown with a last-minute appeal to a core vote fearful of the return of the Tories. But Labour has lost five million votes since 1997, four million of them under Tony Blair. The largest share came from a working-class electorate New Labour insisted had nowhere else to go, with a significant chunk from a progressive middle-class constituency revolted by wars and attacks on civil liberties.

To win those voters back demands first of all a recognition that the neoliberal dogma of the New Labour years has been discredited by epic market failure and its disastrous impact on working-class communities. There’s room to build on the outgoing government’s recent tentative shift towards more social democratic solutions. But it also requires a clear break with the calamitous ideology that led Britain into five wars in succession, as it tailed behind the US imperial juggernaut.

That must be the starting point of the Labour leadership contest that has now begun. The attempt to build up a media and New Labour establishment bandwagon behind David Miliband – the heir to Blair who voted to invade Iraq, out-hawked the Bush administration during the 2008 Georgian crisis and has continued to hanker after the marketisation of public services – risks turning Labour inwards and backwards.

Whether the other candidates expected to stand against him, including Ed Balls and Ed Miliband, can move beyond New Labour and offer the kind of change which reconnects the party to its lost voters will determine the shape of politics in the coming years. It will be essential if the new Tory-led government is not to be the prelude to the era that Cameron is banking on.

http://www.guardian.co.uk/commentisfree/2010/may/12/elite-sharpening-axe-era

Clegg’s £10k tax allowance is no Tory concession; it’s a Tory dream

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Tim Horton, research director of the Fabian Society and Howard Reed of Landman Economics

Has anyone noticed how the Lib Dems’ catchy proposal to raise the income tax threshold to £10,000 has very quietly changed? Back in the old days – when the Libs were a progressive party of the left – the proposal was for a ‘tax switch’, taking £17 billion off the super-rich (highly progressive) to fund the cut in income tax (itself highly regressive).

But now it’s just become the tax cut. The Lib Dems have agreed to drop many of the progressive measures to pay for it, such as a mansion tax and scrapping higher-rate pension relief. And it looks instead as if the revenue will come mainly from public spending cuts – making the overall effect even more regressive.

If delivered, it could usher in perhaps the biggest increase in income inequality in the UK of any single policy since Nigel Lawson’s 1988 tax-cutting budget.

Perhaps most concerning, though, is that we seem to be getting an uncritical acceptance by many news correspondents of the Lib-Con spin – that this is somehow a tax cut “targeted on those on low incomes” or “particularly to help the low paid” (to name but two we’ve heard in the last 24 hours).

But – as we pointed out in our analysis of this tax cut before the election – this claim is totally bogus:

• First, raising tax thresholds doesn’t help the poorest because they don’t have enough to pay income tax. Though the tax cut would cost £17 billion, three million households in the poorest quarter of the population would get not a penny of help. That includes the majority of pensioners. We notice some Lib Dem election leaflets sold this policy as “£100 for pensioners”. But it wouldn’t be. It would be £100 for the richest 40% of pensioners and nothing for the poorest 60% of pensioners.

This is why, lest we forget, Labour introduced the Winter Fuel Payment – not just to help with heating costs, but to provide a universal flat-rate payment that would help all pensioners without excluding the poorest. Let’s hope the Tories and Lib Dems don’t follow through on their sabre-rattling hints that they’d like to cut it.

• Second, the vast majority of this revenue goes not on cutting tax for the low paid, but cutting taxes for richer households. Some 70% of the benefit goes to the top half of society. And only £1 billion of the £17 billion cost – just 6% of the total – actually goes on the often-stated aim of “lifting those on low incomes out of tax”.

In a nutshell, saying you want to raise the tax allowance to £10,000 to help the low paid is a bit like saying you want to eat the cake with the cherry on top to increase your fruit intake. It is disingenuous. For any given amount of revenue, you could help those on low incomes far more by spending it on tax credits or public services than you could by spending it on increasing the personal allowance.

By the way, we have absolutely no problem with doing more to help middle-class households. Quite the opposite. But we think there’s something unfair about spending billions on financial support to middle-income households while excluding the poorest, particularly when there are alternative vehicles that avoid this problem, such as tax credits.

If the Lib Dems and Tories were serious about helping the low paid, they would strengthen the near-universal system of tax credits, not undermine it by cutting it back.

• Finally, the Lib Dem tax cut would give more to richer households than to poorer ones, as the graph below shows. Households near the top of the income spectrum would get on average four times as much as the poorest. The result would be a large increase in income inequality in society – especially between the bottom and middle (relative poverty).

