My apology to the Tories

I was just joking about only liking Ken Clarke.

On Friday night, I appeared on Radio 4's Any Questions, with former the mayor of London Ken Livingstone, Kenneth Clarke MP and Julia Goldsworthy MP. You can listen to it here.

In the middle of a rather lively exchange with Ken Clarke over the Tories' debt delusion, I remarked:

Ken is one of the best chancellors of the Exchequer we've had in many, many years. He's the only Tory I like [boo! hiss!], let's be honest. But, but, he's wrong on this [the deficit].

I'm not sure if the audience hissed and booed because they were angry that I'd said I liked Clarke or because I'd said that, among Tories, I liked only Clarke.

But on reflection, I have an apology to make to the Conservative Party. There are, in fact, lots of Tories whom I admire, appreciate and/or like -- while disagreeing with most of their policies, principles and positions. On the current front bench, as well as Ken Clarke, I have to admit a soft spot for Oliver Letwin, David Willetts, Dominic Grieve and Sayeeda Warsi.

Going back through recent history, the names Michael Heseltine, Chris Patten, Ian Gilmour, Iain MacLeod, Rab Butler and Winston Churchill spring to mind. (Disclaimer: I include Churchill because he led this nation to victory over Nazism; I nonetheless continue to abhor and despise his racist views and his use of chemical weapons against the Iraqis -- 70 years before Saddam Hussein.)

So, which Tories do you like? From a left/liberal perspective? Answers below the line, please . . .

On a side note, Ken Clarke also made a couple of factually inaccurate remarks that I wanted to challenge in this post.

1) On the subject of Lord Cashcroft, Clarke predictably tried to deflect the questions by repeatedly referring to the non-dom Labour donor Lord Paul, even though Paul is not deputy chairman of the Labour Party, is not funding Laboury's marginal seats campaign, and did not give repeated undertakings to his party leadership or the House of Lords that he would become a "permanent resident" of the UK, for tax purposes, upon becoming a peer. On Friday night, I pointed out to Clarke that Lord Paul had not given millions to Labour, as Ashcroft has to the Conservatives. Clarke responded:

No, Lord Paul has given several million [pounds].

Wrong. As the Ministry of Truth blog points out:

For one thing, it's a bit of a reach to call Lord Paul a major Labour donor when the Electoral Commission's records show that he's made only one personal donation to the party (a mere £10,000 in 2001) while his company, Caparo, has donated the princely sum of £14,250 in three donations, one in 2002 and two more in 2008.

Caparo were a little more generous with Gordon Brown during the period when he was raising funds for his campaign for the Labour leadership, but only to the tune of £45,000 in two donations, which is loose change compared to the amount that Ashcroft has funnelled into the Conservative Party since 2003.

2) On the subject of the rules about non-domiciles, I pointed out that the rules were an anachronism and should be abolished. I also highlighted how Britain ploughs a lonely furrow on this issue -- few other countries offer such a tax loophole to their squillionaire class, not even free-market, low-tax America. Clarke, a former chancellor of the Exchequer in this country, responded:

That's not true. That's not true.

Really? I asked the leading tax accountant Richard Murphy whether or not the Americans make a distinction between domicile and residency for tax purposes. His response? "Absolute bollocks." Oh, and here's the BBC website's take:

Few other countries have such a loophole. Most, like the United States, insist that if you live in the country you have to pay taxes on your worldwide earnings.

In general, over the course of the one-hour radio debate, I couldn't help but feel sorry for Clarke. His heart clearly wasn't in it. Had he been leader of the Conservative Party over the past decade -- the great "What if . . .?" question of modern British politics -- we would probably not have had Michael Ashcroft ennobled and made deputy chair of the Conservative Party. Nor for that matter would we have had the Tories' proposed inheritance-tax cut for the country's 3,000 richest estates or the Tories' strange alliance in Europe with the "ultra-nationalist right". Oh, and we might have avoided the Iraq war, too . . .

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.