Tax cuts, then tax rises: an electoral scenario

David Cameron is right:

Gordon Brown knows that borrowing [to fund tax cuts] today means higher taxes tomorrow.

But he’s also wrong:

Everyone knows the prime minister is planning a Christmas tax giveaway, but tax cuts should be for life, not just for Christmas.

The thing about an anti-recession fiscal stimulus is that it can perfectly well be temporary. Then, when decent growth resumes, you can tighten the reins again.

So tax cuts now, presumably targeted at lower earners (and/or rises in tax credits) will need to be reversed later, right?

Wrong. Some fiscal tightening or other will be needed later on – but not necessarily in the same place. And this means there’s no reason for Brown to go into an election trying to claim that no tax rises are on the way.

Imagine this:

In a pre-election Budget, Alistair Darling declares that now the economy is recovering, it’s possible (and desirable) to cut back on borrowing. So he announces a new income tax band for very high earners.

But wait! Labour promised at the last election not to raise the top rate of tax! Surely a move such as this would ruin the Government?

No. I didn’t say they implement the higher tax rate, just that they announce it. The tax change could be set to come in the following year. So voters will still have their chance to accept or reject it as they like.

The package could be sweetened a little by adding to it a small cut in the basic rate of income tax, on the grounds that while the recession is past, many ‘hard-working families’ are still feeling the pinch and deserve some extra help. This will take up some of the money raised by the new top rate, but still allow most of it to go on reducing debt.

The Budget is passed; the election is called. How do the Tories fight this?

First of all, they’d have to take the side of the super-rich versus the vast majority in terms of who’d gain and lose. And secondly, as the policy would be enshrined in legislation (even if time-delayed), it would in effect be the status quo – undoing that always provokes more howls from the losers than proposing different future plans from the other lot. How do they fight it?

I wonder. Could Labour’s electoral chances really be helped by plans for higher income tax on top earners? It goes against new Labour’s founding principles. But these are very different times. Will the post-recession middle class feel more aspirational (against tax rises for the rich in the hope of becoming rich themselves) or consolidatory (supporting whatever will help their finances now)?

Whichever party can best adapt to the new climate will do well.

“I am a fighter, not a quitter”

What do the following jobs have in common?

• Secretary of State for Trade and Industry
• Secretary of State for Northern Ireland
• Member of Parliament for Hartlepool
• and, as of now, European Commissioner for Trade

Something has to give

The most important part of David Cameron’s speech was not any of the extended passages where he told us that he had character and judgement, but this bit:

But we need fiscal responsibility too. So we will rein in government borrowing. You know what that means. The country needs to know what that means.

What it means is that lower spending will be more important than lower taxes. This should disappoint both the slash-the-state core vote and all those who have only floated over in the Tories’ direction after much assurance that public services won’t suffer.

But more substantially, this principle seems very shaky when you judge against it those aspects of Cameron’s “plan” that he’s deigned to tell us about.

The proposal that groups of people can set up new state schools if they don’t like the local ones has some fairly hefty upfront costs, and the supposed benefits are very distant. Paying private firms to get welfare claimants into work will cost more in the short term, and only save money in the long term if there are enough jobs around to significantly reduce welfare rolls.

The inheritance tax cut is clear and unambiguous; the levy on non-domiciles that would pay for it contains much devilish detail, as Alistair Darling can testify from experience. And the council tax freeze will definitely cost money, while the cuts in bureaucrats, consultants and communications that will pay for this are – as are all such proposals from oppositions – uncertain aspirations.

Time after time, the cost savings are much less certain, or much farther into the future, than the tax cuts that they’re supposed to pay for. The so-called ‘sharing the proceeds’ idea can in theory work on all three fronts (paying off some debt, cutting some taxes, avoiding actual public spending cuts – although even just slowing the rate of spending growth is likely to result in services suffering), but unless you have strong economic growth, it takes time to have much noticeable impact.

So if Cameron and Osborne are truly serious about reducing public debt – and they’ve gone to some length this week to convince us that they are – then either tax cuts are going to have to wait quite some time or public spending cuts are going to have to be larger and faster than the ‘compassionate’ rhetoric has suggested.

Perhaps another quote from the speech gives a flavour of Tory policies to come:

I will be asking all my shadow ministers to review all over again every spending programme to see if it is really necessary, really justifiable in these new economic circumstances.

One possibility: they regularly promise not to abolish tax credits. But they’ve avoided, as far as I know, promising not to dramatically cut them.

But an equivalent post could be written about Labour, and how Gordon Brown intends to pay for reducing poverty further, expanding nursery provision, and so on. Whoever wins the next election is going to have less fiscal room for manoeuvre than they’d like.

Labour has been serially worried about being seen as the party of ‘tax-and-spend’; likewise the Tories about being seen as congentical cutters. Despite the many attacks they exchange, neither quite dares to engage the other openly on this central issue. But while the differences between the parties are neither as overt nor as large as in the 1980s, their opposing instincts are still unmistakable.

Not a Heseltine but a Portillo moment

The BBC is reporting a supposedly overheard comment from David Miliband:

The foreign secretary, tipped by some as a future leader, was discussing his speech with staff who told him that it was being given six marks out of ten. He was heard to reply: "I couldn't have gone any further. It would have been a Heseltine moment."

The reference is to Michael Heseltine’s direct challenge to Margaret Thatcher, which succeeded in bringing her down but not in his own victory. As the saying goes, he who wields the dagger never wears the crown.

