Labour must share blame for region's plight

Over the past few weeks, the domestic political agenda has been dominated by the continuing fallout from what has by now surely become of the most controversial, even reviled Budgets of recent years.

It started within a few minutes of the Chancellor sitting down on 21 March with the revelation that he had performed a stealth tax raid on pensioners' incomes by freezing their personal allowances - the so-called 'granny tax.'

It continued with the belated realisation that, in pursuing the entirely laudable objective of limiting the amount of tax relief that can be claimed by the super-rich, the government had also made life much, much harder for the charitable sector.

And throughout it all there has been the ongoing row over the so-called pasty tax, coupled with increasingly laughable attempts by Old Etonian ministers to get with the workers by claiming to be fans of the hot snacks.

But until this week, no serious consideration had been given to the particular impact of George Osborne's proposals on the North-East.

So first off, congratulations are due to Gateshead MP Ian Mearns, always a doughty campaigner on behalf of the region, for securing a 90-minute debate on that very subject in Westminster Hall on Tuesday.

Having spent quite a lot of my career covering such debates, it would be easy for me to write them off as so much hot air, but that would be an overly-cynical view even for me.

They may not change anything, at least in the very short term, and the ministerial replies may be invariably formulaic. But where they do succeed is in raising consciousness of an issue to the point where it becomes harder to ignore, and that sense they are vital.

It was clear from the start that this was a Budget that was particularly pernicious in its potential impact on the region.

Quite apart from the impact on Tyneside-based pasty-maker Greggs, one of its central recommendations was the introduction of regional pay rates, which would institutionalise regional income disparities in the public sector for no better reason than the fact that they already exist in the private sector.

Mr Mearns chose not to dwell on that particularly in his opening speech to Tuesday's debate, however, choosing to highlight some damning statistics about the effect of Mr Osborne's higher-rate tax cut and the government's spending priorities.

He revealed that, while in London, the South-East and East Anglia, nearly 195,000 taxpayers will reap the benefit of the tax giveaway, in the North-East the figure will be fewer than 5,000.

On transport spending, the disparities are even more alarming. Mr Mearns revealed that more than 160 times as much is being spent on transport infrastructure projects in London than in the North-East.

"Once more, the people of the North East are paying the price for an economic strategy made in and for the wealthier south," he said.

He didn't, as it happens, mention the proposed HS2 high-speed link, but although it has its supporters, my own view is that it is not necessarily the panacea that some say it is.

For one thing, it won't arrive here until 2032 at the earliest. For another, any economic benefits to the wider North are likely to migrate towards Leeds and Manchester, which will be getting the link a good half decade earlier.

But the most fundamental question that has to be asked of any Labour politician when raising the issue of the North-South divide is why the party did not do more to address it during its 13 years in power from 1997.

Ian Mearns at least can point to a consistent track record on that score. As a leading figure in North-East local government during the Tony Blair years, he was one of those who regularly highlighted that administration's failure to address the issue, while the likes of Nick Brown and David Clelland also argued strenuously behind the scenes for a better deal for the region.

But the party as a whole allowed Mr Blair to get away with two particular claims that, taken together, served fatally to undermine the case for a more proactive regional policy.

The first was that the differences within regions were as great as the differences between them. The second was that any attempt to rebalance the economy risked harming the Southern regions which were the main driver for the economy as a whole.

Whatever the merit of these arguments, they became, over time, an excuse for simply doing nothing.

In the words of its response to a 2003 report on the issue: "The government does not accept the proposition that increased public funding to the less prosperous regions is a necessary condition to improve their prosperity."

The sad truth of the matter is that New Labour had an historic opportunity to do something about regional economic disparities at a time when it had a fair political wind behind it and, crucially, public spending as a whole was rising.

For the Coalition to try to tackle the gap in the current economic environment is a much harder task.

It's regional devolution, Jim, but not as we knew it

Writing last Saturday, the Newcastle Journal's regional affairs correspondent Adrian Pearson opened his column with the words: "If an elected mayor is the answer, what could possibly have been the question in North Tyneside?"

Well, allow me to have at least a stab at providing an answer.

