Peter Kenyon

Budget deficit management - a City of London Labour Party issue

My Labour Party branch debated Labour's economic policies at its meeting on Wednesday and found official Labour Party wanting. This contemporary resolution is work in progress among those present for the discussion.

Here is the current draft:

Responsible budgetary policy, investment, growth and jobs

Conference notes the latest OECD call published on 9 September for further stimulus measures in the light of a possible global economic slowdown in the second half of 2010. In particular, Conference notes that the OECD proposed that plans to bring looming budget deficits under control through public spending cuts and tax rises "could be delayed".

Conference notes that this is consistent with the previous Labour government's commitment to tackle the budget deficit arising from reckless behaviour in parts of the global and UK banking and financial sectors.

Conference shares the concerns arising from current financial market indicators about the risks of slower growth, fewer jobs and a possible double-dip recession being much great than sovereign debt default.

Conference rejects the Conservative – Liberal Democrat coalition's assertion that the budget deficit must be eliminated within five years. Conference recalls how the 1945-50 Labour government managed the creation of the National Health Service, nationalisation of rail, coal and steel and other major welfare reforms. This was despite UK government borrowing being three times higher (proportionally) after World War II period than after the recent global banking crisis.

Conference further notes that some banks and financial services companies are still paying excessive bonuses.

Conference therefore resolves :

1. that responsible budget management should be linked mainly to economic cycle conditions with a view to optimising the chances for growth in both the public, private and third sectors and to maximise job prospects as the appropriate means of reducing the budget deficit arising from irresponsible banking practices

2. taxation policy should encourage fair pay based on a living wage, as well as aspiration; but penalise greed

Freezing personal allowances shows Darling unwilling to risk public finances

Twittering about the Budget yesterday I expressed my disappointment about the absence of any further move towards fairer taxation. I failed to pick up on Chancellor of the Exchequer (CHX) Alistair Darling's not referring to personal allowances explicitly.

Inevitably, the Tories and the right-wing press have seized on this omission quite cynically as another example of a 'stealth tax'. Personally, and with the benefit of hindsight, Darling missed a trick by failing to pre-empt that line of attack. This account , for example, in his interview with Sky News helps put the record straight.

But Mr Darling told Sky News he had not changed his income tax policies since announcements he made months ago.In December, he froze the personal allowances limit because inflation - which it normally follows - was negative. The retail price inflation rate is now 3.7%, which the Tories say hits workers in the pocket. Mr Darling said it would cost the taxpayer £2bn to increase the personal allowance limit again."It is a nice political device (by the Conservatives) but it is frankly a piece of nonsense," he said."If that really is the Tories' policy ask them how they intend to pay for it."

So the facts are that under the usual rules, personal allowances for the financial year 2010/11 would have been CUT. Instead, Darling decided to leave them unchanged. Rather than a tax giveaway with what wriggle room was available, Darling chose to cut debt and concentrate tax changes in ways that will aid growth in the real economy.

What has not been picked up by the opposition parties or the right-wing press were the measures targeted at small and medium sized businesses, and the entrepreneurs that run them. These are  aspirational people on whom we depend for wealth and hence job creation in the private sector. But that's Tory stealth politics. They wouldn't want to reinforce Darling's message to business - you are better off sticking with/switching to Labour. Would they? Reviewing the content of his speech there was far more for them than Labour's core vote. Which suggests to my that my instantaneous assessment was not too wide of the mark:

No doubt this is budget for growth, employment opportunity with debt under control.

Time to get out on the doorstep.

Labour Party: A Darling budget for May

Far be it from me to even contemplate interfering in the Chancellor of the Exchequer (CHX)'s perogative to determine the budgetary position just weeks ahead of the next election.

But I feel free to report my own thoughts on this issue in the context of recent discussions about the content of the 2010 Labour Party Election Manifesto.

There has been no debate about UK fiscal policy in Labour's National Policy Forum during the life of the current Parliament. Under the distinguished and politically adroit chairmanship of 'Privatise the Postmen' Pat McFadden MP, the National Policy Forum was forbidden from raising such matters. No such constraints were imposed at the meeting last Thursday between Ed Miliband, election manifesto coordinator,  and constituency representatives from Labour's National Executive Committee and National Policy Forum.

There were three out of six NEC constituency section representatives present - all from the Centre Left Grassroots Alliance slate. We all majored on the need for Labour to return to progressive taxation in its 2010 manifesto. This is a critical means of delivering 'A Future Fair for All'. 

The setting for that future is as much the budget, as the Manifesto. There is probably neither the time or opportunity for major tax reform in the 2010 budget. But there is scope for greater clarity about the direction of travel. Income tax policy and living incomes (benefits, wages and pensions) must be the instruments of choice for tackling poverty, and delivering a fair future for all. Those that can afford to pay should be encouraged to do so.

As for the deficit, the electorate is already wising up to the punative consequences of Conservative economic policy on the vast majority of people whether in work, on benefits or retired (unless extremely well-heeled). What Labour has yet to do is transform the popular perception of public debt into 'good' (not 'bad' as argued by the Conservative, Liberal Democrats and the right-wing (read most of) the media.)

There are areas of public investment that require further help. The most important in the view of many of my Labour Party colleagues at last week's meeting is council housing for rent. There is still too much slack in the construction sector. The private sector's failure to deliver affordable housing in sufficient quantity and quality is blighting hundreds of thousands of people's lives.

