Liberal Vision

Alarming Clock-Up

Rumour reaches us that a senior member of the Cabinet has started referring to Nick Clegg’s pet phase as “the people Nick Clegg likes to call Alarm Clock Britain”. A helpful clarification, and touchingly loyal.

It is hard though to find commentators with a good thing to say about this phrase. Who after-all wishes to be associated with a thing that forces you out of bed.

Liberal Democrat activists tend to pause before commenting, usually adding, ‘well of course he means people who work’. To be entirely correct they should add ‘and are lower rate tax payers’… ‘with children’… and ‘get on with stuff’. Obviously… clear as mud…

No one is entirely sure who isn’t ‘Alarm-clock Britain’. Students before the new policy? Pensioners? The dead?

Much commentary then, of which a selection below, is incredulous.

“What the hell or rather who the hell is he talking about?”

“they mean pretty much the same group of people that Ed Miliband called “the squeezed middle”

“it’s a group he defines in the vaguest, most frustrating terms possible – almost as if he doesn’t really know what the hell he’s going on about.”

“I don’t know one single person who really resonates with the phrase.”

“‘Alarm clock Britain’ is the new political label for hard-working ordinary people. How patronising.”

The brave genius behind the phrase, is… no one:

“Lib Dem insiders the phrase has no single author, insisting it was a “team effort” among Mr Clegg’s aides and colleagues.”

A sure sign no one wishes to carry the can. As a result John Sharkey (ad-man) and Richard Reeves (wonk) often get fingered by the commentariat. How unfair.

There’s nothing new about political labels designed to capture a section of voters with whom politicians wish to associate.. “Mondeo Man”, “Worcester Women”, “Soccer Moms”… and so on.

 In marketing, such segment labels are useful short-hand for groups with common but complex characteristics.  

But they are only normally used inside campaigns. Devising a conscious strategy to sound like you’ve just emerged from a creative brainstorm with 10 year-olds high on fizzy pop, is quite novel.

However two months of non-stop abuse about this has not stopped the DPM putting it into his conference speech five times and using it as the headline for his Budget communication. He appears to have remarkable resilience to the sound of bells.

Any phrase that needs to be explained, every time it is used, is not a helpful short-hand.

Any phrase that makes Nick sound like a visitor from planet Alarm-Clock, in need of a Clegg-to-human translator, is unlikely to improve his reputation.

Anything so obviously flakey that didn’t get shot down in flames by his team or the MPs, suggests a degree of group-think is creeping into the bunker. That’s dangerous.

George W. Bush was always very good at getting himself out of his innumerate communication cock-ups with folksey charm. He would frankly admit his errors, shrug, and move on. He made his weakness for gaffes an endearing strength.  

Nick, or “Calamity Clegg” as his erstwhile leadership opponent used to call him, might do the same… “it sounded great when we threw it around the team, but on reflection…”

The alarm-clock is ringing Nick… are you listening?’

Where is the Lib Dem candidate for London Mayor?

We keep wondering – and seem to be getting no closer to an answer – who will be the  Lib Dem candidate for London Mayor? It turns out that the Politics Show is likewise intrigued.  Here is a clip from last Sunday’s show – featuring a piece about this very subject . Well actually it’s about Lembit – as he appears to be the only Liberal Democrat in London who wants the right to be ritually humilated right now.

The more observant of you will notice Liberal Vision’s very own Andy Mayer being interviewed in the pre-recorded piece at the top of the clip.  Andy’s assertions are forthright, but frankly, spot on. 

Shameless Balls

The line adopted by the Ed Balls, that the Government’s current deficit difficulties are purely due to international banking / credit crisis in 2008 is one much repeated.

This is surely easy to test?

At one level is clearly false. It is simply an admission that the last Labour government made spending decisions on the basis of a bubble.

Anticipating such risks and hedging against them is the job of the Treasury. Under Labour the Government was spending more than they made in every year since 2001/02. As was said at the time, they didn’t ‘fix the roof when the sun was shining’.

They excuse this with all sorts of pseudo-Keynesian waffle about ‘investment’, but much of the rise in public spending was not infrastructure for the future, but current spending on wages for public sector workers and voter-pleasing bribes such as the child trust fund. A classic Labour approach to economics; spend, spend, spend, and hope something turns up.

Further the impact of the credit crisis on Government income is measurable.

Tax revenues fell from around £550bn in 2007/8 to £520bn in 2009/10 (£533bn in 2008/09). It’s a difference of around £30bn.

That’s less than the current interest on the national debt (@£50bn), let alone the annual deficit (@£150bn)

This means, crudely, public spending commitments are accounting for about 80% of the deficit, the recession around 20%.