Lib-Dem-regressive-tax-plans

Interestingly, Michael Howard considered an increase in the personal allowance for the Conservative manifesto in 2005. He rejected it as being too unfair. Meanwhile, many on the Tory right have long been campaigning to get this policy adopted – most recently Norman Tebbit, and before that Maurice Saatchi. (Indeed, if anyone wants a forensic analysis of why this Lib-Tory tax cut would be unfair, we can do no better than direct them to David Willetts’ excellent response to Lord Saatchi in 2005.)

The truth is that this tax cut was not a painful concession that the Tory right had to make. It is something they have wanted for years. The Taxpayers’ Alliance are delighted it has survived the horse-trading: “It’s good news that the Liberal Democrats have forced the Conservatives to take up their Income Tax policy,” they have just announced, adding that “it was among the most radical tax policies put forward during the campaign, and the Conservatives really missed a trick by not making it their own in the first place.”

And what about the Lib Dems themselves? When we produced our analysis in March, we were treated to a barrage of criticism from Liberal Democrat activists (even though our main points were subsequently validated by the Institute for Fiscal Studies’ own analysis).Their central complaint, however, was that we hadn’t taken into account the fact that the measure was being funded by taking huge amounts of money off the super-rich.

James Graham’s comments over at the Social Liberal Forum were typical:

“The fact that raising the tax threshold helps people on higher incomes more than people on low incomes is not, believe it or not, a startling revelation. We know. The party has never tried selling this policy in isolation; we’d be mad to attempt to because people would rightly ask where we propose trying to find £17bn. The two are meant to balance each other; that’s why we are calling for a tax shift and not either a rise or reduction in taxes overall.”

Well, sadly, it now looks as if the Lib Dems were only really interested in the tax cut. We don’t hold out any hope for the Libs to change their minds on this now they’ve teamed up with the Tories. But could the media please stop describing it as ‘a measure to help the poorest’?

For full analysis of the Lib Dem tax cut, see our report, “Think again, Nick! Why spending £17 billion to raise tax thresholds would not help the poorest”.

http://www.leftfootforward.org/2010/05/clegg’s-10k-tax-allowance-is-no-tory-concession-its-a-tory-dream/

How they undermined Gordon to get into bed with Clegg

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Barely a week into the general election campaign, Ed Miliband, the architect of Labour’s manifesto, turned up unannounced on the doorstep of a colleague in a neighbouring constituency. “You’re right”, he said dejectedly to his fellow MP. What he confirmed in those two words was the view that the campaign had been hijacked by Peter Mandelson. Anyone seen as a close ally of Gordon Brown was being given the cold shoulder. There was a campaign taking place within a campaign and whatever happened, beyond a stunning and game-changing Labour victory, Brown was to be the loser.

“Gordon’s managed to put the plotters in charge”, said his colleague glumly.

“You won’t believe what’s going on in Victoria Street”, Ed Balls confided to those who already shared their suspicions. By the second week, some of Brown’s closest aides were becoming convinced that the plot was aimed at ensuring his swift removal on the morning after the election. He was to be replaced by David Miliband in a “bloodless coup”.

The speculation was as detailed as it was impossible to confirm:  exploratory talks had already been had with Nick Clegg over the possibility of a post-election deal; Clegg had delivered what the plotters wanted to hear: he could work with Labour, but not with Brown; in the event that Labour came third in the poll of votes, but with enough seats to form a coalition government and keep the Tories out, Brown would have to go – and quickly.

The party rule drawn up to deal with the event of a Prime Minister’s illness making them “permanently unavailable” was to be invoked by a special meeting of the Cabinet which would then vote to install, temporarily or otherwise, David Miliband.  The calculation was that Brown would have only five votes of the 23 Cabinet members, a symptom of the fact that he had failed to make the Government “his own”. Mandelson would be Foreign Secretary and Vince Cable would take over the Treasury.

The quid pro quo for Liberal Democrat support was predicted to be pledges from David Miliband on reform of party funding (reducing the role of the unions), a referendum on full proportional representation, constitutional reform and talks about the creation of a new centre-left party  – one which would jettison what remained of the left and the historic link with the trade union movement.