I’ve just watched Ed Miliband undergo an unhappy interview with Jeremy Paxman on this, in which he took the ‘can’t comment on an alleged remark anonymously overheard’ line; I snorted when Paxman said that the source for this quote was beyond doubt. Funny how media folk are entitled to our total trust without explaining themselves.

But that now hardly matters – the comment is wholly consistent with everything we’ve heard about David Miliband over the past few months. Whether he said it or not, it’s plausible and it will be believed.

No, he is clearly not challenging Gordon Brown directly; it certainly wasn’t a Heseltine moment. But thanks to this report, his desire to replace Brown will be assumed near-universally, endowed with the curious authenticity of something inside speech marks.

It puts him into the same position as Michael Portillo during the Tory leadership election of 1995. Portillo didn’t stand, but it emerged that he’d had a large number of telephone lines installed, in preparation for a late entry into the contest. This signalled to everyone that he wanted the job even though he didn’t want to attack John Major head-on at that time. In the end, Major stayed on and Portillo licked the wounds of his miscalculation.

This reported quote has, whether by accident or design, given Miliband his Portillo moment. It makes his ambition a public assumption. It’s tempting to say that the Milibandwagon must now either speed up quickly or grind to a screeching halt. But I suspect that the result will just be another bout of awkward, pathetic squirming in the media by all the usual suspects.

[Update: While I don’t doubt that Miliband wants to succeed Brown, preferably soon, it’s debatable how much he’s actually trying to push Brown out rather than merely positioning himself. And I think this comment (if indeed he said it) could be cast in quite a different light: he’d made a decent yet unremarkable speech, again, and when this was pointed out to him he gave an excuse for why he hadn’t done better. Just a thought. In a similar vein, the only reason I haven’t unveiled my guaranteed plan to save the world economy is that I don’t want to upstage the policymakers.]

Economy saved as government injects narrative, values and emotional signals into markets

Here’s what Gordon Brown says our priority should be:

all the efforts of our party and our government must be concentrated on the needs of the British people, whose paramount concern is how this week's events will impact upon their families, and how we can help them through this crisis.
… We have acted to secure people's savings, support the housing market, and underpin liquidity in the banking sector. And with our support, the Financial Services Authority has banned short-selling of financial stocks.

But Jon Cruddas sees things differently:

We need policies to tackle the economic meltdown, but most of all we need a politics. … We have to rediscover our idealism and our belief in our founding values

Likewise Polly Toynbee:

It's about more than managing the crash efficiently, it's about sending the right political and emotional signals to people

I’m sure the two of them didn’t mean to sound so airily-fairily dismissive of policies to deal with the financial carnage, but that’s how it comes across. There’s a certain sort of person who cares about politics primarily for the feeling it can provide of being part of a narrative. Brown, whatever his other faults, is not such a person.

(Toynbee also offers the observation that “This is the last make-or-break chance for Labour”, which is unintentionally funny, a classic piece of journalese. There should be a comma after “last”: if so, it would have meant that this chance was both final and make-or-break; as it stands, it says that there have been make-or-break chances before but that this is the last one – a contradiction that illustrates the laziness of the cliché.)

Mangled rhetoric

Let’s bolt those clichés together, shall we?

So instead of repeating the solutions of yesterday we must embrace the new policies of tomorrow and restate the case for our party and our values. Meeting this challenge will not be easy and it will not happen overnight.

Just a couple of semantic points. If you’re intent on not “repeating the solutions of yesterday” then you’re not going to be “restating” a previously existing case but stating a whole new one. And if the new policies you want to embrace are those of “tomorrow”, then I rather fancy it’s going to have to “happen overnight”, or at the very latest by the following nightfall. Otherwise the new policies of tomorrow will have become the old solutions of yesterday and then you’ll have to find another new case to state for the first time. But I do agree that, given such a tight schedule, “meeting this challenge” will indeed “not be easy”.

(Do you really need to be told who writes like this? Although, to be fair, he has a nice line here about the Tory instinct against government interventionism: “You cannot ‘nudge’ your way through a financial crisis.” Perhaps he’s been getting help from a more successful writer.)

Say what you mean

Sigh…

Charles Clarke has said Gordon Brown has a matter of months to improve the standing of the Labour Party or quit as prime minister.
…
Asked on Today what Mr Brown had to do, he said "establish his authority and set a very clear leadership direction". And he said the government's performance must improve "significantly" or Mr Brown should "stand down as prime minister with honour and have a proper leadership election and address the proper issues".
Asked how long he gave Mr Brown, the former home secretary said: "I think it's a question of months really."

I would respect Clarke ever so slightly more if he’d been honest and said:

I don’t think Gordon Brown can improve the government’s performance and poll ratings, and frankly I don’t really want him to. So I’m trying to further undermine his authority in order to guarantee that he can’t recover, so that more people in the party will come to agree with me that he has to be forced out.

Talking down to the voters

David Cameron may have just boxed himself in. He criticises Alistair Darling’s gloomy message about economic conditions, saying that this amounts to “talking the economy right down”, which risks creating “creates a crisis of confidence”.

It is, as he says, unusual for a chancellor to suggest that the economy is improbably bad. But it’s also very unusual for the opposition to buy into the concept of ‘talking the economy down’. How do the Tories now attack the state of the economy without looking like hypocrites? For instance, their first response to Darling was when George Osborne said:

It's not clear whether Alistair Darling meant to tell us the truth about the mess 10 years of a Labour government has left our economy in, but he has certainly let the cat out of the bag.

