Party Political Animal

In 1998, British Petroleum took over a huge American oil company, Amoco, which made up one-third of the new BP-Amoco – as it was briefly called before reverting just to BP.

It was the successor to the old Amoco part of the company which managed the Deepwater Horizon rig, and an American contractor which operated it. The US Coastguard and other American agencies regulated it.

We need these deep-water rigs because it is Americans who each still gobble up twice as much oil as Europeans and Japanese because of  the absurd, swollen SUVs, pick-up trucks and Hummers which they still cruise around in. It was an American President, elected on a slogan of ‘Yes we can!’, who continues to encourage gas guzzling by failing to raise petrol taxes to sensible level.

And now it’s an American who has replaced a Briton at the head of BP to help assuage American public opinion. Feel better, guys?

Now we have all been massively prepared by the Coalition for the worst, I suspect that today’s emergency budget may not be as bad as trailed. That’s all part of the New Labour style media management which Dave and George learned at the feet of the great masters, Blair and Campbell.

There are two grounds for caution here: first, if that is the case, they need to be careful, because as Blair found out, the media and public aren’t that dumb and don’t like being suckered more than once – or twice maybe.

Second, even if the budget is not as tough as expected, it is still likely to take a lot of demand out of the economy.

Bear in mind that Darling had already pencilled in the biggest spending cuts since the early ’50s – far bigger than Jim Callaghan’s late ’70s cuts or anything Lady T did (she, of course, never cut spending – just held it steady for a couple of years – please note all you commentators who seldom question the received wisdom that the Tories devastated public spending in the ’80s).

Then factor in that we have just gone through the steepest post-war recession and that demand is still in intensive care – you see where I’m going with this?

Getting a grip on public finances, good; reassuring markets, also good; getting shot of a load of the bad stuff early in the parliament in the reasonable hope of blaming it on Brown – and better things to come (hopefully in time for the next election) – fine too.

But going too far and threatening the recovery – not so good. Delicate balance, to be sure.

Not Bloody Sunday, of course, but Dave C’s performance yesterday.

An apology goes a very long way, especially when it comes from the heart and not the PR guys. Politicians and businessmen don’t apologise enough – and when they do, it nowadays feels too often like something directed and scripted by their media advisers.

The anti-alcohol lobby is at it again. Not satisfied with securing above-inflation duty increases, they now want minimum pricing.

Poorer drinkers would have a simple response: turn to smuggled booze.

That is what has increasingly been happening for many years now. I was in charge of alcohol duties at the Treasury in the mid ’90s and we were cautious about raising duties too fast for that reason.

Don’t imagine these smugglers are merry chaps in white vans freeloading a bit of booze on a channel ferry awayday. They are now large, organised and often violent criminal gangs.

Raising duties or prices will do little to tackle the problem of drinking. It has already driven people from pubs into drinking at home – potentially far more damaging. It has also encouraged people to load up on booze before they go out.  Higher duties don’t even raise as much as expected as smuggling increases.

We for a long time have had some of the highest drinks prices in the developed world – and some of the worst drink problems. Seems to me, price is not the issue.

Sympathy for David Laws’ personal position – and the widespread perception of him as a potentially excellent Chief Secretary- should not blind us to the fact that what he did was dishonest and his excuse unconvincing.

Claiming £950 a month in rent for his partner was not necessary to maintain his privacy, as Laws claimed. Not is it the mark of a man of the “highest integrity”, as Paddy Ashdown and other Lib Dems lined up to claim in the lead up to his resignation.

There is also the question of whether a heterosexual minister caught making comparable false claims would have been so gently treated by the commentariat.

Then there’s the widespread assumption by fellow politicians and journalists that a quick resignation will allow Laws to return as a senior minister after a decent interval.

Disgraced Tory ministers in the early ’90s were always accused of hanging on until their fingers were levered one by one from the heights of power by the media. Maybe. Once gone, though, they did not return.

That fashion begun under Blair when ministers both hung on and then were allowed to come back into high high office – Blunkett and Mandy spring to mind.

If someone is proved unfit for office, that should be that. Instead, having given the Tories a good kicking for not bundling offending minister out quickly enough, Blair allowed his to be reborn.

That’s not automatically a good thing. Or if it is reasonable for a very capable minister to return (I don’t include Blunkett and Mandy in this category) for the good of the country, where’s the logic in them going in the first place. Is it just that a few months on the backbenches assuages the rage of the press and public?

