Thursday, December 10, 2009

Its the Axe or Tax - the choice in 2010

I'm sure all parties will spin the choice at the next election better than this, but it ultimately comes down to the axe vs the tax.

Labour are appearing to go for mostly tax. That national insurance hike, although painful, is just the first swallow of spring. There are far more to come. Labour are now wholly owned by the Unions - which means the public sector Unions, and they will only be appeased as more of the nations activities are moved from the productive sector to the public sector.

Tax has traditionally been a toxic issue in British politics. No one can openly increase income tax unless they are taxing other people than the voters - like the very rich ( but that doesn't bring in money, just votes from your base ).

George Osborne had it right when he mentioned ring fencing a black hole ( best line of the pbr debate by the way ). But the Conservatives, my party, have questions to answer here also.

It should be noted that the ring fences both parties ( sorry Lib Dems, Nats etc you just don't add up to much of a prospect of future UK govt ) have fence posts that look very movable to me.

Alistair Darling was being tortured by Evan Davis on radio 4's Today this morning, and one of the many insightful lines of questioning put forward was a request to define what front-line education means ( as its the ring fenced bit ).

Perhaps it doesn't include teaching assistants ? Or schooling after 16 ? Or schools in low priority areas ( ie in Labours term Tory voting areas ).

I can see these guarantees (from all sides) morphing into a woolly guarantees of outcome, not of method of delivery ( IE hospitals can be closed, teachers, nurses, civil servants etc made redundant ).

The words on ring fencing will mean as much as the guarantee on a referendum on the EU Constitution that Gordon Brown and the Labour party promises and then reneged on once in office.

So in the end its tax more or spend less.

In the short term it almost certainly means tax more, as spending less takes time to organise and to pay for.

But can a structural deficit be paid for with just more tax ? Even Labour admit this is not possible in the long term - though they do look like giving it a good go as they only hint at doing something about it.

Labour are trying the new rouse of waiting for the recovery - but of course the debt that's building up may strangle it at birth.

The Irish have no choice, thanks to being in the Euro and having handed over their monetary sovereignty to the ECB ( who helped create their problem with interest rates that were inappropriate for Ireland in the first place ). In Ireland the axe has been used, and used again.

In the Baltic states, and specifically Latvia the same has happened. Greece is going to face a really ugly 6-12 months ahead. They can't duck the issues much longer.

And neither can we.

The public's view on this will determine the next general election.

I don't think swing voters will be that keen on eternal tax rises which Labour will be in effect proposing, and once this sinks in the polls will swing again towards the Conservatives.

Labour have perhaps shored up the heartland vote a little at the expense of the marginals. This shows they feared an Italian or Canadian style wipe out most of all.


James Higham said...

March election eh?

Man in a Shed said...

If they are really pessimistic they will go for May ( just to save money ).

But March makes sense - however I'm suspicious of the supposed leaks. I think Brown would like the Conservatives to reveal their hand so he can counter it. Its the way he works.

Don't rule out June. But we may have a sovereign debt crisis before then.

neil craig said...

Good point about Labour's union paymasters no longer being mass working class representatives but now simply the class of governmentemployees. All governments are to some extent the creatures of the people paid by government but Labour is now their representatives on both the government & party sides.