And that only if you generously assume the Government couldn’t have possibly seen there was a bubble (whilst Vince Cable kept predicting it), and taken precautionary action. And further that the debt itself, and that large interest bill, was nothing to worry about and should not have been reduced.

How all that equates in the mind of Balls to the financial crisis being solely responsible for the deficit and debt is a mystery to me.

Perhaps a Labour economist could explain?

Budget Reaction: Is ending NI a good idea?

A few cheers and jeers in today’s budget. The airwaves are full of detail so we will focus briefly on a selection of issues. This is not a comprehensive analysis.

Cheers

Raising tax allowances is essential to increase the incentives between work and benefits. It is not a redistributive anti-poverty measure, it is one that makes exiting poverty far easier for those who are prepared to work.

Reviewing the 50% tax rate is probably the only way, politically, it can be ditched, and likely then only when the economy is better recovered.

Cutting fuel duty and suspending the escalator is sensible. The Exchequer loses little from this, whilst the political message is powerful

Jeers

Although the Budget predicts reduced deficits by 2015, any deficit at all means more debt. Public spending is clearly not being cut fast or hard enough to protect future generations from our waste today.

The flip-side of the fuel duty announcements was the introduction of a Fair Fuel Stabiliser paid for by a levy on production. There is already a 20% special tax on UK oil and gas exploration. That has reduced the attractiveness of the North Sea for investment, in turn reducing returns. The costs of another 12% levy will also be passed on to pension funds and in reduced investment which could undermine any relief for consumers. The Chancellor should just cut duty when global oil prices are high.

Smokers get another beating with 2% rise above inflation. It is already the case that 21% of the tobacco consumed in the UK comes from illicit trade, i.e. organised crime. This is driven principally by relative national tax rates. It is highly profitable to smuggle and counterfeit, enforcement and punishment are weak. Counterfeit products tend to be more unhealthy, criminal profits fund more crime. A technical reform to mitigate against differential impacts on low and high cost brands misses this point. In the long-run British duty rates need to be sensitive to the pace of change in other countries. That reform is overdue. Providing another case-study in why prohibition doesn’t work is unwise.

The Big Change

Merging National Insurance and Income Tax does sound sensible. NI is effectively a stealth income tax and is masks just how extreme and high British taxes are by international standards. Such a change will make the sort of tinkering enjoyed by Gordon Brown much more difficult.

The problem, other than the possibility of a stealth rise on upper-rate payers in the process of change, is that national insurance is in itself a better idea than general taxation as a way of funding welfare.

When introduced by a Liberal government it was a proper insurance scheme for worklessness and old age. As recently as the 1990s the Liberal Democrats believed it should be used to fund the NHS.

Proper insurance is hypothecated, i.e. spent on a specific thing, not on anything the government fancies. The more hypothecation there is, the less the state can do as it pleases. For that reason tax hypothecation is vigorously opposed by the Treasury.

But that constraint protects taxpayers. It acts as a break on the kind of welfare ramping that has led to the current trillion pound debt, and even larger unfunded state pension liabilities.

Hypothecation is also more personal, people can see how much welfare costs them. Transparency engenders responsibility.

Another benefit of insurance is there is no need for the state to be the monopoly supplier. Similar to David Laws point in the Orange Book about health insurance. Offering people choice in providers of welfare insurance would be another check and balance on state waste.

The proposal is now subject to a long review, so we cannot say whether these issues will be taken into consideration, but it would be a historic quirk if this liberal coalition ended one of the main achievements of the last Liberal government, 100 years on.

Cutting up the cake

For better or ill, the political settlement that Western liberal democracies have means that the government of the day decides how to cut the cake. That cake is cut according to the size of government borrowing, what its spending priorities are and the demands of the public as voiced by pressure groups.

If the cake is reduced there is less to cut and hand around. If you wish to give out more but have a small cake you need to find ways of making it bigger. This is a continuous challenge and leads to fierce arguments about post code lotteries and fairness.

During the last 30 years we have seen some steps to alter this. While the government may make the cut someone else hands out the goodies or administers the transfer. There have been attempts at getting the recipients to make more decisions about the services they get. This trend is continuing and is likely to grow as successive governments face tough fiscal decisions.

There is another way of distributing products and services. One of the best devices at crowdsourcing public demand emerged centuries ago. But making the price signalling of the open market function within public services is not easy.

The coalition is clearly using that policy tool to reshape the relationship between the citizen and the State. It will take some time before we know if they have achieved  that aim.