All seems a bit woolly to me.

Taxation of capital gains has been a muddle in the UK for decades. It relates to taxation of savings, which has been a major factor in our low levels of savings and high consumption.

CGT should not therefore be treated in isolation – it should be reviewed as part of a wider look at pensions and savings tax.

Some perspective. In the ’70s, capital gains was taxed at 30% compared to a top marginal rate as high as 98%. Needless to say, people capitalised income wherever possible – entrepreneurs would for example build up the value of their shares rather than taking large salaries. Even so, high inflation often meant people were taxed on non-existent real-terms gains.

The Conservatives after 1979 first allowed inflation indexing of gains – essential in an era of high inflation.  Then, when they reduced the top income tax rate to 40%, they equalised CGT at 40% to prevent distortions – the rate was a little high, but the system worked quite well and indexing, though complicated, at least meant that illusory gains were not taxed.

Enter new Labour’s bright, hopeful dawn in 1997. Nothing couldn’t be fixed – what works is best etc etc. Labour, having lost an ideology, were also a bit starry eyed about their new mates in the City who buzzed around the government honeypot, hoping for peerages – which many of them got – or rather bought.

So, CGT was cut to as little as 10% for entrepreneurs, but out went indexation – no bad thing in a lower inflation environment.

10% was, however, a little on the low side and contributed to a society where the very wealthy got filthy rich, and although the very poor got tax credits, everyone in-between was screwed by indirect tax rises, while the failure fully to raise the top-rate band dragged four times as  many people into top rate tax.

Then, of course, all hell broke loose, Labour were less dewy-eyed about their new rich best friends and we were left with a top rate of 50% and CGT at 18%, with obvious consequences.

But for the Lib-Cons now to rush into an ill-thought our equalisation would not be wise – many Tories, including Michael Forsyth, are correct in their warnings.

For a start, it could penalise people with long term assets whose gains have been eroded by inflation; but indexation is also complex.

And differential rates for people governments approve of or otherwise can be rough justice: higher second homes rates can clobber the not-so-wealthy elderly; lower rates for long-term investors can be distortive and end up helping the private equity spivs.

Factor in that for decades we have saved and invested too little and consumed too much and our economy is skewed towards housing and financial services.

Why? Because the pension system is so Byzantine that too many people are forced into the clutches of the financial services middlemen who rip them off for 2% a year, added to which they see their savings locked up until they are 55 or older. So people consume rather than save, or use their houses as tax shelters.

Most people area also not financially literate enough to run their own ISAa and get similarly ripped off – and if you take cash out, you can’t put it back tax-free – you lose that chunk of tax free savings.

Low savings and investment and high consumption plus an economy overweight in financial services and housing have been a major cause of long term economic weakness and contributed greatly to the recent crisis.

We need to recognise that our fiscal system has contributed to that by making savings difficult, bloating the property and fincial services sectors.

We need to tackle the problem as  a whole, not piecemeal. Here’s a start:

• Simplify pension rules and allow people to take a portion of pension savings tax free earlier in life if they need to – this will encourage and increase overall savings
• Allow people to use and reinvest ISA funds tax free if they need to – ie the tax-free pot available stays the same if you need access to funds and then put them back
• Educate people properly so they can make more of their own decisions without being ripped off by the financial services spivs
• Raise CGT by all means, but 50%, or even 40%, would damage investment – and without indexation would leave some people being taxed on losses
• Keep it simple with one rate and allow indexation for assets more than 10 years old – the complexity of indexation is balanced by the fairness
• And…have the same rate of CGT on house sales, but allow indexation and tax-free roll-over into new property – that would reduce the tax shelter and help to make our houses homes rather than financial instruments
• Take away all other tax reliefs on property, such as REITs

Just some thoughts.

Well, are they? And if not, why not? Everyone else’s perks are taxed – and God knows, we need the dosh!

The Labour Party? Remember them? Bunch of tossers who sporadically bugger the country up even more than the Conservatives?

For some reason there is a line of characters wanting to lead this rabble.

One’s called Ed (sic) – presumably ne Edward – Millipede. And this is what he had to say to The Guardian last weekend about his brother, the also-standing Dave Millipede:

“He’s made  a huge contribution in terms of the empowerment agenda. ”

And of himself?

