Why Nick Clegg's still taxing Cameron and Miliband

The Lib Dem leader and the coming Budget.

It remains a curiosity of today's political scene that a small and unpopular party bumping along on 7 to 10 per cent in opinion polls is making the waves on the central issue of tax policy. On this one issue at least, the two main parties find themselves reacting to the gauntlet the Liberal Democrats have laid down.

Nick Clegg's recent speech to the Resolution Foundation making the case for going further and faster in reaching a personal tax allowance of £10,000 has been widely reported as a significant moment in the genesis of the forthcoming budget which due to the precarious position of the economy, and the increasingly creaky nature of the Coalition, is destined to be a highly charged affair both fiscally and politically.

Significant it may have been, but not for the rather mundane reason that the leader of the Liberal Democrats made the case for delivering on one of his central manifesto commitments as soon as possible. Dog bites man.

It was, however, noteworthy for three less commented upon reasons.

First, because it was an attempt to signal the end of the Liberal Democrats "give and take" strategy in relation to those on low and middle incomes. Up until now each rise in the personal allowance (or indeed progress on other Liberal Democrat priorities) has been funded in large part by cuts to tax credits and increases in taxes that particularly hurt the precise group the Liberal Democrats state they are seeking to help.

Hitherto this has completely neutered their claims to being a force for tax fairness. Clegg's new and unmistakeable message is that this time it will be different. From now on the wealthy should pay for further increases in the tax allowance - whether through wealth taxes, less avoidance or cuts in higher rate pension tax-relief.

If Clegg can make this approach stick -- and that is a very big if -- it makes additional increases in the personal allowance a different political proposition for both the Conservatives (a straightforward hit to some of their core support) and Labour (why oppose?).

That said, this new and potentially more progressive approach to funding increased tax allowances may well be completely lost on the public given that deep cuts to tax credits already in the pipeline (based on previous budgets that Clegg signed up to) will bear down on the working poor for years to come.

Second, Clegg's budget intervention represented the next stage in the Lib Dem's differentiation strategy. They expect, but still don't know for sure, that Osborne will agree to some progress on personal allowances. But even if they fail their judgement is that they would be better to do so having at least have looked publicly distinct (even if ultimately ineffectual), rather than seeming to meekly go along with whatever Osborne ends up announcing.

Playing your budget hand quite so openly is a high-stakes move, and not one borne from a position of strength.

Finally, Clegg's open air budget negotiations have certainly turned up the heat on Labour. Over the last few weeks there have been many more column inches written about Liberal Democrat-Tory budget disagreements then there have been about the opposition's position.

Moreover, Clegg has stolen a march on his opponents both in terms of being the leader talking about taxing the rich and the one reported as caring about cutting income tax on the low paid. Right now it is he who is occupying this large swath of political terrain -- more baggy centre, then squeezed middle -- which is about rebalancing the tax system so it better chimes with our straightened times.

Labour to date have been largely silent on this tax rebalancing argument, though Ed Miliband has been nodding towards the need for increased taxes at the top. Ed Balls' intervention yesterday was significant therefore not just in that it broadened out Labour's position on tax cuts from VAT towards other measures, like personal allowances, that the coalition might actually move on. But it also succeeded in inserting Labour into the middle of the Budget debate.

All three parties face some delicate judgements over the next four weeks. George Osborne will need to balance carefully his instinctive reluctance (and that of his backbenchers) to hand a major victory to Clegg with the potentially destabilising effects for the Coalition of the Liberal Democrats coming away with nothing.

Labour will need to strain to explain to a sceptical public how its call for large tax cuts in the here and now fits with its renewed determination to reclaim fiscal responsibility over the medium term, a theme which was so much in evidence at the turn of the year. And they rapidly need to come up with ideas of their own to prove it is they who are best placed to lead the debate on tax fairness.

Meanwhile Clegg desperately needs to show that he can convert his recent media momentum on tax reform into a Budget victory -- and, more than that, into an upward tick in the polls.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Erdogan’s purge was too big and too organised to be a mere reaction to the failed coup

There is a specific word for the melancholy of Istanbul. The city is suffering a mighty bout of something like hüzün at the moment. 

Even at the worst of times Istanbul is a beautiful city, and the Bosphorus is a remarkable stretch of sea. Turks get very irritated if you call it a river. They are right. The Bosphorus has a life and energy that a river could never equal. Spend five minutes watching the Bosphorus and you can understand why Orhan Pamuk, Turkey’s Nobel laureate for literature, became fixated by it as he grew up, tracking the movements of the ocean-going vessels, the warships and the freighters as they steamed between Asia and Europe.