How is that not talking the economy down?

And another thing: isn’t going on all the time about a “broken society” talking society down? If you give the impression that masses of teenagers go around all the time carrying knives, say, in which direction is that going to “nudge” teenage knife-carrying rates?

What’s Darling up to?

Alistair Darling’s interview has caused a bit of a kerfuffle. He said, among other things, that people are “pissed off” with the government, which is evidently true, and that economic conditions “are arguably the worst they’ve been in 60 years” – while this is the bluntest government assessment yet of the very real problems, that “arguably” surely bears the weight of a lot of hyperbole.

Some think that this may turn out to be a “Geoffrey Howe moment” – an intervention by a former loyalist that could precipitate the PM’s downfall.

Others think that, as these remarks may have undermined Gordon Brown’s imminent political strategy, the result will be Darling’s sacking in the predicted autumn reshuffle.

I’m not convinced. Because another thing he said, most unusually for a minister, was on that very subject:

Frankly, if you had a reshuffle just now, I think the public would say, Who are they anyway? You name me a reshuffle that ever made a difference to a government…And you can't be chopping and changing people that often. … I'm not expecting one imminently. I do not think there will be a reshuffle.

Perhaps Darling’s just angling to keep his job. There’s been reshuffle speculation over the summer, some of which has suggested that Darling might be shown the door. This interview means that such a move would be (a) pre-rubbished and (b) seen as punishment for, as George Osborne puts it, “letting the cat out of the bag” about the state of the economy.

I think that while Darling’s comments are awkward for Brown (not to mention for Darling himself, for the rest of the government, and for those of us party members who think that exaggerated doom-mongering is the job of the opposition), they make it harder for Darling to be sacked anytime soon.

Whether that was his intention, though, I cannot say. Maybe he’s just politically inept and didn’t mean anything by it.

‘The Scottish press conference’

A blasted heath, Westminster. Enter Milibeth, Thane of South Shields, stage centre-left.

Milibeth: Is this a throng of journalists which I see before me, their microphones toward my mouth? Come, let me brief thee.

Reporter 1: Lord Milibeth, are you plotting to become King?

Milibeth: We have got a King. We have got a good King who has got good values.

Reporter 2: But do you seek to force King Duncan out?

Milibeth: I’m not campaigning for anything other than a successful Scottish monarchy.

Reporter 3: Do you think Duncan will still be King at the end of the year?

Milibeth: His leadership has shown itself to be of strong value, and one which shows itself to have brought a team around it who are able to make a contribution. His Majesty will lead us forward and the rest of us have a contribution to make.

Reporter 2: Do you intend to kill King Duncan, though?

Milibeth: The starting point is not debating personalities but winning the argument about our record, our vision for the future and how we achieve it.

Reporter 1: But will you categorically rule out any attempt to kill His Majesty?

Milibeth: Well look, with all respect to you guys, I don’t think there’s much point in doing that. I’d previously categorically ruled out murdering Banquo, and nobody believed me.

Reporter 2: But Banquo was murdered. When will you own up to your role in that?

Milibeth: It’s true that sword crime is a serious problem – although I don’t endorse the scaremongering claims that we live in some sort of ‘broken society’ – but I mourn Lord Banquo’s untimely death as much as anyone else. As to the identity of the culprit, I’m afraid it would be quite inappropriate for me to comment on an ongoing police investigation.

Reporter 3: What of reports that you have been consorting with three vile witches to divine a path to power?

Milibeth: I have regular meetings with many party colleagues. Alan Milburn, Stephen Byers and Charles Clarke have government records they can be proud of, and I’m sure they have a positive role yet to play.

Reporter 1: But you haven’t even mentioned Duncan’s name!

Milibeth: Ah, haven’t you heard? It’s bad luck to utter the name of the Scottish Prime Minister. Now if you’ll excuse me, all I want to concentrate on is getting on with the job of being Foreign Secretary.

Exit, pursued by a barely concealed smirk.

Lancashire not-plot

I mean, really:

A "Lancashire plot" against the Prime Minister appeared to be gathering pace as two backbenchers from the North-west of England urged him to step down and a third questioned his survival chances.

This “plot” consists of: (a) Graham Stringer – yes, the Graham Stringer – saying last Friday that Brown should go, something he’d previously said back in May; (b) George Howarth – yes, the George Howarth – saying over the weekend that Labour needs to think “long and hard” about the leadership, while denying media reports he was collecting names in support of Jack Straw; and (c) Gordon Prentice – yes, the Gordon Prentice – saying Brown should resign.

And the Independent – yes, the Independent – reckons this amounts to a hill of beans. Welcome to summer.

If you want a little more intelligence, you could check out Hopi arguing that Team Brown have been performing badly but that semi-public plotting (Lancastrian or otherwise) is only likely to make things worse, or Don Paskini’s ten terrible pieces of advice for Labour, or Septicisle suggesting that the worst piece of advice of all might be for Brown to keep buggering on.

Meanwhile, outside Westminster…

Like all decent people, I can’t help but obsess over opinion polls and the options facing the Labour Party. But over the weekend, something else had the nerve to happen. Labour’s National Policy Forum talked about, well, some policies. I know, it’s disgusting, isn’t it? But I suppose that’s the sort of thing we have to put up with when the National Personality Forum is in recess.