“I have tried to inspire a new generation of young people around the environment.”

Why just young people, Ed? And what’s with this very new Labour/media/quango word “around”?

Do you mean ‘about the environment’?

You see, I’ve got issues (aka a problem) around (aka with) glib career politicians telling everyone what’s what and using ingratiating little buzz-word euphemisms instead of giving it to us straight. Do you guys never learn?

Oh, and a special mention for Dianne Abbot, who on Radio 4’s Broadcasting House praised the new Miss USA. Did I mention she was a muslim?

So here’s the deal. If you are a honky Miss USA, you get scorned by Dianne – beauty contests objectify women etc etc etc. But if you are a muslim Miss USA, you get patronised by her.

Not sure which is worse. But do bear in mind that Ms Abbott is only standing for the Labour leadership because she is a woman. Not because she thinks she would be any good at it – though God knows she couldn’t do a worse job than her predecessors.

Either way, there’s a thousand messages in this little story. May the best person win. And then lose.

I don’t often agree with Lord “Charlie” Falkener (unelected Blair crony, overrated and significantly responsible for the Dome f**k up etc etc), but yesterday on Radio 4’s PM he admitted a major mistake of Blair’s first years was to promise too much – “whiter than whiter”, “servants not the masters” etc etc.

Clegg, he went on, might be making the same mistake in claiming his constitutional reforms were the biggest since 55BC,  or whatever.

Amen to that, brother!

Careful guys. I think I shall just refer to you jointly as Clameron for simplicity. There’s a lot I like about your coalition, but don’t get carried away. AV and what looks horribly like a stitched up voting system for an elected Lords (closed-list PR isn’t much different from appointing peers) – oh, and regulating CCTV – aren’t quite in the same league as 1832, or several other reforms since then if I remember my Ladybird history correctly.

Blair’s rhetoric promised far too much in the mid ’90s, something I constantly pointed out in my Sunday Times pieces. Now Clameron is making the same mistake. Go easy boys. There’s a lot of good will for you at the moment, just as there was for Blair 13 short years ago. But promise too much as you may disappoint.

Clameron may also find that the getting some of these measures through in big bang bills may not be as easy as he thinks. One step at a time, or you run the danger of uniting people who object to one aspect or other of the proposed constitutional reforms.

And don’t think there won’t be opposition. Stuffing the 22 Committe with ministers and placemen will increase, not decrease dissent.

Too high handed and too cliquey was the comment of one overlooked Tory MP as he sobbed into his Bacardi and Coke last night. There is a surprisingly sour mood already among the  backbenches.

Be careful out there. Modelling yourself on Blair need to not run to repeating his mistakes.

Last weekend, Ed Millipede announced he was standing against his brother for the Labour leadership. Lord Triesman made the headlines too – and less well-reported, on Saturday evening Amber Valley Conservatives celebrated the election of Nigel Mills after a massive swing.

Whatever the rights and wrongs of people reporting private conversations – Liam Byrne’s private letter  to his successor was another victim of our cavalier attitude to privacy – Lord Triesman represents much of what has gone wrong with our politics.

Triesman has done virtually nothing in his 67 years outside of politics. A union official and then general secretary of the Labour Party, this former communist turned very new Labour and  became yet another unelected member of a House of Lords which his party had come to power promising to “democratise”.

He then became an unelected minister and thence, a few years ago, chairman of the FA – a post formerly reserved for people who had spent their career in the FA. Presumably the Football Association thought that appointing a Labour time-server would buy them influence. That is symptomatic of the politicisation of large sections of life and the way in which political patronage has created a cadre of time-serving careerists.

On to Ed Millipede – capable, bright, personable. Also glib, a bit oily and a career politician with absolutely no experience of work or life outside of politics – like his brother. Like, some might point out, Dave and Nick. Like so many in the outgoing and incoming Cabinets. Like too many of the new intake of MPs.

And Nigel Mills? Sure, he’s been a local councillor. But he has spent his working life as an accountant. He comes from the the area he represents. No A-list for Nigel – and no financial help from Lord Ashcroft’s pot.

So while A-listers were being trashed in the metropolis with low, single figure swings, Nigel, who has worked the area for years with a dedicated band of local people, got a double-figure swing and swept aside a Labour MP who thought she was in for life.

Thank God we’ve got one or two real people in the Commons.