There are plenty of cynical explanations. Elected mayors were originally the brainchild of the Tory cabinet minister Michael Heseltine in the early 1990s, and were seen by some at the time as an attempt to circumvent the power of high-spending, left-wing Labour councils.

Indeed, as Adrian pointed out in his column, this was precisely what later happened in North Tyneside, where Labour's stranglehold on local politics was finally thwarted by a succession of Conservative mayors in what became a recipe for decade-long infighting.

By the time New Labour came to enact Heseltine's proposed reforms, though, the agenda had changed somewhat. I believe Tony Blair's primary motivation for implementing elected mayors was simply to try to revive flagging voter interest in local government by, well, sexing it up.

In that sense, it was no more than a reflection of the trend towards ‘presidential’ politics that reached its apogee under Mr Blair, and which continues, though to a slightly lesser degree, under David Cameron.

The sorts of arguments that were heard then - "increased accountability through increased visibility" - are still used to promote the elected mayoral idea today - but a decade or more on, the debate has now become much more bound up with economic development and in particular with redressing regional economic disparities.

It is now very much part and parcel of the "city regions" concept that emerged from the wreckage of the regional government debate after the North East Assembly referendum debacle, with elected mayors seen as a way of giving their areas the kind of clout that properly-empowered assemblies might once have exercised.

This argument is already very much to the fore in the debate over whether there should be an elected mayor of Newcastle, for instance.

The city has yet to even make a decision on the issue - but already people such as Lewis Goodall of the regional policy think-tank IPPR North are talking openly about a directly-elected leader or 'metro mayor' not just for Newcastle but for the entire Tyneside conurbation.

"To really counterbalance the power of London, mayors need to have real powers to forge the destiny of their area," he wrote in Good Friday's Journal.

"Over time, this might mean a move towards a metro mayor for the wider city area - not just Newcastle but the surrounding conurbation too, with powers over economic development and transport."

To those of us with long memories, what is particularly interesting about that comment is that it was precisely those powers that the proponents of an elected regional assembly demanded - and failed to get - prior to the 2004 referendum.

I have always believed that had Mr Blair been more inclined to hand such powers to a regional body, the public might well have been more inclined to vote for it.

But regional government was only ever a means towards the greater end of tackling the North-South prosperity divide.

And as Lewis Goodall also pointed out in his piece, this is still very much with us, with the government planning to spend £2,700 per head on infrastructure projects in London compared to £5 a head in the North-East.

Looming over the whole debate over elected mayors is the larger-than-life figure of London Mayor Boris Johnson.

Not only has he enhanced the ‘accountability’ argument in favour of mayors by being a highly visible elected figurehead, he has also enhanced the economic argument by using his undoubted clout to further deepen that imbalance.

Mr Cameron’s own decision to axe regional development agency One NorthEast didn’t help matters either – but a gaggle of elected mayors flying the flag for the region could go some way towards filling that gap.

It isn’t regional devolution as we once knew it, Jim, but it might turn out to be the best form of regional devolution on offer.

Heir to Blair in more ways than one

Shortly after becoming leader of his party in 2005, David Cameron caused consternation among Conservative supporters by claiming that he was the true ‘heir to Blair.’

In one sense, it was a strange move, since the former Prime Minister had by then already begun the long, slow descent from the public adulation that greeted his arrival in No 10 to the public disillusionment that hastened his departure.

But Mr Cameron’s boast had a larger strategic purpose, namely to fix himself in the public mind as a politician of the centre ground and at the same time portray Mr Blair’s putative successor Gordon Brown as one who would abandon that territory.

And since entering Downing Street, he has continued in the same vein, claiming more than once that his health and education reforms are no more than a continuation of the changes initiated by Mr Blair a decade ago and thereby portraying Labour’s opposition to them as indicative as “lurch to the left.”

Mr Cameron has also found himself praised by former Blairite apologists such as John McTernan for his policy of liberal interventionism abroad, most notably in Libya.

But over the past week, much less welcome comparisons have started to be drawn between the two leaders as the government’s political fortunes took a marked turn for the worse.

At some points over the past seven days it has looked as though recent history may be repeating itself, such is the sense of déjà vu surrounding some of the government’s current crises.