A typical Labour conspiracy in the debilitating, over-long feud between the two houses of Tony Blair and Gordon Brown? Perhaps. But one shared, by accounts of at least two of his closest aides, by Brown himself. Then came the welcome performance of Nick Clegg in the first televised leaders’ debate that transformed the campaign. Except that Clegg excelled beyond preferred expectations and was no longer the dog under the underdog.

He started publicly flirting with, then rejecting, both bigger parties and re-opening options. The X-Factor idol had become a tease and was beginning to annoy his Labour suitors. That was soon to change but, publicly at least, not for several days.

By election launch plus 11 days, Thursday April 22 and the morning of the second leaders’ television debate, The Guardian’s Jonathan Freedland was reporting from the Brown election tour that the Prime Minister was being served up to the electorate as a sort of minor royal, with lots of cuppas with Labour supporters in front rooms but nothing that allowed Brown to be himself in a campaigning way.

“Some of Brown’s Cabinet colleagues are beginning to despair… several telling The Guardian that the leader’s time is being wasted, that he is travelling from Worcester to Birmingham to Oxford to Cardiff to generate nothing more than a few wallpaper pictures for the local news.

“[Some] suspect that Brown has lost out in a battle for control with his one-time nemesis and new ally, Peter Mandelson. In this reading, Mandelson has dispatched Brown to the provinces so that he can remain in charge at the centre.”

On the same day, the paper’s columnist Seamus Milne suggested that senior Labour figures were “transparently delighted by the third party eruption”. He went on: “For the Blairites, it has another attraction. As one senior Labour figure declared, a Lib-Lab pact would be “the ultimate fulfilment of the New Labour mission”. They also see it as an ideal opportunity finally to replace Brown with David Miliband – now expected to win backing from centre-left figures such as Jon Cruddas.

Cruddas’ stance in the new realignment has been simplistically misrepresented in the media, but his role was always going to be crucial if he held his seat.

The scenario was this: the electoral system is bust and there is a popular mood to change it; if the Tories are allowed the power to implement their proposals for change in parliamentary boundaries and numbers of seats, Labour would be out of power forever; leaving aside the Liberal Democrat meaning of the slogan, this was a once-in-a-generation chance for change, to create a new, permanent “progressive” political realignment which would leave the Tories out of power for good. It was what advocates would later call “the bigger picture” and what critics would call the SDP mark two. Even if, in the advocacy of tactical voting to achieve the goal, it meant sacrificing Labour seats.

The following weekend, Brown announced that he was going to “up the tempo” on his campaign, a public expression of the internal attempt to wrest it back from “the plotters” (whom he blamed with lumbering him with an Elvis impersonator at a key point), and talked of the election being the “fight of my life”. As far as the campaign-within-a-campaign was concerned, it was a fight for his political life.

By Tuesday April 27, Clegg appeared to be back on script. “Clegg: I’ll work with anybody except Brown” was the Daily Telegraph headline which summed up the spin of the Liberal Democrat day. While David Cameron warned his rival against “holding the country to ransom”, Clegg joked that he would even see “a man from the moon” as an acceptable partner in a coalition if it meant that reforms to voting, taxes, education and banking were driven through. But he singled out Brown as the one person he could not do business with. “Nothing personal”, he said, but Brown could not cling on to power if Labour turned in fewer votes than the Lib Dems and the Tories.

Then came the Rochdale encounter. As it went viral on the internet and made global live television, Labour members held their heads in their hands even before Brown did – compounding the error over the on-air microphone by being unflagged by his staff about the radio studio’s live camera – a standard in today’s multi-platform media. In Barking and Dagenham, Stoke Central and Oldham East & Saddleworth, the consternation, and probable effect, were greater than the immediate aftermath recorded among public opinion. While the view appeared to be that this was “just Gordon being Gordon”, two factors kicked in. One, with a wider resonance than these constituencies, was that this represented the exposure of the real Gordon Brown: two-faced, arrogant, detached from reality. Political nous prevented the other two major party leaders from attempting to exploit this “there-but-the-grace-of-God-go-I” moment, but it may have been instrumental in keeping the Labour vote from turning out or even exacerbated the stemming of protest voters drifting back to Labour.

The other factor, with greater local traction, was the reasonably-put question about eastern European immigration – albeit abetted with the emotive use of the words “flocking here”. Did it trigger Margaret Thatchers’s “swamping” moment for Brown, zeroing out any other language to which he ought to have been better attuned? The incident was evidence to Brown’s internal critics that you could not take him anywhere; likewise to his increasingly despondent coterie of supporters, who felt that taking over his own campaign strategy – to meet the voters and be himself – delivered the plotters’ self-fulfilling prophesy.