My worry is that Labour's budget deficit reduction programme is cast in terms of a Parliament and not as under former CHX, gordon Brown,  the expected economic cycle. We don't want a repeat of 1970 when Roy Jenkins' fiscally neutral budget did not help Harold Wilson secure a third election victory. 40 years on the markets and the banks have been rumbled.

The CHX's challenge is how to escape Treasury orthodoxy and deliver a Darling budget for May.

Brown initiative to tax financial transactions wins EU support

Watch this space

This is another initiative which British Prime Minister and Labour Party leader Gordon Brown can take credit for.

It's significance?

As the report notes:

A Tobin Tax, named after the Nobel Prize winning economist James Tobin, was originally designed to raise funds for developing nations.

However, following the financial crisis, the tax is now seen by many as a possible way to help insure against future crises.

Quite so. Widening the tax base to help reduce the deficit?

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Political language: Why is an NIC increase a tax?

When my critical life insurer ups my cover and hence my premium do I call it a tax, write 'yours disgusted' to the Editor of my daily newspaper, or follow George Osborne's example in his closing remarks in his response to the PBR and brand the company as untrustworthy?    

So what are all these headlines about? I'm glad we have a National Health Service, I wish we had a genuinely comprehensive national education service, I'm glad we such an extensive array of collective provision. There is lots more to do. But a modest increase in NIC except for those on less than £20K a year - a tax. Surely this is better described as a premium?

Tory toffs in extremist diversion to protect own wealth

Cities of London and Westminster CLP voted in favour of the abolition of leasehold as a form of property ownership at its GC on Tuesday. I'm kicking myself for having failed to alert the No.10 Political Unit to add this to the armoury of measures for the Manifesto to cement the differences between Labour and Tory over wealth, income and privilege before yesterday's false allegations that Labour in government was funding extremism in schools.

The Labour Party's targets should include absentee landlords - symbols of our class-ridden society. This is not just an issue in Mayfair and Marylebone, but throughout many of our industrial cities too where absentee landlords are also profiteering. While prominent parts of the media continue to give air time to Tory toffs seeking to divert attention from their real policies, congratulations are due to the Mirror for highlighting personal gains for the Shadow Cabinet from their inheritance tax proposals, if the Tories won the next election..

Shame on the BBC for giving so much airtime to Tory education toff Michael Gove's poorly researched claims as evidenced eventually here, and here .

Ed Balls deserves a slap over the wrist for failing to make sure his boss was properly briefed before PMQs. But that should not detract from the extreme measures the Tory toffs are now going to protect their wealth and privileges.

The Labour Party has a simple calculator anyone can use to work out how much they could benefit from the Tory's flagship tax proposal to distort Inheritence Tax. We now need one to calculate how little it could cost to buy out your absentee landlord with leasehold reform. Why anyone with a leasehold property would want to vote Tory is a bit of a mystery to me.

UPDATE: I see Luke Akehurst has also featured the Greedy Tory Shadow Cabinet.

That pesky 10p tax issue

I hope that Labour Prime Minister Gordon Brown will finally see sense over this issue. There are too many people on low incomes paying tax, just as there are too many people without living incomes who are either in work, on entitlements or retired. Every Labour MP should be demanding reforms to deal with this, starting with taking more people out of tax altogether. On Thursday the Labour Party's Joint Policy Committee meets. Among other things it should set the scene for reducing income and wealth inequalities ahead of the next General Election and removing the stain of increased inequality under Labour.

Time to lash up the loose can(n)ons in the Lords

No sooner had I relished my barber's embracing a 50% tax band for those on over £150K a year, than the Thunderer reports:

50p tax on rich may be temporary, Labour ministers hint

And who might the source be? None other than the unelected, reverse transfer from the capital of unaccountability, m'Lord Mandelson of Hartlepool and Foy. Let's have a national debate about Labour taxation policy before the next election and offer the country a clear choice. This is not about a return to Denis Healey's taxing the rich until the pips squeak, it is about fairness.

Never has it been simpler to make the case for a living income for the low-paid (they tend to spend, big plus in times of recession) and question the claims of senior executives to mega-salaries (it's the risks, except when they miscalculate, then they expect the rest of us mere low-paid mortals to pick up the bill via government).

Time to lash up the loose can(n)ons in the Lords and bring on an elected second chamber.

Wacky barber backs 50p tax hike

Just back from a cheerful chat with my local barber who knows about my political proclivities. So yesterday's budget was a natural for discussion.  Imagine my surprise at the welcome reception the 50p tax rate announcement got.

He was a bit puzzled about all the money to bail out the bankers. So I asked if he'd thought about what might have happened if our Labour government hadn't propped up the City. In a trice, he was after the 'parasites'. If they don't want to pay up "good riddance". Meanwhile, the salon filled up at £23-50p a head.

So, Alistair, that's at least one voter who's got the message.

Labour's Darling grants my Budget wish

Tory Party leader David Cameron is on his feet predicably trying to rubbish Alistair Darling's 2009 Budget for the UK. Meanwhile the markets appear to have taken news of raising debt and increased taxes stoically - the FTSE 100 index is little changed, and the currency is stable. This is a Labour Budget. The New Labour election manifesto commitment not to increase income tax has been abandoned, with an increase in the top rate to 50% from April next year - i.e. before the next election.

On a personal note, I was asked last night on Sky TV what my budget wish was. Mine was more to ensure Labour sticks with its commitment to reduce child poverty, paid for by removing tax concessions for top rate tax payers pension contributions. Wish granted.