Where New Labour has its 45p pension increase, the Coalition has its granny tax. Where New Labour had the fuel protests, the Coalition has the threat of a tanker drivers’ strike. And where New Labour was accused of selling honours for cash, Mr Cameron now finds himself accused of selling access.

No wonder that one of Mr Blair’s former speechwriters, Phil Collins, called it the government’s worst week in office so far, before going on to note wryly that under Mr Blair, each week was portrayed as being a worse one than the last.

Far more scathing was the verdict offered by the Conservative-leaning commentator
Peter Oborne, who saw this week’s events as signs of a shift in the political landscape.

“David Cameron’s claim that the government represents the interests of Britain as a whole now feels baseless and cynical, replaced by the growing perception that he represents nothing more than a coterie of rich and privileged men,” he wrote.

Oborne went onto to accuse Mr Cameron and Chancellor George Osborne of embracing “the worst aspects of Blairism: the obsession with very rich men; the divergence between public statements and private conduct; the preference for policy making through private cabal; and the almost demented Blairite contempt for their own party members."

This is only one example of what appears to be a deepening gulf between the government and its natural supporters, both in the press and in the country.

The Daily Telegraph was never that keen on him anyway, tending to regard him as “not really one of us” in much the same way as The Guardian once saw Mr Blair.

More worryingly for Mr Cameron, the Daily Mail now appears to have turned on him over the 'granny tax’ while The Sun has him in its sights over both the 'pasty tax' and the failure to do anything about fuel prices.

Some will say it's a good sign, showing that Mr Cameron is still occupying that fabled centre ground. Others will point out that alienating your natural allies is a political dead end, as Mr Blair eventually found to his cost.

Mr Cameron’s problems with the Tory press – and the wider party - really stem from one thing: his failure to win an outright parliamentary majority in 2010.

Had he succeeded in doing that, they would have forgiven him all his attempts to define himself in opposition to his own supporters, forgiven his portrayal of the Old Tories as a “nasty party” which he was determined to detoxify.

But he failed, even when up against an opponent whom they regarded as at best, ineffectual and, at worst, bonkers.

And until, like Mr Blair, he can prove himself a real winner, Mr Cameron will never truly capture his party’s heart.

Bad news management costs Osborne dear

There is a hoary old adage in British politics that a Budget that looks good on the day invariably looks like a turkey a few weeks later.

But there can be few Budgets in the recent past which have unravelled quite as quickly as George Osborne’s latest package unveiled to MPs on Wednesday.

Within an hour of him sitting down, #grannytax was the top trending item on Twitter and the revolt against the Chancellor’s ‘stealth tax’ raid on pensioners was under way.

Rarely have the following days’ newspapers seen such a degree of unanimity over a Budget statement – or made such depressing reading for the man from Number 11.

Part of the largely hostile press reaction can be put down down to poor presentation and rank bad news management on the part of the government.

As one Labour veteran reminded us, Gordon Brown’s modus operandi was to get all the bad news out there beforehand and hold the good stuff back for a big ‘rabbit-out-of-the-hat’ announcement on the day.

The government appears to have taken the opposite approach with this Budget, with more leaks than a St David’s Day parade as one heterographically-minded blogger put it.

Indeed one reason it has had such a bad press is that most of the more positive measures were old news by the time the Chancellor got to his feet.

There were at least some good points. Annual tax statements will be a welcome addition to the public’s right to know, while the 2p cut in corporation tax ought to help meet the desperate need for new jobs.

And the imposition of 7pc stamp duty on the purchase of homes over £2m is the nearest we are likely to come to the Lib Dems’ cherished “Mansion Tax.’

Furthermore, despite its appalling presentation, I don’t necessarily go along with all the criticisms that have been made of the so-called ‘granny tax.’

As the Institute of Fiscal Studies has pointed out, pensioners have so far done better than younger people from the government’s austerity measures, and this at least helps even things up a bit.

Inevitably, much of the ire of left-of-centre politicians and commentators has been directed at the 5p cut in the top rate of income tax, worth around £42,500 a year to someone earning £1m.

