Archive for the 'Cuts' Category


Flooding the Lords with 100s of new peers so several million people can be made poorer doesn’t sound like smart politics

Monday, October 26th, 2015


The great Lords-Commons standoff

Today, of course, the House of Lords gets to decide whether George Osborne’s controversial tax credits curtailment plan will go forward. Because of the way this is being pursued through Parliament, as a statutory instrument, this is a rare occasion when the Upper House can, if it wants to, block a major part of government policy.

If this had been part of a finance bill then the House of Lords would have had no power to stop it. It is the parliamentary process that George Osborne’s team have used that has created this possible crisis between the two houses.

In the build up over the past few days we have seen quite a number of Conservative voices raised against the policy of their own government. The latest to join is Ruth Davidson the leader of the Scottish Conservatives.

If the Lords do block it it will be in the face of threats to create 100+ new CON peers in order to ensure that this sort of thing doesn’t happen again. I don’t buy it.

    A problem for ministers is, as the latest YouGov polling finds, that they are not winning the argument on the issue itself. The pollster found 46% said they thought this was unfair with 28% saying it wasn’t. The rest don’t have a view.

My reading of George Osborne is that following his Omnishambles budget of 2012 the last thing he wants to happen is for him to have appeared to have U-turned. His ratings took a lot of damage 3 years ago but he has slowly recovered his position.

One thing’s for certain: When Osborne runs for the leadership of the Conservative Party then what happens over tax credits will be a key part of the campaign.

Mike Smithson


North American pointers for John McDonnell’s growth strategy

Friday, October 23rd, 2015


Don Brind on Friday

The biopic of Steve Jobs had its premiere of at the London Film Festival last weekend. Just days before, the company he founded was in the dock in a New York court – and lost.

The jury found that Apple had infringed patents held by the University of Wisconsin by using technology developed by University researchers in their I phones and IPods. The university is claiming $400 million in damages which would be a record patent award to a university.

I was alerted to the case by a tweet from Professor Mariana Mazzucato author of the ground-breaking “The Entrepreneurial State” which shows how the success of Apple and other stars of Silicon Valley was based on innovations developed in the public sector.

I was in the Commons the following day and there in one of the coffee shops was the striking figure of Professor Mazzucato in a huddle with John McDonnell and his shadow Treasury team. She is a member of the economic advisory committee McDonnell announced in his speech at the Labour conference in Brighton and her ideas are likely to form a key part of McDonnell’s strategy for dealing with the deficit through economic growth.

Mazzucato’s argument can be summed up as “Do what the Americans do — not what they say they do.”

The Apple court case was grist to her mill. Her book explores how US federal government cash was used by universities and research institutes to develop technologies which are the foundation for the success of Apple products. She argues that the state can and should be an Entrepreneur developing technologies and shaping markets.

Another of her tweets takes us to the website of the American Energy Innovation Council and a clip of Microsoft’s Bill Gates  calling for basic research – paid for by governments – as the best way of getting a clean energy breakthrough. Mazzucato is out to bust the myth that innovation can be left to the private sector.

It’s part of a broader argument about the role of government in promoting growth. By contrast to Osborne and the Tories the Obama administration’s American Recovery and Reinvestment Act of 2009 (ARRA) which provided a near $800 billion stimulus package – equal to about 4% of America’s GDP. The story of how it was done is recounted in Michael Grunwald’s The New New Deal: The Hidden Story of Change in the Obama Era.

The Obama programme was consciously modeled on the public works projects undertaken by President Franklin D Roosevelt. And a new biography of Republican presidential hopeful Donald Trump shows that the fortune he inherited from his father came massively from public contracts. Deborah Friedell’s book Never Enough: Donald Trump and the Pursuit of Success reviewed in the London Review of Books suggests Trump may not be quite the brilliant business man he presents himself as. His estimated fortune is around $3-4 billion dollars. “The National Journal has worked out that if Trump had just put his father’s money in a mutual fund that tracked the S&P 500 and spent his career finger-painting, he’d have $8 billion.”

On the other side of the 49th parallel Canadians have elected a Prime Minister who argues for the kind of public investment which is at the heart of John McDonnell’s anti austerity drive.

“Every dollar we spend on public infrastructure grows our economy, creates jobs, and strengthens our cities and towns,” said new Prime Minister Justin Trudeau.

He routed the Tories despite the best efforts of Lynton Crosby which was the subject of my last post. One of my “good guys” won but I was disappointed with the outcome for the NDP.

I was disappointed too with John McDonnell’s clumsy U-turn over Gimmicky George Osborne’s fiscal charter. I had high hopes for the shadow chancellor based on his assured appearance on BBC Question Time, his conference speech and the quality of his team. As I said in a previous post he is the key figure in the Corbyn team.

The veteran commentator William Keegan took a charitable view (certainly more charitable than some Labour backbenchers)  McDonnell, said Keegan, “fell into Osborne’s trap. But the shadow chancellor is plainly aware of Denis Healey’s dictum: “When you are in a hole, don’t dig deeper.” Keegan’s point being is that it was his original support for the charter that was wrong not the decision to vote against it.
Looking back at the records of Tory Chancellors Anthony Barber, Geoffrey Howe and Nigel Lawson Keegan says the “argument that the Conservatives have always been the party of economic and fiscal responsibility takes some swallowing ….. And now its obsession with balancing the budget – indeed, aiming for a surplus on both current and capital accounts – promises to make the austerity we have experienced so far look like a vicarage tea party. “
“The damage about to be wreaked by the reductions in tax credits may well prove to be Osborne’s poll tax moment. There is much for an opposition that gets its act together to oppose.