Anyway, my thoughts on the leadership situation haven’t really changed in two months: the dangers in sticking with Brown are apparent every time he comes on TV, but the costs and benefits of changing are pretty much unknowable. So I thought I might highlight a few things to come out of the NPF (as reported here and here):

• Lower the voting age to 16
• A wholly elected second chamber
• Make the full adult minimum wage available to 21-years-olds (currently you have to be 22)
• Improved redundancy pay
• Extend the right to seek flexible working
• Extend unpaid parental leave rights to parents of children up to 16 (the current age limit is five)
• More preventative health check-ups
• Help with study and training for 18- to 25-year-olds with fewer than two A levels
• More power for hospitals to terminate cleaning contracts with external providers.

Sketchy, obviously, and far from a full programme for government. But there they are. Good? Bad?

Oh, who really cares when we could be out in the sun, or more importantly debating which of Jack Straw and Geoff Hoon should speak first when they go to tell Brown that he should step down in favour of a Miliband-Johnson dream ticket…

(I am actually now going out to sit in the sun. While I’m there I’ll mull over what colour tie Ed Balls should wear when he rules himself out of the running.)

“Dear Prime Minister… er…”

Labour’s 26th-safest seat, Glasgow East, has gone west. Now what?

We are writing this private letter as a group of MPs first elected in 2001, all of whom have been involved in the party and the wider Labour movement for a long time.
…
We have always believed passionately in the same kind of modern, progressive, electable Labour Party that you do.
The permanent advancement of this kind of dynamic, electorally persuasive Labour party is, and always has been, our project as much as yours. And it remains so.
We can and must win the next general election. To do otherwise would be, unforgivably, to fail in our duty to the party and the country.
…
Sadly, it is clear to us - as it is to almost the entire party and the entire country - that without an urgent change in the leadership of the party it becomes less likely that we will win that election.
That is the brutal truth. It gives us no pleasure to say it. …
But we believe that it is impossible for the party and the government to renew itself without renewing its leadership as a matter of urgency.
As utter Labour loyalists and implacable modernisers, we therefore have to ask you to stand aside.

This letter, sent in September 2006 by a group of normally loyalist Labour MPs, helped to prompt Tony Blair to announce his coming resignation.

At the time, Labour was worryingly unpopular. Of the 30 published polls in May to September 2006, Labour was behind in 28 – and in three of these, the party was as much as 10 points behind the Tories.

How things change.

Of the 23 published polls since the start of May 2008, Labour’s best performance (in fact in the earliest poll in this period) was trailing by 11 points. In 11 of these 23 polls, the party has been 20 points or more behind the Tories.

And while, in September 2006, 65% of people thought Blair was doing badly as PM and 31% thought he was doing well, last month the equivalent split against Gordon Brown was 78% to 16%.

So, what lesson should the anxious Labour MPs learn? That changing leaders wasn’t the answer in the first place? Or that changing leaders is now more vital to their survival than ever before?

Luke thinks it’s the economy, and Conor thinks it’s the lack of a clear narrative. There’s certainly truth in both views – but can Labour get through this politically with Brown in charge? And if not, how to get rid of him without making the party look even worse? Whom to replace him with? What the hell to do next?

Food fights

Of all the things Tony Blair did, there were far more serious misdeeds that the one that infuriated me the most. Asked whether he opposed the teaching of creationism in faith school science lessons, he ducked the issue and gave some generalised flannel about how faith schools got good exam results. That really got under my skin.

Gordon Brown has just made me strike my forehead with similar force over an equally minor thing. He’s said:

If we are to get food prices down, we must also do more to deal with unnecessary demand such as by all of us doing more to cut our food waste which is costing the average household in Britain about £8 per week.

Chris Dillow is pretty acerbic on this, noting that people will economise without being told if they feel the need to, that if they don’t feel the need than being told will have no effect at all, and that Brown seems to feel the need to be seen ‘doing something’.

I’d add that it’s not the best of ideas right now to tell people, in effect: ‘You are about to become so painfully impoverished that you will need to save the scraps from your dinner plates to feed your children in the morning.’ Austerity rhetoric is political stupidity beyond belief. It’s not quite saying that we should eat all our food because of the starving kiddies in Africa, but it does evoke the less-well-nourished people of Glasgow East, which Labour held in 2005 with 61% of the vote.

This will collapse, but whether to the point of losing the seat is hard to say. I almost wonder if Labour’s candidate-selecting troubles are a cunning plan to avoid having to actually fight the byelection. Just as David Davis’s win will be rendered hollower through lack of a proper contest, so an internal cock-up that kept Labour out of the ring in Glasgow would be deeply embarrassing for a couple of days – but might at least be less painful than getting crushed by the voters in an ultra-safe seat.

But surely not. Labour will fight the seat – although, perhaps, on an empty stomach.

A dodgy dossier of sneers and smears

The nasty party modern, compassionate Conservatives have produced a dossier on Gordon Brown’s year as PM. It is, of course, highly critical, and nobody could deny that at least some of it hits the mark. But a lot of it is purest dross, often based on the seriously dishonest use of quotes.

A few choice nuggets rather than a full fisking. For instance:

While many countries are experiencing an economic slowdown, Alan Greenspan, the former Chairman of the Federal Reserve, has warned that the UK economy is “more exposed” than the US economy to financial instability (The Daily Telegraph, 18 September 2007).