It provided Ed Miliband with the best joke of the week – and perhaps of his leadership – telling the Prime Minister he will save so much that he “will be able to afford his own horse.”

A more serious moral point was made by the commentator Martin Kettle, arguing that the top-rate tax cut highlights the different worlds inhabited by the super-rich and the rest of us.

“The vast majority of us would be prosecuted if we opted not to pay [tax.] If the rich don’t pay, the law is changed to reflect the fact that they won’t pay up,” he wrote.

The economic arguments over the efficacy of the 50p rate will doubtless run and run, but this is perhaps one area where the politics should have trumped the economics.

If the 50p rate symbolised the fact that ‘we’re all in it together,’ then the political damage to the government engendered by its removal may well outweigh any economic benefit in the longer term.

The move towards a single personal tax-free allowance of £10,000 has been widely welcomed, but - just as Mr Brown once did – Mr Osborne is recouping some of the cost through so-called ‘fiscal drag.’

It means around 300,000 middle-income earners are finding themselves dragged into the 40p tax rate at the same time as top-rate taxpayers see their own rates cut by 5p in the pound.

But saving the worst till last, for me the most pernicious of all the Budget measures – at least as far as the North-East region is concerned - is the proposed introduction of regional rates of pay in the public sector.

As has been pointed out, this will only serve to entrench existing regional economic inequalities and institutionalise low-wage economies in areas such as the North-East, Wales and South-West.

The government’s argument seems to be that as private sector pay is lower in these regions, so therefore public sector pay ought to be lower too.

To me, that sounds suspiciously like two wrongs make a right.

Nothing gets politicians so worked up as a Boundary Review

THIS week, The Journal reported that there had been more than 900 objections lodged with the Boundary Commission over its plan to alter the face of the region’s one real rock solid Tory enclave – the parliamentary seat of Hexham.

The plans, drawn up last September as part of the government’s proposal to reduce the size of the House of Commons by around 50 seats, would see historic country boundaries crossed in the name of ‘equalising’ the size of constituencies across the country.

If the proposals go ahead, the North-East will see its overall representation in Parliament fall from 29 to 26 with no part of the region unaffected by the changes.

For some of the region’s MPs, it is likely to mean the end of the political road, while those that survive are will find themselves standing for re-election in constituencies almost unrecognisable from their existing ones.

In nowhere than Hexham has the opposition to the government’s plans been more intense.

All three main parties – including the Conservatives and their sitting MP Guy Opperman – have come out against the proposals, with the 950 letters of opposition equalling the number received in all the other 28 North East constituencies put together.

What the opponents of the changes find particularly galling is the fact that the proposed new constituency will breach the historic county boundary between Northumberland and County Durham, with Haltwhistle moving into a newly-created seat of Consett and Barnard Castle.

Other proposed new constituencies in the region – for example Newcastle North and Cramlington – will see the traditional divide between metropolitan and non-metropolitan areas breached, although, perhaps surprisingly, these seem to have aroused much less opposition to date.

But the ongoing debate over Hexham could prove to be a microcosm of a much larger battle over the government’s proposals which could yet influence both the timing and the outcome of the next general election.

In my column last week, I speculated that Nick Clegg’s proposals for House of Lords reform could ultimately prove to the rock on which the Coalition founders, with Conservative peers, who want to maintain the second chamber’s built-in Tory majority, threatening to derail his plans.

What does that have to do with Parliamentary boundaries, I hear you ask? Well, potentially quite a lot.

For the Lib Dems are threatening to retaliate against the potential loss of their leader’s cherished Lords reform plans by scuppering the Tories’ attempts to reduce the number of MPs.

Now at first sight, you might think this was yet another ill-judged policy intervention by the Lib Dems that is likely to prove about as big a vote-winner for them as their support for the Euro.

Years of mounting public cynicism about politicians – capped by the MPs’ expenses scandal – have created a climate in which any party advocating a reduction in their numbers is likely to be on pretty firm electoral ground.

But politicians are never so exercised as when their own jobs are under threat – and for that reason alone, a Lib Dem revolt against the boundary review proposals could have a very real prospect of success.