What was less evident was that the Mandelson strategy had also ruled out any “hostages to fortune”, such as any boast about the proposed increase in the national minimum wage or redistribution of wealth. The attack, rightly in the consistent opinion of Tribune’s leader commentaries, was on the threat of the Tories’ economic policies, but it ducked, as though embarrassed, the potential effect of Labour’s social welfare policies.

Discredited former “new” Labour spin-doctors such as Benjamin Wegg-Prosser were calling the shots, along with his old boss, Mandelson. When the Cabinet were paraded to support an education policy promotion in south London, Balls – still Schools Secretary and party spokesman – travelled from his constituency where the Tories were already planning to give Labour their “Portillo moment” only to be silenced by Mandelson. Only he and, perforce, Gordon Brown would address the cameras.

Among those said to have been excluded from the campaign strategy was Charlie Whelan, head of political policy at Labour’s biggest funder, the Unite union. Nothing could be further than the truth, other than, in the sense that, while soaking up the union’s funds, Mandelson made it clear the union’s subservient role would be legalised out of existence in the future.

Whelan was there in the spinning room, but his strategic spinning role was left to tweeting. Take a look – he’ll be denying it now.

The Peter Mandelson-David Miliband anti-union political elitist alliance saw a fresh boost with the flagging up of the suggestion that supporters of Compass – which boasts it is the most influential and effective campaign group on the “left” – should vote tactically. The proposal – which dismayed and enraged Labour candidates and members in marginal seats across the country, many of whom resigned their Compass membership – was endorsed in a ballot of members by 74 per cent to 14 per cent.

This is the internet view of one Compass punter on the advice: “Well, the decision means that Labour’s share of the national vote goes down – especially since there is no reciprocal arrangement from the Lib Dems. And, since Clegg has unilaterally rewritten the constitutional rulebook to take account of national share, this will contribute to a worse showing for Labour, and therefore increase the chances of Cameron getting to Number. 10. All in the name of ‘progressive politics’.

“Tactically, reproducing the Tory target list is utterly inept. Are we meant to vote Lib Dem in Gillingham & Rainham, simply because this is the first Tory target, but where the Lib Dems have no hope? If so, this only increases the chances of Tory victory at constituency level. If not, why include it in the list? If, instead, we are meant to start in Watford, where the Lib Dems are already in second place, if their surge in the polls is to believed, they may have won it anyway, but without the help from supposed Labour members and supporters, again diminishing our national share of the vote and demoralising our supporters and members in the area.

“Or perhaps Colne Valley is what you have in mind, more of a three-way contest with the Lib Dems in third in 2005? But again, how can you be certain that by handing Labour votes to the Lib Dems, you won’t hand the seat to the Tories – even at a local level, before Nick Clegg interprets it as a reason to enter coalition with the Tories?

“This is a foolish approach and tactically unsophisticated – and whose sole guaranteed effect will be to minimise Labour votes and seats. People have been expelled for less.”

Compass head Neal Lawson reproduced the Tory target list on the organisation’s website as a basis for tactical voting, rather than a list of seats where Labour has no chance. Judith Blake, the Labour candidate in Leeds North West, would probably have empathised with Lawson’s critics, as would other candidates in three-way marginals, or even in no-hope seats such as Woking where the Labour candidate was at least flying the Labour flag.

When Blake, a now former Compass member, protested, she was told by Compass to consider “the bigger picture”. The bigger picture included Compass giving supportive space on its website to Caroline Lucas, the Green candidate in Brighton Pavilion, another marginal where Labour had a high-quality candidate in Nancy Platts.

Eventually, four days before polling, Brown found his voice, speaking out for the low paid at a rally in Westminster, but sounding as though his passion was driven from a position of opposition. The next day, he underlined the mood around him by admitting that if he could no longer make a positive difference “I’d go and do something else”. It was beginning to look as though a coup would not be necessary after all.

In the early hours of Friday morning, Ed Balls, Ed and David Miliband, Yvette Cooper and any other minister who still had their seat and a government car was offering a lift to other surviving MPs on their way back to Westminster and Number 10, where Peter Mandelson, Harriet Harman and others who did not need to travel so far were already gathering for the arrival of Gordon Brown. Winning outright had long been abandoned as a plausible outcome. But the biggest fight, not just for the soul of the Labour Party but for its very existence, was about to begin.

Chris McLaughlin in Tribune