It’s awfully good of them to put the reference in. It lets you look up what Greenspan actually said:

Britain is more exposed than we are in that regard - in the sense that you have a good deal more adjustable-rate mortgages. Britain has done awfully well. If you look back, it’s been a big surprise. Nonetheless, it’s probably marginally more subject to credit problems than we are.

Which casts things in a rather different light. Also, when asked whether the UK had as serious a prospect of recession as the US, he said:

No, because one of the things that Gordon Brown has been pressing for for quite a long time is flexibility. Unlike even the US, Britain accepts foreign corporations coming in, buying up British assets. It may be one of the most competitive economies in the world.

Exhibit two:

Last June, Gordon Brown announced a new policy of providing “British jobs for British workers”, which he reiterated in his September Labour Conference speech (24 September 2007). But the proposals would be illegal under EU law.

Alas, no. The more intelligent among you may have noticed that “British jobs for British workers” is a verbless soundbite and not a policy. His conference speech remarks were clearly about training and skills rather than restricting the working rights of foreigners. And what he said last June was actually “British workers for… British jobs”. More precisely:

It is time to train British workers for the British jobs that will be available over the coming few years and to make sure that people who are inactive and unemployed are able to get the new jobs on offer in our country.

Third up:

Pensioner poverty higher than in 1997. The number of pensioners living on below 60 per cent of the median income measured before housing costs… is 100,000 higher than in 1997 (DWP, Households Below Average Income, June 2008).

In reality, the number of pensioners below the poverty line so defined is either unchanged or 100,000 lower depending on whether they mean 1996/97 or 1997/98 when they say “1997” (hat tip). But it’s more seriously misleading than that.

This is the number of pensioners below the poverty line. And there are now six or seven hundred thousand more pensioners than there were back then, which means that the proportion of pensioners below this line is significantly down.

And a fourth:

On the day before Gordon Brown became Prime Minister, he said it was “frankly a good thing” that newspapers were briefed on key announcements before Parliament (The Independent, 27 June 2007).

You know the routine by now. What he said, when asked about policies being trailed in the papers, was:

If you think that's happened in the past, I'm sorry. But I think now we live in times when there is more external consultation on the formation of policy, and it's inevitable that there will be some kind of public discussion about policy issues before anyone stands up and makes a statement to Parliament. Frankly, I think that's a good thing. We can't have a return to a purdah system, where the Government refuses to consult anyone on the development of its policies.

But the Tory dossier covers a lot of ground, generally in scattershot fashion, and it certainly scores some legit hits (although some of those are pretty minor). There are also points that are purely differences of opinion, some that are irrelevant and some where the Tories could face similar criticism.

Then, though, it goes into tawdry attack mode.

There’s the ‘year in quotes’ section, consisting of people saying bad things about Brown (except for the ones from Jack Straw and Alan Johnson, which are saying utterly different things from what the dossier suggests). A fair few of them are anonymous, including that old favourite, “psychological flaws”. Nice. Classy.

Next up is ‘A year in pictures’, which reaches the intellectual heights you’d expect. Among the reasons that Brown has been a bad PM is that he “was pictured with his trouser leg tucked into his sock”. Worse, he hit a tennis ball with a “weird style and facial expression”. He was also “pictured outside Downing Street, with his hair apparently on fire”. Worst of all, on one occasion, Brown “looked as if he’d been targeted by aliens from planet orange”. I’m not making this up.

The following section is ‘A year of gaffes, tragedy and farce’, which is a mixture of unsubstantiated gossip culled second- and third-hand from the press, a couple of verbal slips, taking the piss out of his accent, Madame Tussauds not making a waxwork of him, a daft Hazel Blears idea (which went nowhere), an opinion poll, and one of the lyrics in a song he likes.

Then it gets even better. The ‘Jonah Brown’ section explains that Brown is a jinx: his presence is associated with sporting defeats, bad weather and minor injuries among those around him. Actually, only one of these three claims is made. Can you guess which? Does it even matter?

And that’s that. Oh yes, except that David Cameron describes the document as “robust”. Mmm.

It’s perfectly possible to deliver a firm and reasoned argument that Brown has failed in his first year, being critical of his personal qualities as well as his policies. You’d expect the Tories to be quite good at doing such a job. But this ain’t it. It’s cheap, flimsy and nasty.

Goodhart’s law and Brown’s poll collapse

In the middle of a piece about Gordon Brown, Jonathan Freedland says this:

All this came to a head of course with last autumn's phantom election. Besides the machinations clearly designed to give him a poll lead, the uncertainty created a new part of the Brown persona: that he was indecisive.

That short aside, “machinations clearly designed to give him a poll lead”, leapt out at me. I’ve argued before that Labour’s poll leads last summer and early autumn were artificial and illusory, but Freedland’s phrasing here makes me see more clearly some of the reason for this.

It’s Goodhart’s law (usually found in economics): when some visible measure has been used as a surrogate to indicate the level of some underlying phenomenon, and then is targeted directly by policy, it ceases to be a reliable indicator of what it used to be.

In this case, the early Brown strategy of presenting him as the calm, competent leader of the nation - with a flurry of smallish yet nice policy changes - served to shift the voting intention polls a fair amount. But during this period, general satisfaction with the Government stayed very low.

So, for a while, Brown’s newness broke the link between declared voting intention and deeper political attitudes – it produced a shift in the former at the cost of making it a poor indicator of the latter. Which is why, when the Tories got their act modestly together during their conference week, and Brown made a couple of presentational mis-steps, the whole thing came crashing down so suddenly.

