Showing posts with label Budget 2010. Show all posts
Showing posts with label Budget 2010. Show all posts

Saturday, June 26, 2010

Playing for the highest stakes

Whenever we journalists describe something as a "political gamble," or even a "huge political gamble," I sometimes think we need to go and take a lesson in the avoidance of cliché.

The fact is, all political decisions require an assessment of the balance of risk, and in that sense, all political decisions are gambles to some extent or another.

Delaying the general election until moreorless the last possible moment was a gamble for the then Prime Minister Gordon Brown, for instance.

He was gambling on the fact that the economy would pick up sufficiently before 6 May to show the electorate that his prescriptions were working. It wasn't that far away from coming off.

The gamble unveiled by Chancellor George Osborne in his first Budget on Tuesday, however, was of an entirely different order.

This wasn't just a gamble with his own future, or that of the Con-Lib coalition. It was a gamble with the future of the whole country and the jobs and livelihoods of millions of its people.

The debate over the Budget has thus far focused on two issues. First, whether it could reasonably be called "fair" and "progressive," and secondly, whether or not the £40bn extra spending cuts and tax rises were avoidable.

All I would say on the first point is that it depends how you define fairness. Some will say that the rise in VAT to 20pc is fair because it will affect everyone in the same way, while others will say it's unfair because it will disproportionately hit the poor.

The more illuminating debate surrounds the second point – whether this Budget was indeed unavoidable, or whether these cuts are at least in part ideologically motivated.

As I noted last week, the government's attempts to lay the blame for the cuts at Labour's door has aroused the opposition from its post-election slumber and forced it to stand by its own, more limited deficit reduction plan.

The really difficult thing is that no-one knows who is right about this. There is no clearer consensus among the economists about how fast the deficit should be cut than there is among the politicians.

In short, it's a case of suck it and see. We will only find out the answer once we have been there and done it.

Whatever the outcome, it is no exaggeration to say that the politics of the next decade and beyond will be shaped by it.

If Mr Osborne's strategy works, and he succeeds in bringing down the deficit without causing another recession, then David Cameron will almost certainly win a second term and probably, this time, with an outright majority.

But if it he is wrong, the current political status quo will be transformed

The coalition's political honeymoon will come to a swift end, and Mr Brown will start to look not so much like a failed leader as a lost leader, or a prophet without honour in his own country to use a Biblical analogy.

A vindicated Labour Party would then be on course for a victory at the next election every bit as crushing as the one it achieved in 1997, four years after the last Tory government's claim to economic competence was swept away by Black Wednesday

The Conservatives could be out of power for another generation, while their Liberal Democrat collaborators may well be wiped off the political map entirely.

While some on the left might welcome this apocalyptic scenario on the grounds that it would be good for the fortunes of the Labour Party, the cost in terms of human misery would surely be too great.

For that reason, we'd better all hope that Mr Osborne's great gamble does indeed pay off.

free web site hit counter

Saturday, March 27, 2010

Ghost of Callaghan strikes again

With the election drawing ever closer, it is hard to say which of the three stories which have dominated the political agenda this week will have done Labour’s chances of a fourth term the most damage.

In a Budget week that was never going to be an easy one for the government, its cause was hardly helped by the revelations surrounding North Tyneside MP Stephen Byers last weekend.

The former Cabinet minister was forced into the humiliating position of having to refer himself to the parliamentary standards commissioner after describing himself as a “cab for hire” to an undercover reporter probing political lobbying.

As the headline on Monday’s Journal editorial succinctly put it: What a way to finish a political life.

By admitting that his initial claims to have persuaded Transport Secretary Lord Adonis to go easy on National Express after it defaulted on the East Coast rail franchise were fantasy, Mr Byers effectively fell on his own sword.

In one sense, he did the honourable thing. Not to have done so would have triggered a far bigger scandal that would certainly have forced Adonis’s own resignation.

Yet although Mr Byers is a politician who, in the words of the former rail regulator Tom Winsor, has an “ambiguous relationship with the truth,” there remains a nugget of suspicion that his claims may not have been entirely groundless..

The idea that he may have brokered a deal with Adonis over National Express does not seem all that fantastical to those of us who know how government really works.

By contrast with Mr Byers, Chancellor Alistair Darling is certainly not a man given to hyperbole or flights of fantasy – although he has occasionally been known to blow the whistle on his own government.

He did it when he spoke of Number 10 unleashing the “forces of hell” against him following a candid interview about the recession, and he did it again this week with his comments about the ‘Thatcherite’ scale of the cuts that will follow the election.

Given that Prime Minister Gordon Brown has been at pains to underplay the extent of the cutbacks, this stark message from his next-door neighbour was about as off-message as it was possible to get.

It reveals once again the tensions between a Chancellor whose focus is on sorting out the public finances, and a Prime Minister more worried about political positioning.

Pre-election budgets are traditionally a time for giveaways, as Mr Brown demonstrated in 2005 with his announcement of a £200 council tax rebate for pensioners.

Any such rabbits-out-of-the-hat this time round would surely have got a belly laugh from a cynical electorate, and Mr Darling was surely right to resist them.

That said, by playing safe, the Chancellor added to the widespread impression of a government that has run out of ideas and is reduced to nicking them from the Tories, as with the stamp duty holiday for first-time buyers.

It had, in truth, a rather fin de siècle air to it – much as the demise of a man once thought of as a future Labour leader provides an apt metaphor for his party’s decline and fall.

But if there is one thing that has really damaged Labour this week, it is not Byers or the Budget, but the unions.

The strikes by BA cabin crew and now the RMT rail union have revived bitter memories of the dying days of the last Labour government in 1979, and are certain to lose the party votes.

Throughout his career, Gordon Brown has fought shy of the parallel with Jim Callaghan, the long-time Crown Prince forced to wait for No 10 by a more charismatic rival.

Once again, though, it seems Mr Brown’s destiny to follow in his footsteps.

free web site hit counter