Monday, September 29, 2008

Council Tax Emerges as Defining Battleground at Next Election

George Osborne’s conference announcement that the Conservatives would plan to freeze council tax bills over a two year period is a thought provoking, yet timid incursion into the debate surrounding council tax.

Let us be clear about the nature of the proposal, one that is small in scale but intended to be large on political impact. Osborne estimates that the freeze on council tax bills will cost in the region of £1.5bn over the course of two years. He emphasises that the Conservatives would be able to fund this proposal by trimming government consultancy budgets; by £270m in the first year and £770m in the second ( The message that Osborne and the Conservatives will be keen to emphasise is that this modest proposal will not involve a cut in frontline services. The Cameroons are desperate to avoid a repeat of the 2005 election campaign, in which Labour relentlessly attacked the Conservatives as a tax cutting, service cutting party. As far as this aspect of the debate goes, I think it is clear that Osborne’s proposal is modest in nature; the new leadership has successfully resisted a right wing clamour to offer upfront, unfunded tax cuts. It would be a mistake to portray this Conservative party as one that will slash public services in the way that predecessors may have threatened to do.

So, I accede that this is a responsibly costed proposal and one that doesn’t pose a grave threat to local services. The next question to ask is whether a two year freeze on council tax is a policy that will really make an appreciable difference to those who have been hit hardest by mounting council tax bills. It is here that I don’t believe that the Conservative proposal stands up to scrutiny, particularly by comparison to the more radical and progressive alternative favoured by the Liberal Democrats. The outright ‘freeze’ on council bills that Osborne proposals will give a small reprieve to all taxpayers, from the richest to the poorest. A welcome reprieve perhaps, but not a policy that even attempts to deal with the fundamental flaw of the council tax.
The essential problem with the council tax is that it is a regressive tax, one that taxes people on the value of their homes, not their ability to pay. The damning reality of the council tax is that those on low and middle incomes pay a far greater percentage of their income towards this tax, than those on higher incomes. In 2005, council tax accounted for 4.7% of the income of the bottom 20% of households and just 1.4% of the top 20% ( The Conservative proposal does absolutely nothing to tackle this gross inequity. Osborne’s proposal will do nothing to alter the status quo. Under his ‘freeze’ proposal, those on the lowest incomes will continue to pay proportionately more of their income in council tax than their more affluent neighbours.

It is only right that I draw attention to the governing party’s stance on this issue. I will be brief, as Labour’s record on reforming the council tax has been one of contemptuous inaction. As has so often been the case with this government, Labour commissioned a review into council tax, only to dismiss the findings. The Lyons Report was rejected by Gordon Brown, who was seemingly fearful of overseeing any meaningful reform. Subsequently, Labour has said nothing on council tax, seemingly happy to allow this deeply iniquitous state of affairs to remain.

It is only the Liberal Democrats who have made a compelling case for reform. Their plan to replace council tax with a local income tax is openly ‘revenue neutral’. This means that under their proposals, the lowest paid will pay less and the wealthy will pay more than they currently do. As Lyons said himself in his review for the government, “fair taxation is based on the ability to pay”. The Liberal Democrat proposal ensures that a clear majority of people are better off and that low earners are relieved of what is currently a disproportionate and unfair burden.

Osborne’s intervention today shows the electorate that they will have 3 clear choices on council tax by the time of the next election:

Labour offers us a commitment to the status quo; no reform, no change, no progress.

The Conservative party offers us all a short term bribe by virtue of their council tax ‘freeze’. An interesting development, but one that makes no attempt to change the deeply regressive nature of the council tax.

The Liberal Democrats offer open and honest reform. A shift to a local income tax that will relieve a huge burden from low and middle income earners who are currently hit so hard by the council tax.

Which option will you choose?

Thursday, September 25, 2008

As the Global Economy goes 'Nuclear', Labour's fiscal plans for Nuclear Power look Ever More Irresponsible

As the Global Economy goes 'Nuclear', Labour's fiscal plans for Nuclear Power look Ever More Irresponsible...
-A view on the £12bn takeover of British Energy and EDF's plans for a new generation of Nuclear Power stations.

In a yet another fast paced news day, it may have passed people by that British Energy is on the verge of being bought out by French energy group EDF

As the guardian article emphasises, this paves the way for EDF to oversee the development of a new generation of Nuclear power stations. The government are active cheerleaders for Nuclear Power, Gordon Brown is cited in the Guardian as insisting that this power source is, "crucial to the country's energy security". There are countless arguments against Nuclear Power and I am proud that the Liberal Democrats have led the debate in opposing their return. I don't wish to list all of the compelling argument against the Nuclear industry, but to focus on one facet in particular; cost.

Nuclear Power stations remain prohibitively expensive to build, manage and sustain. 'Not to fear', exclaim the government; they assure the electorate that the entire project will be funded by EDF and this new Nuclear era can be forged without cost to the taxpayer. Of all New Labour's audacious claims, this must be one of the most unbelievable.