As a ten-year Chancellor, perhaps Brown should have known about Goodhart’s law.

This week’s poverty news

On Tuesday, the Households Below Average Income survey for 2006/07 was released. As ever, the Institute for Fiscal Studies went over the small print with a magnifying glass, a hefty dollop of brainpower and astonishing speed, producing on Wednesday morning a thorough report.

Later on Wednesday, Gordon Brown took PMQs in the Commons, where nobody mentioned the poverty figures. On Thursday, Brown held his monthly press conference, where nobody mentioned the poverty figures. I feel lonely sometimes. Oh well.

The headlines, you may have noticed, reported a small rise in child poverty as well as overall poverty from 2005/06, which makes the second year in a row we’ve had some bad news from these figures. Also there was a surprising (to the IFS) rise in pensioner poverty, which it puts down largely to the removal of age-related payments for pensioners in that year, as well as partly because of increased under-reporting of pension credits by recipients in the HBAI survey.

Something really did go wrong
On the rise in the number of children below the poverty line, Cassilis says that “we're looking at relatively small movements around an entirely arbitrary point used to define poverty”, and that “this sort of micro-management based on arbitrary poverty definition isn't really about impacting peoples lives - certainly not on any significant scale”. I almost wish this were right.

Yes, the Government’s headline 60% median income target is an arbitrary line, and when you have a target based on such a threshold, it can distort what you do. But Labour’s progress in reducing poverty – and then the setbacks in the most recent two years’ figures – are much broader than that. You can look at eight different ‘poverty lines’ (here I’m talking about the whole population) and see that the numbers below rose between 2004/05 and 2006/07 – these lines are 40%, 50%, 60% and 70% of median income, each measured either before or after housing costs (BHC or AHC).

If lines, however many, aren’t your thing, then look at it this way: dividing the population into income quintiles, from 1996/97 to 2004/05, the poorest fifth experienced (slightly) faster income growth than either the middle or the richest fifths; but from 04/05 to 06/07, the fastest gainers have been the top fifth and the real incomes of the bottom fifth have actually dropped.

This is a broader phenomenon than precision-targeting followed by target-missing. Alas.

Why have things gone awry over these two years? Unfortunately the IFS gives less detail than I’d like to corroborate this, but it does appear to be largely to do with benefit levels:

given that the majority of net income of individuals in the second and third deciles (roughly those just below and just above the poverty line) comes from state benefits and tax credits, this is a key determinant of what happens to relative poverty.
…
it is notable that child poverty has risen in the two years with particularly small rises in entitlements to benefits and tax credits.

If so, then redistribution works. And less redistribution works less well.

Things can only get better
Yes, my tongue was in the vicinity of my cheek as I typed this heading. But only in the vicinity. Given that rises in benefits and tax credits have been reducing poverty, and that slowing these rises had the opposite effect for two years, we can consider what’s to come given policies that have come into place since 2006/07 and those that will start in the next year or two:

IFS researchers predict a fall in the numbers of children in poverty [from 2.9 million in 2006/07] to 2.2 million (using incomes measured BHC) in 2010–11

That’s not far off double the average rate of fall over the preceding eight years. And yes, this is looking at that arbitrary poverty line, but I say again that it’s just not possible to get that many families across a line without having significant real improvements to their living standards and those of many others. Labour’s campaign against child poverty stumbled, needlessly, but it hasn’t collapsed; in fact, it looks like it’s already back up and running again. However, we won’t know for sure what progress is made until the figures come out in late spring 2012. That may not be much political use to Gordon…

It’s also worth mentioning that the Government isn’t simply trying to chuck ever-increasing amounts of taxpayers’ money at poor people. Just as the Tories aren’t really going to cut all the poor off without a penny, so Labour hasn’t exactly been avoiding more punitive and pro-active measures to get people into work. There are big differences in emphasis, of course, but more solid comparisons are hampered by the facts that the Government supertanker turns slowly, and that the Tory polices are still often elusively vague.

One contrast: in 2006/07 a workless lone-parent household had a 57.5% risk of being below the 60% BHC poverty line. Moving into part-time work takes that risk down to 19.4% and full-time work down to 7.4%. Becoming a two-parent household, though, takes the risk down to only 46.6% if either or both parents work part-time, and 20.2% if one works full-time and one not at all. It seems that promoting employment is a better way to cut poverty than promoting marriage.

Some are more unequal than others
‘Inequality’ is a tricky beast to define, and the IFS looks at a number of different measures of it. It finds that the ’90:10 ratio’ – the income of the 10th richest percentile to the 10th poorest – has varied a bit but is basically unchaged under Labour. Likewise the 90:50 and 50:10 ratios. So income inequality for the middle 80% has remained pretty constant. It’s actually quite an achievement for Labour to have engineered continuing economic growth where the bulk of the population participate equally – under the Conservatives, periods of growth involved a general rise in inequality right across the spectrum.

On other measures of inequality, such as the Gini coefficient, there have been slight rises under Labour. What this means, in combination with the steady 90:10 ratio, is that the very richest are speeding away from the rest of us, and the very poorest aren’t keeping pace (although in absolute terms they’re mostly better off).

The IFS recently published a study (noted here) of the super-rich and how they get their income; a future paper, looking at the ‘super-poor’, was hinted at. Soon, I hope. It’s important to know what’s going on in these people’s lives that prevents them from getting more income – indeed, whether they’re even the same people years after year (see below) – and how things could be improved for them.