I went to an Ottoman palace on the Asian side of the Bosphorus, waiting to interview the former prime minister Ahmet Davu­toglu. He was pushed out of office two months ago by President Recep Tayyip Erdogan when he appeared to be too wedded to the clauses in the Turkish constitution which say that the prime minister is the head of government and the president is a ceremonial head of state. Erdogan was happy with that when he was prime minister. But now he’s president, he wants to change the constitution. If Erdogan can win the vote in parliament he will, in effect, be rubber-stamping the reality he has created since he became president. In the days since the attempted coup, no one has had any doubt about who is the power in the land.

 

City of melancholy

The view from the Ottoman palace was magnificent. Beneath a luscious, pine-shaded garden an oil tanker plied its way towards the Black Sea. Small ferries dodged across the sea lanes. It was not, I hasten to add, Davutoglu’s private residence. It had just been borrowed, for the backdrop. But it reminded a Turkish friend of something she had heard once from the AKP, Erdogan’s ruling party: that they would not rest until they were living in the apartments with balconies and gardens overlooking the Bosphorus that had always been the preserve of the secular elite they wanted to replace.

Pamuk also writes about hüzün, the melancholy that afflicts the citizens of Istanbul. It comes, he says, from the city’s history and its decline, the foghorns on the Bosphorus, from tumbledown walls that have been ruins since the fall of the Byzantine empire, unemployed men in tea houses, covered women waiting for buses that never come, pelting rain and dark evenings: the city’s whole fabric and all the lives within it. “My starting point,” Pamuk wrote, “was the emotion that a child might feel while looking through a steamy window.”

Istanbul is suffering a mighty bout of something like hüzün at the moment. In Pamuk’s work the citizens of Istanbul take a perverse pride in hüzün. No one in Istanbul, or elsewhere in Turkey, can draw comfort from what is happening now. Erdogan’s opponents wonder what kind of future they can have in his Turkey. I think I sensed it, too, in the triumphalist crowds of Erdogan supporters that have been gathering day after day since the coup was defeated.

 

Down with the generals

Erdogan’s opponents are not downcast because the coup failed; a big reason why it did was that it had no public support. Turks know way too much about the authoritarian ways of military rule to want it back. The melancholy is because Erdogan is using the coup to entrench himself even more deeply in power. The purge looks too far-reaching, too organised and too big to have been a quick reaction to the attempt on his power. Instead it seems to be a plan that was waiting to be used.

Turkey is a deeply unhappy country. It is hard to imagine now, but when the Arab uprisings happened in 2011 it seemed to be a model for the Middle East. It had elections and an economy that worked and grew. When I asked Davutoglu around that time whether there would be a new Ottoman sphere of influence for the 21st century, he smiled modestly, denied any such ambition and went on to explain that the 2011 uprisings were the true succession to the Ottoman empire. A century of European, and then American, domination was ending. It had been a false start in Middle Eastern history. Now it was back on track. The people of the region were deciding their futures, and perhaps Turkey would have a role, almost like a big brother.

Turkey’s position – straddling east and west, facing Europe and Asia – is the key to its history and its future. It could be, should be, a rock of stability in a desperately un­stable part of the world. But it isn’t, and that is a problem for all of us.

 

Contagion of war

The coup did not come out of a clear sky. Turkey was in deep crisis before the attempt was made. Part of the problem has come from Erdogan’s divisive policies. He has led the AKP to successive election victories since it first won in 2002. But the policies of his governments have not been inclusive. As long as his supporters are happy, the president seems unconcerned about the resentment and opposition he is generating on the other side of politics.

Perhaps that was inevitable. His mission, as a political Islamist, was to change the country, to end the power of secular elites, including the army, which had been dominant since Mustafa Kemal Atatürk created modern Turkey after the collapse of the Ottoman empire. And there is also the influence of chaos and war in the Middle East. Turkey has borders with Iraq and Syria, and is deeply involved in their wars. The borders do not stop the contagion of violence. Hundreds of people have died in the past year in bomb attacks in Turkish cities, some carried out by the jihadists of so-called Islamic State, and some sent by Kurdish separatists working under the PKK.

It is a horrible mix. Erdogan might be able to deal with it better if he had used the attempted coup to try to unite Turkey. All the parliamentary parties condemned it. But instead, he has turned the power of the state against his opponents. More rough times lie ahead.

Jeremy Bowen is the BBC’s Middle East editor. He tweets @bowenbbc

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue