Party Political Animal

Recent Posts

I like Will Hague, but I also think the ‘Hague the Great Lost King’ line of argument has been a tad overdone in recent years.

In the negative column, he is a career politician who has done nothing much in life outside of politics. In the several years I knew him as a fellow MP and minister, I never remember Hague coming out with any significant or enlightening comments, though there were occasional flashes of the dry humour he is now known for; and his years as Tory leader were a disastrous flip flop from liberal reformer to prisoner of the Right, which set back the recovery of the party.

On the positives, Hague was and is clearly a decent and highly intelligent person, he was one of the few Tory stars in the recent years in opposition and he can be very funny.

As for a his sex life, when I was an MP there were always vague and unsubstantiated rumours about him being gay. I never saw or heard any real evidence.

Nor, on the other hand,  did Hague join in the badinage about sex and women which many of the rest of us shared, or the (often pathetic) attempts to get laid (by women) which occupied much of the spare time  of  the (mainly) single MPs. That, of course, may just have been an example of good judgement on his part.

I always felt the likely answer was that Will was pretty much non-operational in that department – ie, like many very ambitious politicians, he put career ahead of sex. When he married Ffion, many of us felt it showed how serious he was about putting the gay rumours to bed – so to speak – and becoming party leader.

Having said all of that, clearly sharing a “twin hotel room” (two rooms, twin beds – what does that mean exactly?) with a young assistant was a major error, as were those rather mincing photos of Hague in fitted white T shirt and baseball hat with said assistant.

The confessional stuff about Ffion’s miscarriage was also a bit more information than really necessary, raising suspicions of the sympathy diversion tactic.

Whatever. Politicians lives should be private unless they parade their family for political ends, or behave hypocritically – or their private lives impinge on their work. That is the small, but persistent lingering suspicion and I have a horrible feeling that there may be more to come on this one.

Want to know how HSBC et all have managed to jack up their profits while the economy flatlines?

For 10 years, they charged me 2.5% over base on my fully secured farm overdraft. Suddenly, last year, in the depth of the very recession the banks helped to engineer, they whacked it up to 20% – for an overdraft secured 200 times over!

“We are realigning all of our non-standard overdraft products” they told me.

So while the base rate was being cut by a factor of 10, the rate HSBC was charging their customers went up by a factor of four. In the process, their margin over base – which they by and large borrow their own money for – soared from 2.5% to 19.5%.

The banks were not solely responsible for the economic collapse – the government’s easy money policies and a tax system which encouraged us to consume rather than save were also responsible.

But now, as a result of a problem they helped to engineer, banks are literally coining it by being able to borrow for almost nothing while stiffing us all on rates.

I know HSBC didn’t directly receive taxpayer money, but they massively benefited from Quantative Easing and low base rates.

Meanwhile, a sector which was close to bankruptcy just year ago, continues to pay more than 2,000 of its executives more than a £1m each a year – in the interests of perspective, that’s far more £1m pay packets than the whole of the rest of the FTSE top 250 UK companies put together.

The previous government did nothing about it – sadly, the new one is doing little better. No wonder poor Vince Cable is looking so miserable!

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.