Poverty is becoming less of a trap
One other silver lining from the figures [PDF, table 7.1] is that regardless of the number of children in poverty in any given year, there’s more ‘churn’ than there was under the Tories – that is, fewer of those who are poor are staying poor for long periods. One might think that as the proportion of people below a given poverty line falls, you’re left with a ‘core’ who are harder to shift at all. That’s not supported by this data.

This graph (using my calculations from table 7.1 here and table 4.1tr here [PDFs]) shows the percentage of children in households below 60% of median income who have been in that same position for at least three out of the preceding four years, starting with the period 1998-2001 and running to 2002-05 (BHC in blue, AHC in red):


Child poverty (at least on this measure) has not only fallen, but those who still below the threshold are spending less time stuck there.

Be bold and stick to your principles, except when I don’t agree with them

Andrew Rawnsley, whose columns I generally rate pretty highly, performed an interesting two-step yesterday. He has some advice for our beloved PM:

Gordon Brown has been a much more impressive leader, even to those who object to where he is leading, when he has taken a principled position and argued for it. In the pages of The Observer a fortnight ago, he wrote a passionate appeal in support of the government's legislation on fertilisation and embryology. He didn't hedge and he didn't trim. He made his case and he did so rather persuasively. The government went on to win on a free vote.
… Conviction convinces. Drift encourages the sort of anarchy that is beginning to break out in his party as various factions try to pull the government in different directions. The mass of Labour MPs in the middle would be grateful simply to be given a clue where they are supposed to be heading.
When Mr Brown addresses his troubled backbenchers tomorrow, their greatest yearning will be for the Prime Minister to articulate a clear sense of purpose and direction.

Brown clearly agrees, for in today’s Times he does exactly that:

Some have argued that I should drop or significantly water down the 42-day limit. But having considered carefully all the evidence and arguments, I believe that, with all these protections against arbitrary treatment in place, allowing up to 42 days' pre-charge detention in these exceptional terrorist cases is the right way to protect national security.
That is why I will stick to the principles I have set out and do the right thing: protecting the security of all and the liberties of each; and safeguarding the British people by a careful and proportionate strengthening of powers in response to the radically new terrorist threats we now face.

Huzzah! One may well “object to where he is leading”, but there’s no doubt that he’s articulating “a clear sense of purpose and direction”. Rawnsley must be delighted.

But wait! What’s this I see towards the end of Rawnsley’s column?

Where there are principles worth defending, he should do battle for them. Where he finds himself besieged because he has made a miscalculation, he should mount the most graceful retreat that he can manage.
In my view, he would be right to listen to those of his colleagues who are arguing that he needs to rethink the anti-terror legislation. A good case in principle has never been made for extending the detention of terror suspects without charge from 28 days to 42 days.

So that’s clear, then. Be a bold, principled leader when the commentariat and your backbenchers will allow you to.

Labour’s predicament

More questions than answers, I’m afraid…

Is Brown really the problem?
Labour’s underlying unpopularity pre-dates Brown’s accession to Number 10. The Iraq war more or less marked the point at which the Government stopped being able to shrug off mistakes and failures and attacks and sheer bad luck. Blair’s political skills only grew in his last couple of years, but by then he’d lost the ability to reap popularity from the use of those skills; by contrast, the Tories finally got themselves a leader who had the skills needed to draw support away from Labour.

For a brief while, Brown pulled Labour out of the hole, but then the ground next to the hole gave way and the result is now an even bigger hole. Thanks to his own cock-ups and singular lack of presentational talent, he’s now a significant part of the problem.

Can Brown change?
This is really three questions rolled into one, and two of them are beside the point. (a) Can Brown change who he is? Of course not. (b) Can he change the way he acts as PM? Probably, but only to a degree. The question that matters electorally, though, is: (c) Can he change the way he is perceived? And the answer is surely: not much, not any more. It would take a national crisis dwarfing the upsets of last summer – and for him to handle it very well – for that sort of shift to happen. Doesn’t seem likely. So…

Should Labour get rid of Brown?
There has been a torrent of commentary this month about whether he should go; a majority of what I’ve read thinks either yes, ASAP, or probably, later in the year. But a surprising proportion of these columns and blog posts don’t suggest who should replace him, nor do they have all that much to say about what a new Labour leader should do to regain popularity.

I suspect that things won’t really get any worse for Labour under Brown. But there may not be much scope for them getting better, either. If his personal image is now irreversibly tainted then whatever he does won’t count for much. I’m not sure how big an if that is, but it’s been getting smaller with every month that’s passed since October.

But getting rid of him could be very costly. A full frontal challenge, with or without a candidate starting at its head, would leave blood all over the floor; it also seems unlikely, now that Brown’s survived this weekend with the Cabinet rallying round him. And another new PM mid-term? Wouldn’t it make the Parliamentary party look ridiculous to abandon the man they overwhelmingly backed just last year?

Why and how would he go?
What would be the reason given for turning on Brown? Just his poor poll ratings and lack of charisma? That might work for the Lib Dems (though I’m not sure it does), but for a governing party to try that would be met with contempt.

Martin Kettle asks: “who is going to be Labour's Geoffrey Howe?” But Howe’s attack on Thatcher, which brought about her downfall, was not about personality or popularity; it was about serious policy differences on Europe and how she managed her Government. A challenger would need a substantive, ‘legitimate’ critique of that sort.