“These are early days to be writing off Mr McDonnell,” says Keegan. I agree.

Donald Brind


Osborne’s tax credits dilemma might be solved by the Lords – peers could kill the move

Monday, October 19th, 2015


Huffpost’s Paul Waugh has what appears like a scoop with a report that the House of Lords, where the Tories don’t have a majority, could kill the legislative move to change the tax credits system.

This is because the means chosen by Osborne’s team to make this law is via a statutory instrument not new legislation. This has to be approved by both houses of parliament. Waugh writes:

“..A rarely-used ‘fatal motion’ is set to be tabled in the House of Lords this week, followed by a vote next week, with the specific intention of preventing George Osborne from putting his controversial £4bn proposals into law.

A crossbench peer is being lined up to table the motion in a bid to garner as much support as possible and use the in-built anti-Tory majority in the Lords to stop the Chancellor from going ahead..”

There are currently 246 CON peers, 209 LAB ones, and 106 LDs. In addition there are 175 cross-benchers and 25 Bishops.

The convention is that the Lords does not block measures which were in the governing party’s manifesto which the tax credit move was not.

Maybe this was all along part of Osborne’s plan to focus on the role of the upper house where his party does not have the numbers – or is that being too Machiavellian.

If the change had been included in the Finance Bill the House of Lords would have had no power.

Mike Smithson


The pressure mounts on Osborne’s tax credit plan

Sunday, October 18th, 2015

Remember that George has turned before

The headline on Tim Montgomerie’s piece for tomorrow’s Times and his Tweet say it all. The pressure is building for a U-turn.

Let’s recall what happened in the aftermath of Osborne’s 2012 “Omnishambles budget”. A whole series of measure from the so-called granny to the pasty tax all got “refined” in the weeks after the budget. For a while it damaged Osborne but over the past three years he’s staged a remarkable recovery.

I think he’ll change over this one.

Mike Smithson


Methinks that Osborne might have to U-turn on tax credits

Friday, October 16th, 2015

The exchange from last night’s Question Time

The above clip from last night’s Question Time has been doing the rounds throughout the day and highlights the challenge facing minsters, particularly Osborne, over his budget tax credits move which is due to come into place in the next couple of months.

With Boris and the Sun already pressing hard for change this is an issue that has the potential to hurt the blue team just when everything seemed to be going so well.

I can’t see the government line holding firm.

Mike Smithson


Labour is paying a price for its elongated leadership contest

Tuesday, July 21st, 2015

The welfare vote abstention looks like a mistake

I was recovering from an operation last night and am only now catching up on the big welfare vote in the commons.

Labour’s abstention move does look like a mistake and was the product of the party not having a confident leader in place to steer the party through the mine-field that had been carefully set by Osborne.

As it is the party looks as though it has connived in helping the controversial changes go forward as others, like the much slimmed down LD contingent, are rushing to point out. These things get remembered.

The real problem is the time-scale taken to choose the new leader. This could all have been wrapped up in less than two months. Instead there’s another month and a half to go before one of JC/LK/AB/YC is in place.

Mike Smithson


The big problem with free TV licences for those 75+ is that a staggering one in six of all UK households qualify

Wednesday, July 8th, 2015


Gordon Brown’s 2001 exemption rule has a huge loophole which should never have been agreed

From 1980-84 a big part my then job at the BBC was to deal with the PR and political issues relating to the corporation’s prime income source, the TV licence. None of the challenges that was as sensitive or as problematic as what should be done about the oldies who were required to pay the same fee as everybody else.

There had been a long-standing campaign for oldies to get free licences which at one point in the early 80s saw some pensioners deliberately trying to get themselves sent to prison for non-payment of fines over their refusal to get a licence. The idea was that their incarcerations would be the focus of marches and other demonstrations.

This was dealt with by secretly paying the outstanding fines and licence fees of the would be TV licence martyrs who were then released from jail much to their annoyance.

On its return to power in 1997 LAB took up the cause of free TV licences for pensioners and in the 2001 general election year the current scheme was introduced by the then chancellor, Gordon Brown in a move to offer something to help win the pensioners vote.

His plan was simple – all those aged 75 or more would get free licences irrespective of their financial circumstances. The massive problem was that the rules were drawn up far too widely so that any household with someone of that age living there qualified for the benefit even if everybody else there was younger.

    The result is that we now have the nonsensical situation in which one in six of all TV licences are now paid for out of central taxation irrespective of the incomes of everybody at the address.

Clearly that has to change and the only households which would qualify are those where everybody is 75+.

My reckoning is that Osborne has made his move to make the BBC fund this knowing that there’ll be less political damage to the Tories if the BBC is seen to be be trying to close down the Gordon Brown loophole and not the government.

This is pure politics. Let the Beeb and not the Tories take the flak.

Mike Smithson


Marf on Osborne’s plan for the civil service

Thursday, May 21st, 2015


PB Update – welcome to Don Brind

Tomorrow the political journalist, Don Brind, is joining our small team of regular guest slot contributors. He is somebody I’ve known a very long time since we both worked at the BBC in the 1970s. In recent times Don has been a regular contributor on The Week

Back in 2007 Don gave me a well argued steer on the then LAB deputy leadership contest to the effect that Harriet Harman, then 10/1, was going to get it. She won.

He’s got very close contacts with LAB and will act as a balance to David Herdson and TSE who are both active Tories. His first column will be tomorrow.

Mike Smithson