In the past, Nuclear projects have invariably had to be bailed out by governments. The inherently risky nature of the sector is underpinned by the fact that British Energy had to be rescued by the government as recently as 2002. Add to this the experience of those who are also embarking on a new Nuclear future. As the Guardian reports, the first plant to be built in Western Europe for 30 years is in Olkiluoto, Finland. This project has suffered from spiralling costs, far higher than the original estimate. As we all know, the UK doesn't exactly have an A* record of keeping its headline projects within budget...From the Millenium Dome through Wembley (which was also under foreign ownership) to the Olympics; we have a glittering record of going over-budget.

Now consider our current economic climate. Analysts seem to agree that the global credit crunch is unparallelled in severity, save the depression of the 1930's. With the nationalisation of Northern Rock this government has already had to use vast sums of taxpayers money to prop up a failed institution. The country simply cannot afford for a failed Nuclear scheme to go over budget in the same vein. The EDF proposal is high risk for so many reasons and in our current state it is surely not a risk that Gordon Brown can viably afford to take...

Wednesday, September 24, 2008

Labour's 'outbreak of unity' and why a rebellion would have been more honest

The dust settles on what Ed Miliband described as the 'speech of Gordon Brown's life', Harriet Harman triumphantly hails the 'Labour fightback' all is well with the Labour government again...

With trust so dangerously low in the government, I cant believe that the public (or the media) could bring themselves to believe that there has been a sudden outbreak of unity amongst Gordon's cabinet. What I find genuinely surprising is that the Labour strategists believe that a renewed message of unity and experience under the Brown banner is really the way to move forward.

We all know that the reality is markedly different, Ruth Kelly's surprise resignation reaffirms to me the mood of discontent and unease that encircles the Prime Minister. Her resignation is just one chapter in the story of a conference dominated by whispers against Brown, from Miliband's 'Heseltine moment' to John Cruddas attempting to drum up support for a new 45% rate of tax.

The plotting goes on, from Miliband's Blairites to Cruddas' disaffected left wingers. Barring a miraculous and unforseeable poll turnaround, Gordon Brown remains on borrowed time. There are so many potential flash points between now and a likely 2010 election, I am convinced he will not survive to lead the party into the next election.If that is the case, then this shallow and short-term 'outbreak of unity' will look even more ill advised a few months from now.Particularly if Brown is ousted as soon as after the Glenthroes by-election.

The Labour party ought to have used this conference as an opportunity to oust Gordon and launch an open and honest leadership debate. Yes, the timing would not have been ideal, but there never is an opportune time to knife an incumbent Prime Minister. This 'show of unity' is dishonest and shallow. It is one that I am confident the electorate will not buy.

Perhaps it is not time for a novice Mr Brown, but it is not the time for a disunited, split cabinet to continue to govern either.

Saturday, September 20, 2008

A Poll for Liberal Democrat Activists to Cheer...

A Poll for Liberal Democrat Activists to Cheer...

No, Im afraid I don't bring news of a post conference poll that shows us ahead of the Labour party, all in good time...

I am referring to the publication of a fascinating marginals poll, unique in that it has a sample size of 34,000.
The headline news from the poll is that the Conservatives are on course for 146 seat majority and that Labour's support in the marginals has totally collapsed.

On surface value, the forecast that the Lib Dems are on course to lose 19 seats does not make for pleasant reading and would seem to be at odds with my title. However, the real story of this poll from a Liberal Democrat perspective is that a combination of the 'incumbency factor' and tactical voting will ensure that many of our MP's are in a strong position to defy the national Conservative tide.

The poll clearly shows that the party benefits hugely from our ability to convince Labour leaning voters to switch to the Lib Dems in constituencies where we are either the incumbents or the main challengers to the Conservatives. The third party squeeze is a message that we have perfected over the years; it is not something that can be delivered from on high, but can only be mastered by constantly reminding the local electorate that regardless of the national situation, the battle in their constituency is a 'two horse race'. As Lib Dems across the nation know, this message is constantly driven home in the form of focus leaflets and targeted mailing. Without this local campaigning edge, our squeeze message would never work. It is a testament to Liberal Democrats across the country that we are so effective at this practice.

As this poll makes clear, the Liberal Democrats are far ahead of either Labour or the Conservative party at applying this squeeze message and it has been particularly successful in the South West, where we have been relentlessly targeting the Labour vote since the mid 1990's.

The poll also shows that there is room for improvement, in honing our squeeze message in many of the new Lab/LD marginals. Our national advance in 2005 created marginals between us and the government that would have previously been considered safe Labour seats.

The task now is for campaigners in places such as Liverpool Wavertree, Hampstead and Kilburn and the City of Durham to convince the local electorate that the Liberal Democrats are the only viable challengers to Labour in these seats. If the local activists in these areas can fashion local campaigns similar to those in the South West (albeit with different opponents) then I am convinced that we can secure sizeable local swings and win a string of seats from this discredited, tired and directionless Labour government.

Bring on the election and bring out the bar charts, 'only the Lib Dems can win here!'