Archive for January, 2012

Taxes or cuts?

So Stephan Hester is not to take his £1m share bonus and Mr Milliband claims it as a victory of sorts. He even goes further and says that Labour will put further pressure on RBS executives to rein in excessive bonuses. 

Labour described RBS employees as public sector workers and that the party would be taking a close look at the bonuses offered to the bank’s senior staff.

Now this is all fine and dandy, and lets face it, plays well with most of the voters. God knows the Leader of the Opposition could do with getting a few things right with the electorate. 

Certainly on this issue he wrong footed Mr Cameron who was seen as slow to react to the anger felt by many at the obscene size of this and many an other bonus.

But by pinpointing on the bonus culture they’re missing the main point. Labour have for far too long been afraid to tackle the whole issue of taxation.

If the rich had to pay taxes on their income and wealth the bonus payments would not matter as much. But of course they don’t. 

It took an American Billionaire to point out the inequity of the system. Warren Buffett, a billionaire investor, famously complained that his secretary pays a higher rate of tax than he does.

Hence, Mr Obama in his state of the Union address last week making a renewed call for his Buffett Rule – a principle that millionaires should not pay a lower tax rate than typical workers.

Far from following a similar line Labour in their period of office went  in the  opposite direction. 

Their policy on taxes, helped the rich at the expense of the poor. Taxes on income were reduced and the emphasis was on indirect taxes such as VAT which bore heaviest on those least able to pay.

Both parties are still wedded to a deficit reduction programme that’s about cuts to the public services and public expenditure generally and not about the government increasing its income through the taxation system.

In re-election year President Obama has recognised the importance of fairness when he said last Tuesday, “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by.

“Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.’

Surely a message that Labour ought to take on board. But disappointingly, Milliband has been very quiet on the issues. 

According to the test of public opinion by polling organisations voters would welcome a wealth tax on the rich, mansion taxes and what Europe are about to introduce, a tax on financial transactions. 

So a fair taxation system is what many in the country are crying out for. Why are Labour so reluctant to embrace redistribution of income and wealth. Are they finding it difficult to break the habit of of kowtowing to the rich. 

Perhaps, Mr Miliband ought to reflect on what his happening over the channel There the Socialist candidate for President, François Hollande is pushing ahead in the polls with a policy promise of taxing the rich and then putting  the money into public services. 

A lesson there, young Eddie, my lad.

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Who’ll lift the gloom

There was no snow to blame this time so it must be the eurozone’s fault for the 0.2% contraction in the UK economy. 

‘It’s not me guv.’ was David Cameron’s response to our shrinking economy. With our economy going backwards, yesterday, both our Prime Minister and Chancellor chose to blame the euro crisis for the rotten state of our economy.

But, the fact of the matter is, that the economy has been flatlining since 2010 a point that Ed Miliband was quick to jump on in yesterday’s exchanges in the House of Commons.

Even Sir Mervyn King is predicting that the road out of recession is going to be ‘arduous, long and uneven.’  

The austerity road that the government was determined to travel on is in large measure the cause of the country’s economic malaise. 

Despite the International Monetary Fund urging the government to ease up on the cuts agenda, the government has persisted with it, even when all the evidence points to it making matters worse.

In such circumstances you’d think that Labour would be shooting at an open goal. Indeed Ed Ball’s predictions have come true. He’s been warning for a while that the government’s policy would result in bringing about that double dip recession. 

Yesterday’s figures surely point to that state of affairs being just round the corner and there’s plenty of anecdotal evidence that we’re already there.

But the opinion polls show that Labour are not making an impact. Voters still believe the rhetoric of the Chancellor that we’d be just like Greece if we hadn’t gone down the road of severe cuts. 

It is certainly true that the credit agencies have been sympathetic to the Osborne view of the world. The policy the Chancellor sold was that cutting the public sector was the way forward. 

But, and it’s a very important but, these agencies swallowed the Chancellor’s line that parallel to the severe cuts in the public sector, the private sector would see real growth. 

This has not happened. An austerity policy without robust growth results in higher deficits. So yesterday Britain’s national debt hit a massive £1trillion. This alongside unemployment of over two and a half million. 

My prediction is that credit agencies will reflect this. You don’t need to be Mystic Meg to see Britain following France and loosing its triple A rating. 

Whether the Opposition are able to capitalise on these developments is highly unlikely. 

Miliband’s leadership has been inept in many areas not least in their approach to the economy. 

Last week was a prime example of them  shooting themselves in the foot. They confused the voter by talking about what they would or wouldn’t do after the election. 

Their new line is that they will stick with the present governments cuts. For months they have been attacking the very same government for cutting too fast and urging them to grow the economy. It seems that they’re been advised by Confused.com

A party that doesn’t offer hope, and persists with the same solutions as the existing government, will not win support. The voters will stick with the devil they know.

Miliband will have to shape up and soon or it won’t be just Plaid Cymru that will be holding a leadership election this year. 

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New arrangements?

Alex Salmond will soon be pushing the line as to how Scottish independence will benefit the English when he delivers the Hugo Young lecture this week. 

His line will give many an English MP food for thought, ’˜cos he’ll sort out the West Lothian question for them straight away. Independence, so no more Scottish MPs, full stop.

It’s also this week that Mr Cameron’s commission on relations between between the English and MPs from the devolved countries gets underway. 

Coincidently, Cardiff University announce a comprehensive study of the English and their attitudes to devolution. 

Not suprising they don’t like it. Why? Because they feel they’re missing out, getting a raw deal.  

The facts don’t back up this up, by any objective measure England is still the most prosperous of the nations. But, and its a mighty big but, in politics perception is more important than objective reality. 

If they think they’re getting a raw deal, a raw deal they’re getting. It’s enough of a reality to get English politicians champing at the bit for the government to do something. 

Now a commission that reports sometime in the future ain’t going to satisfy back bench Tories.  No, they’ll want action this side of the next election.

What action? That’s the question. 

Ah, enter stage left Salmond. He offers the solution. No, not necessarily the independence that he and his party crave.  But that second question that Mr Cameron doesn’t want on the ballot paper, ‘devo max.’

The study by Cardiff and Edinburgh Universities show that eight out of ten of those English voters questioned, support full fiscal autonomy. In other words, ‘devo max.’  

At the same time those questioned say that MPs from these devolved countries should not by voting on English laws. So what’s the solution?

There are only two possibilities, either setting up an English Parliament, which Cameron has already ruled out or some other more sustainable arrangement. A Federal system.

Now Carwyn Jones flagged up that new arrangements would have to be made if Scotland left the UK. That may not happen, but the pressure from England may make ‘devo max’ the answer for all the devolved adminstrations. And yes, a new compact between the nations of these islands would then have to be negotiated. 

‘Devo max’ is the last thing that Labour would want for Wales. No longer would the English be bailing Wales out. The country would have to be self sufficient. 

Now there’s a challenge for Carwyn Jones, making Wales stand on its own two feet.

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