Wednesday, April 29, 2015

Most exciting UK election in ages? Philosophical commitment vs. capitulation (Part Two)

I was wrong.

When I first envisaged this blog post, the UK election campaign looked like a lot of "me too" ism, which moved away from the early rhetoric of Labour Leader Ed Miliband, to a middle muddle ground of mediocrity, where both major parties campaign on different versions of the same policies. Although in substance both main parties are not too far apart on most policies, the truth is there is a yawning gap, and it is one based upon not simply political philosophy, but the very notion of having a political philosophy and set of principles upon which to base policies.

In that sense, the Labour Party has got both.  The Conservative Party, has almost neither.

It's relatively easy to look at the policies of both major parties and see that the gaps between them are not significant.  Although they may joust over the economy (the Conservative claim of success) and the NHS (Labour's claim of disaster), the truth is there is little between them on both issues.  The Institute For Fiscal Studies said as much in its review of their fiscal plans.  The Conservatives would cut spending more than Labour and run an actual budget surplus, although there is no clarity about proposed cuts in welfare spending.  Labour would run a current (i.e. not capital) budget surplus, "as soon as possible", but is also unclear how it would make up the gap (it's claims of "savings", and revenue from new taxes and the perennial "crackdown on tax avoidance" are pitiful).   

On the NHS (note no one talks about health policy, but rather how much to spend on the world's biggest civilian bureaucracy), it's about "we'll spend £8 billion more" or "we'll spend £2.5 billion more per annum", both basically wanting to throw more money into the same system.  No debate, at all, about whether it is fit for purpose or whether there are better ways to deliver healthcare. 

Beyond that, there is a lot of noise about tax.  Both parties claim they will crackdown on tax evasion and avoidance, both parties claim they will get more money from the rich (who despite the top 1% paying 27% of income tax apparently should be fleeced more, in different ways).  Both have announced either direct or indirect measures to do this, Labour by increasing income tax on those earning more than £150,000 and by a wealth tax on homes worth over £2m, the Conservatives by cutting tax relief on pension contributions.

What about housing?  Well a review by Paul Cheshire, Emeritus Professor of Economic Geography at the LSE, indicates that both parties are doing little to address the real issue, which is supply.  Both parties offer various fiscal bribes through either subsidies or targeted tax relief to make housing more "affordable", and Labour advocates returning to the heady days of building public housing, but Professor Cheshire says:

The illness is real but all that is on offer is snake oil; displacement activities treating some symptoms but not the underlying causes and – paradoxically – having the net effect of making the crisis worse. Perhaps that is just a little harsh on Labour but I did just hear their spokesperson offering the party’s solutions and the whole emphasis was on how the ‘market was not working so the planning system needed to be tougher’. Not so: the problem IS the planning system. It needs root and branch reform but that would take serious political courage.

The combined impacts of the Town and Country Planning Act, the power-hungry dedication of local authority planners and the banking of vast tracts of urban land as "green belts" is the problem, but no party will address any of these meaningfully.  Labour does want to introduce rent-regulation, whereas the Conservatives want to nationalise the social-housing held by privately owned Housing Associations so their tenants have a taxpayer subsidised "right to buy" them.  Neither is exactly a market oriented solution.

What about other policies?  Education?  Well, here there is more of a difference. The Conservatives have been pushing their somewhat successful "free schools" programme, which allows anyone to set up new schools, which is roundly opposed  by Labour and the teaching unions, and so Labour has promised to stop new ones being developed and to wage war on "unqualified" (read "non-unionised and not indoctrinated into state progressive teaching ideology") teachers.  Meanwhile, Labour wants to cut tuition fees, even though they don't have to be paid until a university student earns above the average wage.

How about the environment?  Who cares, thankfully (pledges on that have largely gone unnoticed).

I could easily go through a bunch of policies.  Labour's pledge to regulate energy prices, the Conservative pledge to freeze rail fares, both party's support for renewing the Trident nuclear weapons' system, but they aren't really the point.  On immigration, both want to "crack down" on immigration, except of course from the EU.

Yet what is actually going on between the two main parties is more fundamental.  Both embrace solutions to problems that are interventionist, that are sceptical about free markets.  The difference is that the Labour Party, and the Labour leader in particular - Ed Miliband - is back to its roots of Marxist rhetoric, narrative about the relationships between business and labour, and more explicitly a class based analysis of what is wrong with the UK (with some identity politics thrown in).



Ed Miliband has successfully created a rather simple narrative of Us vs. Them.  It is much deeper than Labour vs. Conservative, although that is the layer built on top of it, it is in fact a rather complete picture of class warfare.

On the us side besides the Labour Party, there are "hard working ordinary people" or "struggling workers" or "working people" or "working families".  The classic proletariat.  Add in the small businesspeople, add in "young people", add in "the most vulnerable" and lastly the classic "the many".  Beyond that are Labour's identity politics groups, "women", "Black and minority ethnic communities" (they don't mean Jews, Chinese or the Irish by the way, but it does include Muslims), "LGBT" and the "disabled". What it doesn't include are the others on the Labour side, are the trade unions, the BBC and the central and local government sectors, or the BBC (which despite being the dominant broadcaster and online news provider isn't apparently deemed to dominate the media).

