Friday, 10 July 2015

Budget 2015 - it's as if Gordon Brown never left.

So, the laws of supply and demand have been suspended for a Tory chancellor? Because his "living wage" of £9 an hour by 2020 will (by his own admission) cost jobs. 60,000 of them, according to the OBR. Just as the minimum wage cost jobs for young people. (yes, it did - youth unemployment started its inexorable rise in 2000) so will Osborne's living wage. But the people it hurts most will be the loudest to cheer it. Osborne isn't even pretending this is anything more than a shameless political reach into Labour territory. It won't make people much better off, because tax credit cuts (long overdue) mean the extra money is clawed back by the Government, and it means more tax revenue. Gordon Brown used this trick a couple of times.

Inheritance tax changes further privilege property. This is a policy I once endorsed. But it's the privilege of property in the tax system which is, along with its shortage, responsible for Britons seeing their home as an investment, not consumption. I've no problem with raising the inheritance tax threshold, but make all capital equal.

Hypothecated taxation is the politics of the moron down the pub. We need roads. It doesn't follow that Vehicle Excise Duty (a bad tax anyway -much better to get rid of it and raise more from fuel) should be spent on roads, so to put its proceeds into a "road fund" is idiocy. US roads are funded from petrol taxes, and petrol taxes are unpopular in the extreme. So politicians won't raise them, so US roads don't have enough money, and so bridges crumble. And that's before the "you cyclists don't pay road tax" nonsense. Words cannot describe how bad this policy is.

There were a number of measures I approve of - the changes to dividend taxation seem sensible and make ISAs valuable to basic rate tax-payers once more and the moves to build more homes. But this was a political budget. Osborne has got the big questions right over the past 5 years, and this budget was his reward: Its purpose wasn't the good of the country, but to plunge a knife into the twitching corpse of Labour, by stealing their identity and parking Tory tanks on Labour's working class lawn.

The difference between him and Gordon Brown? Osborne is a politician of Tony Blair's class. It's a privilege to watch such a master of the liars' craft at work.



3 comments:

Shiney said...

And it says it all about GO's priorities that the tax privilege on property (i.e. rent seeking) is being (partially) withdrawn in stages, whereas that on dividends - which are generally a return on investments in the productive part of the economy - are being brought in next year.

AndrewZ said...

Political budgets are normally tactical. They are usually short-term measures to get through the next election. This appears to be a strategic political budget, intended to deliver a decisive blow to the Labour Party. The Conservatives are claiming the centre-left ground that Labour needs to occupy in order to be electable. If they succeed there will be no positions left for Labour to take other than mindless opposition to everything the government does - even when it's something they used to support - or "we'll do the same but better". Many of the party's supporters will want to move further to the left but that would be suicidal. Labour is already losing much of its traditional working class support so a repeat of the 1979-1997 wilderness years would cause it to wither away like the old Liberal Party.

In the short term, Labour's approach will probably be to claim that the government isn't serious about these measures and can't be trusted to implement them properly. That line will fail as soon as the measures announced in the budget do take effect. Labour will then face a crisis that will manifest itself as constant infighting over what direction to take next.

In the long term they will have four options. Firstly, continue to dither and wither until it no longer matters what they do. Secondly, go back to the left and accept that the price of ideological purity is electoral obscurity. Thirdly, bet the farm on identity politics, which is natural territory for many of its supporters, and become the big-budget Hollywood remake of Galloway's RESPECT party. Fourthly, re-invent themselves as a "left-libertarian" party standing for the rights of the average citizen against the overbearing power of the state.

Now it might seem inconceivable that the central planning party could ever choose option four. But if the Tories are evolving into paternalist social democrats then that will become the logical place for an opposing party to position itself. It could also be justified in terms of the party's history, as a return to its roots in the 19th century self-help socialism of Friendly Societies and trade unions that were genuinely run by the members for the members. Of course, the cynic in me says that they will open door number three without stopping to think what they might be releasing.

Jackart said...

AndrewZ. Super comment. Agree wholeheartedly.

There was an error in this gadget