A small number of Tory MPs affected by the changes – some of them only elected for the first time in 2010 and whose parliamentary careers face being cut off in their infancy – might even be persuaded to join such a rebellion.

This is not just about the Lib Dems getting their own back on the Tories, though. There is undoubtedly an element of calculation in the party’s stance.

It is estimated that the boundary changes will be worth an extra 20 seats for the Conservatives at the next election – some of which will undoubtedly come at the expense of their Coalition partners.

The changes will therefore make it much more likely that there will be a majority Conservative administration next time round, and correspondingly much less likely that the Lib Dems will again be in a position to hold the balance of power.

Killing off the boundary review might yet be the Lib Dems’ best hope of hanging onto their ministerial limousines. And it might even win them a few votes in Hexham.

The Coalition will not last five years

In last week's column, I suggested that the key strategic task facing the Liberal Democrats as they gather for their spring conference in Gateshead was to find a way of winning back the support that has deserted them since they joined the Coalition in 2010.

And doubtless there will be plenty of ideas floating back and forth at The Sage this weekend as to exactly how they should go about it.

They could, as some argue, stop the Health and Social Care Bill in its tracks. The Guardian commentator Polly Toynbee is among those warning this week that if they don’t take what may be their last opportunity to do this, it will seal their fate as a party.

Or they could, as Business Secretary Vince Cable has suggested, use their influence to help shape next month’s Budget, taking everyone earning less than £10,000 a year out of tax and introducing a ‘mansion tax’ for the super-rich.

Their leader, Nick Clegg, certainly wants to see the party getting on the front foot and proclaiming its successes in the Coalition rather than apologising for being part of it.

“Now it is time to move on. To stop justifying being in government and start advertising being in government. To stop lamenting what might have been and start celebrating what is. To stop defending our decisions and start shouting our achievements from the rooftops,” he said yesterday.

But whichever way they turn, will it make the slightest difference to the party’s electoral prospects?

Well, if history is any guide, no. The plain facts of the matter are that involvement in a Coalition is almost always disastrous for the smaller party, whatever political achievements it manages to extract from it.

The most recent example was the Lib-Lab pact in 1977/78. This was perhaps the most enlightened and humane period of government in my lifetime, but it still ended up doing the then Liberal Party terrible damage.

Far from emerging strengthened, their vote went down at the subsequent general election in 1979 and several of their most high-profile MPs, including the deputy leader John Pardoe, lost their seats.

Further back, the 'National Liberals' who joined the Tory-dominated National Government in the 1930s ended up simply becoming absorbed by the larger party.

And David Lloyd George’s 1916-22 Coalition, in which the Tories also held a numerical majority, likewise ended disastrously for the Liberals and their leader despite victory in the First World War.

It is partly for this reason that I have argued from the outset of the Coalition that, while the Lib Dems probably had no choice but to join it, they also needed to find a way of getting out of it alive – preferably well before the next election is due.

The Health and Social Care Bill, on which the Lib Dem rebels are more in tune with public opinion than the government is, would have given them a plausible pretext, although the party activists’ last-ditch bid to halt the Bill now looks unlikely to succeed.

Europe, by contrast, would not be a good reason for the Lib Dems to try to collapse the Coalition, for the simple reason that on this issue, it is the Tories who are much closer to the mainstream public view.

One less widely-canvassed possibility is House of Lords reform – not the sexiest of issues, for sure, but one on which the Tory ‘backwoodsmen’ seem almost certain to thwart Mr Clegg’s well-meaning attempts to drag the British Constitution into the 21st century.

The last time I discussed the possibility of the Coalition ending before its due-date of 2015, a commenter on my blog reminded me that the government has already passed legislation to bring in five-year fixed-term Parliaments.

My view, however, is that this could turn out to be no more than a quaint constitutional notion, given that the legislation also allows for a two-thirds majority of MPs to dissolve Parliament ahead of its term.

Let’s just suppose that David Cameron decides he wants an election. Would Labour MPs, in such circumstances, really vote to keep him in office until 2015?

It stands to reason that the Coalition will not last five years. It will, rather, last just as long as both of its partners want it to.