On the "them" side, there are the "privileged few", the "elite", the "bankers", the "energy companies", "Rupert Murdoch", the "few at the top", "big business",  The bourgeoisie, and Labour's scapegoats.  It's simple, and sufficiently compelling narrative, is that the current government believes in "looking after the privileged few" and that "as long as you look after them everyone else will gain", which of course is a completely fabricated narrative.  It's the vision of the "fatcat capitalist" who treats employees with disdain.  It's the bankers who Labour now hates, for destroying its government and not meeting their side of the "deal".  It's the energy companies that Labour regulated and imposed taxes on their consumers to fund its renewables fetish, and so increasing barriers to new entry and to constructing power plants, but they are evil even though less than 5% of energy prices is profit.  It's Rupert Murdoch who, despite owning a minority of newspapers and broadcast media, is hated because The Sun stopped backing Labour (let's not pretend it is about phone hacking, given the pro-Labour Mirror Group was just as guilty, but Labour strangely ignored that).

So from that narrative comes Labour's panoply of policies consistent with this:

Attack the "rich"

- Increase top rate of income tax from 45% to 50% on earnings above £150,000 p.a.;
- Wealth tax on homes worth more than £2 million;
- End "unfair tax breaks" on hedge funds;
- Abolish taxation non-domicile status;

Attack private sector

- Legally cap residential energy bills until 2017 and empower regulator to force energy companies to cut prices (figure out how these last two policies reconcile themselves, because they don't);
- Increase Corporation Tax by 1% (but cutting business rates for small businesses);
- Raise minimum wage;
- Publicly listed companies required to report whether or not they pay the so-called "living wage";
- Require employers to employ full time anyone on a zero hours contract, who has regular hours, for more than 12 weeks;
- Abolish fees from bringing employment tribunal cases;
-  A bank bonus tax, on top of the existing effective 47.5% income tax on bonuses;
-  Every business winning a major government contract required to have an apprenticeship scheme;
-  Every large employer hiring anyone from outside the EU will be required to have an apprenticeship scheme;
-  Largest six energy companies forced to split generation and retail businesses;
-  All water companies to be required to provide "affordable tariffs" for those who can't afford to pay;
-  Councils to be allowed to regulate, price control and service control commercial bus services;
-  Eliminate competitive tendering in the NHS;
-  Profit caps on private companies providing services under the NHS;
-  Private schools to be forced to form partnerships with state schools;
-  New levy on bank profits;
-  Make three year rental tenancies "the norm" and cap rent increases to inflation during that time;

Protect Labour's favoured interests

-  Ban "unqualified teachers" from teaching at schools;
-  Establish a new College of Teaching;
-  Establish a Centre for Universal Health Coverage to help countries provide socialised health care.

Grow central and local government

- Set up National Infrastructure Commission;
-  Taxpayers to fund a new state owned British Investment Bank;
-  Compulsory government jobs for young people who want to claim benefits;
-  Local authorities to provide energy efficiency schemes to 200,000 homes each year;
-  Taxpayers to pay to set up a national train operating company to compete with private ones;
-  Council owned schools to be given freedom to expand, but no more free (independent) schools;
-  Start public sector housing construction (up to 200,000 more homes per annum).
-  Taxpayer funding for Rape Crisis and Womens' Refuge centres;
-  Replace House of Lords with an Elected Senate of the "nations and regions";
- Devolve £30 billion of state spending to local authorities with new powers over economic development, skills, employment, housing, and business support (you can bet how well that will work);
- Councils will be given the power to require particular types of shops to apply for planning permission, allowing them to restrict the number of payday lenders or other shops that are clustering on a single high street (Councillor X owns this shop, let's make sure there is no competition);
-  Require large companies to publish their gender pay gap;
-  Maintain 0.7% of GDP as the minimum level of UK taxpayer funding of foreign aid;

Embrace religious fanaticism 

- "Remove carbon from our electricity supply" by 2030;

Grow Nanny State, reduce the presumption of innocence and free speech

-  Maximum limits to be set on levels of sugar, fat and salt in foods marketed mainly to children;
-  Primary schools to provide childcare from 0800-1800 every weekday with a new National Primary Childcare Service to indoctrinate children into the merits of democratic socialism (yes I made that bit up);
-  Ban "legal highs";
-  Rape suspects have DNA recorded and stored;
-  Strengthen the law on disability, homophobic, and transphobic hate crime;
-  Ban "Islamophobia";
-  No one media owner should be able to exert undue influence on public opinion and policy makers (except the BBC), no media outlet will be allowed to get "too big".

Increase handouts

- Cut the cap on university fees from £9000 to £6000, paying the difference by removing tax exemptions on pension contributions for those in higher tax brackets;
-  Ten more hours a week of taxpayer funded childcare for parents of 3-4yos;
-  Almost double compulsory paternity leave and pay;

Remaining meaningless patronising drivel

-  A legal right of all rail passengers to access the cheapest ticket available (whatever than means);
-  A new Violence against Women and Girls Bill (no one told them it's illegal now);
-  Require football clubs to give fans a "voice" in board rooms;
-  Give 16 and 17yos legal authority to vote;

You see in Labour's Marxist inspired future, the deficit isn't fixed by spending cuts (except for mutterings about efficiency and capping eligibility of some universal benefits for seniors), but by clamping down on the "privileged few" who "avoid" tax.  Don't mention how Ed Miliband's family did just that about his father's home to avoid inheritance tax.  No, Labour has spun the myth, held by the far-left UK Uncut movement that there are literally billions of pounds to be found from "closing tax avoidance loopholes" that the evil rich loving Tories have "ignored". The implication being that this money sits around in Scrooge McDuck like money bins where rich people dive in and out and laughing at the homeless, not that it gets invested and helps fund businesses, further wealth creation and jobs.

Labour's narrative is simple.  Big business rips ordinary hard working people off.  It doesn't pay them enough, it puts some people in zero hours contracts.  Bankers don't pay enough tax (note HSBC is currently investigating closing its UK head office for reasons including the regulatory and tax burden that has grown in recent years), and banks rip everyone off and are "monopolies" (even though there is enormous choice in retail banking).  The same narrative is over energy bills, even though taxes on gas and power bills are several times greater than the profit margins, and it is government policies instituted by Ed Miliband when he was Energy Secretary that have increased the costs of energy supply. Don't ask how removing the main sources of cheap reliable electricity (coal and gas) is compatible with capping electricity prices, because it isn't.




Ed Miliband is not exactly charismatic, and to some extent the Conservatives have relied on him looking awkward and not appearing to be leadership material.  However, he's largely let that wash over him, and has demonstrating what he does have - authenticity.

Not for being working class.  He can't feign that living in Primrose Hill, north London in a home worth over £2m, having spent his whole working life working for the Labour Party, plus a short period as a lecturer at Harvard.  He's a leftwing academic at heart, albeit not a particularly notable one.

What he has got is a complete belief in what he sells, which is essentially a sanitised form of class war.

Sanitised in that he has bought into the Conservative's one strong narrative, which is that there isn't any money and that the public finances need to be looked after.  However, that hasn't stopped him making spending pledge after spending pledge, whilst claiming that it is "fully funded" simply by claiming that a "tax on bankers' bonuses" (which are already effectively taxed at 47.5% anyway), or "mansion tax" or "cracking down on tax avoidance".  Most voters don't do the calculations or analysis that shows this is all a chimera.  He will cut spending "with compassion", the implication being Labour loves the poor and working people, but the Conservatives cut with no concern for either.

Ed's big announcement last week was to commit to reducing the deficit and to balance the (current) account "as soon as possible", which the IFS rightfully said you could drive a truck through (as it said about the Conservative pledges).

Beyond that, Ed wages war.  Higher taxes on the hated rich, the hated banks and bankers.  Promises to protect the citadel of socialism, the UK's national religion, the NHS, from the evil privatising Tories (even though Labour signed more PPP outsourcing contracts when it was in power than the Conservatives have).  Price freezes for hated landlords and energy companies, and employment will get better, by guaranteeing government jobs for young people, abolishing "zero hours" contracts and hiking up the minimum wage (albeit roughly by inflation).

On the economy, it wasn't Labour to blame for the greatest economic collapse since the Great Depression, at ALL.  Blank out the role of the Bank of England in feeding the growing credit bubble, blank out the complete absence of moral hazard carried by financial institutions in engaging in unwise financial instruments and loans.  Blank out the bail out of the banks, and Labour's courting of the financial sector to feed the taxes it used to engage in a spending spree than ran constant deficits from 2001 onwards.  

Ed talks about the "cost of living crisis" even though inflation is zero (real people don't think that, even though Ed has no idea what a bag of groceries cost), blaming nasty railway companies (even though rail fares are entirely government regulated anyway and are on average subsidised), nasty energy companies, exploitative landlords.  Don't talk about how the majority of the price of petrol is tax (and none of it is dedicated to roads), just like the price of alcohol.

The underlying message is that you can trust Labour to look after the "hard working many" not the "privileged few" (whoever said they needed looking after?) and Labour will stand up to "vested interests" of the banks, energy companies and Rupert Murdoch (not notably, the state sector monopolies, trade unions, or the pro-Labour media). 

You'd think this would consign Labour to the boondocks of poor opinion poll ratings, like it did in 1983 and 1987 (albeit in both cases it went much further, as Labour is now committed to renewing the UK's independent nuclear deterrent (although some backbenchers are not keen)), but it hasn't.

Labour and the Conservatives are neck and neck in the polls.  Enough people are embracing low level class war to make it quite likely that Labour's plans could come to pass.

Isn't anyone standing up for free enterprise, liberty of the individual and smaller government?

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