If Brown were to stand down himself, presumably after discreet yet ‘full and frank’ discussions with his Cabinet and former backbench supporters, that would make things smoother. It also seems likelier – although maybe not by that much.

Either way, the pressures for a general election within a few months would be immense, so the new leader might have little time to make an impression. That could be either a handicap or an opportunity to make virtue of necessity and go for an all-guns-blazing ‘big push’.

But it’s hard to do a cost-benefit analysis when you only know what half of the ‘replace Brown’ plan involves.

Who would take over?
There’s talk of Alan Johnson or Jack Straw as a ‘caretaker’, to lead the party to as limited a defeat as possible, whereupon the younger generation could get to work on rising from the ashes. That won’t work. An opposition party can get away with putting in a caretaker leader if all that’s expected of it is to improve a bit on its previous poor showing – as with Michael Howard. But for a Government to do that would be rightly seen as running up the white flag.

To stick with a perceived loser can be understood as being due to inertia and loyalty, and with Brown you get the sense that he’d willingly fight the Tories to his dying breath. But to go to all the trouble of replacing him with someone who’s seen, even before the start of his candidacy, as someone intended to steady nerves and lose gracefully… what would be the point? What value a safe pair of hands if the ball has already been dropped? The defeat might be more graceful but it’d be no less big.

So there’s the younger generation of ‘bright young things’. If one of them thinks they can turn things around for Labour, then best of luck to them. Maybe one of them could (David Miliband seems by far the most credible). But if they think they can’t, then why would they want to captain the post-iceberg Titanic?

But then what?
And the bigger question remains: what would any new leader do to deal with the underlying dislike of this government that’s been growing since 2003? A personable face is important but no substitute for a political-governmental strategy.

How can Labour win?
This is perhaps the fundamental question that all the others lead up to. But it’s actually the wrong question, for two reasons. First of all, it’s mesmerising. Labour supporters look at the Tory poll leads, at the mass graves of their local Labour councillors, at last week’s byelection swing and at Mayor Johnson, and try to imagine what might possibly be able to overcome all of this. They stand, like deer in the headlights, paralysed beyond muttering words like ‘change’ and ‘listen’. Some trot out a prefabricated list of their own pet policies, but I’m not sure they really think they have a workable plan for scaling the mountain. I know my own list isn’t one.

So forget about trying to do something called ‘winning’ – the concept is just too daunting. This brings me to the second reason: there isn’t a qualitative difference between ‘winning’ and ‘losing’ a general election. There are degrees. Show me any opposition leader or any Prime Minister who wouldn’t prefer to have another dozen MPs. The phrase ‘fight for every vote in every seat’ is a tedious mantra, but that’s what needs to be done. Not trying to ‘win’, but trying to maximise Labour’s vote and get as many seats as possible. If that still leaves the party in opposition, so be it; at least no effort will have been spared. But trying to do something that seems impossible means that people’s hearts won’t be in it and that the strategy will be feeble and clumsy.

What chance is there?
I don’t know whether Labour can manage to get a majority in (presumably) 2010. Maybe not: it looks less likely than it did even two months ago. But the party is much less divided than the Tories in the mid-1990s, and it hasn’t been as far behind nor for as long. So opinion is not as firmly settled as it was in 1995 – there’s more scope for a comeback, at least of sorts. Perhaps there could be enough innovation to make people really think again about Labour. The economic slowdown may be briefer and milder than feared. The Tories will make mistakes, some of which may be serious; certainly, the constructive ambiguity in many of their policies will come under more critical attention.

The only way to know how much ground can be recovered is to go for it.

Finally, a question that makes all the above look petty. It’s one for Brown, for the ministers talked about as successors, for the anxious backbenchers: imagine, just hypothetically, that you wake up tomorrow morning to find that you have two years in government ahead of you.

What do you want to achieve?

Crewe and Nantwich: comparisons and consequences

In the 1992-97 Parliament, there were three byelections in Conservative seats where Labour was placed second. Labour won them all, on swings of 29.1% (Dudley West, Dec 1994), 22.1% (Staffs SE, Apr 1996) and 17.2% (Wirral South, Feb 1997) – an average swing of 22.8%

Yesterday in Crewe and Nantwich, the Tories won on a swing of 17.6%. Not quite up to early Blair standards, but definitely getting into the ballpark.

Yesterday’s result has made the predictable waves – it’s being reported as something revolutionary, and even as professional a poll-watcher as Mike Smithson has been inspired to come off the fence and predict a Tory majority at the next election.

I don’t think this result tells us anything we didn’t already know, just as the council results earlier in the month only added to an increasingly clear picture of Labour unpopularity. But, as I said about those results, this byelection will ‘send a message’. Not to the Government – if they don’t know they’re unpopular by now then they never will – but to other voters. The result, and the breathless ‘first-time-in-30-years’ coverage of it, will communicate the message that real people are now willing to switch from Labour to Tory in a real Parliamentary election.

There’s a demonstration effect at work: once people see that others really are voting for a previously unpopular party, then their own willingness to do so will increase. Expect a further Tory poll boost, at least in the short term.

This means that anything remotely ‘relaunchy’ from Brown will be completely disregarded if it takes place during Cameron’s current afterglow. Cameron, on the other, hand, would be well advised to unveil something that looks serious, sober and substantial while he has this extra burst of sunshine. Triumphalism, while understandable, would be a mistake.