Leader: Far tougher choices are needed on tax and spend

Neither the tax rises proposed by Labour, nor the benefits cuts proposed by the Tories would make a significant dent in the deficit.

The 2010 general election was defined by a conspiracy of silence between the main parties. For fear of the electoral consequences, neither Labour nor the Conservatives spelled out to voters what austerity would entail in practice. While vowing to halve the deficit, Gordon Brown never acknowledged the scale of spending cuts that would be needed to meet this pledge. The Tories, who promised to eliminate the structural deficit in a single parliament, were no better. The weekend before the election, David Cameron declared that any future cabinet minister who proposed “front-line reductions” in services would be “sent straight back to their department to go away and think again”. During the campaign, he said that his party had “absolutely no plans” to raise VAT, that he “wouldn’t means-test” child benefit, that Sure Start centres would not be closed and that the Education Maintenance Allowance would remain in place. Each one of these promises was broken before the year was out.

This year has begun with both the Tories and Labour declaring that they are prepared to make the “tough choices” required to reduce the deficit – which the government forecasts will be £111bn this year – in the next parliament. George Osborne has promised to implement £25bn of further spending cuts, including £12bn from welfare, in the two years after the next general election. Ed Balls has announced that Labour will seek to achieve a current budget surplus by the end of the next parliament and will reintroduce the 50p income-tax rate to help with this task. Both men wish to be seen as fiscal disciplinarians, taking difficult but necessary decisions in the national interest. Yet neither can credibly claim this mantle.

There is little that is brave about cutting benefits for the poor or raising taxes on the rich, policies that have the overwhelming support of the public. Voters, unsurprisingly, are most in favour of austerity when it does not affect them. Just 1.5 per cent of taxpayers have earnings above the £150,000 threshold at which the 50p tax rate would be introduced and a similarly small proportion of households is affected by measures such as the benefit cap. For this reason, none of the policies recently announced by Mr Balls and Mr Osborne would make a significant dent in the deficit. Rather, their logic is almost entirely political. The Tories are seeking to frame Labour as the party of welfare, Labour to frame the Tories as the party of the wealthy. One can hardly blame politicians for playing politics but the danger is that this ideological skirmish denies the country the open debate it needs about its fiscal choices.

Despite the return of consistent growth, the scale of austerity required after 2015, owing to the persistence of the structural deficit (which stands at 3.6 per cent of GDP), has not lessened. The Institute for Fiscal Studies has estimated that £12bn of further tax rises or welfare cuts will be needed merely to maintain departmental spending cuts at their current level. While Mr Osborne has declared his willingness to make welfare reductions of this size, he has notably refused to specify any beyond the abolition of housing benefit for the under-25s, a measure that would raise at most £1.2bn, and likely less after exemptions for the disabled and other vulnerable groups. Beyond the tax rises announced by Labour, most of which are to fund new spending programmes, Mr Balls has offered to remove winter fuel payments from the wealthiest 5 per cent of pensioners, a cut that would save just £100m.

For the sake of democracy as well as good government, we need a far wider debate about the services the state should fund and the taxes it should levy to pay for them. Both parties should consider significantly deeper cuts to a defence budget that remains the fourth largest in the world. At a time when property values are rising far faster than incomes, they should also look to increase the taxation of high-value estates, including steeper rates of stamp duty and the imposition of capital gains tax on first properties. Other imaginative options include the introduction of a land value tax and a higher rate of VAT on luxury items. But given that it seems the limits of departmental cuts will soon be reached, the parties ultimately may need to discuss openly the possibility of raising the only taxes that reap reliably large revenues: the basic rate of income tax, National Insurance and VAT. That would be a properly “tough choice”.
 

Ed Balls and George Osborne attend the State Opening of Parliament on May 8, 2013. Photograph: Getty Images.

This article first appeared in the 29 January 2014 issue of the New Statesman, The seven per cent problem

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Just you wait – soon fake news will come to football

No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

So it is all settled: Cristiano Ronaldo will be arriving at Carlisle United at the end of the month, just before deadline day. It all makes sense. He has fallen in love with a Herdwick sheep, just as Beatrix Potter did, and like her, he is putting his money and energy into helping Cumbria, the land of the Herdwick.

He fell out with his lover in Morocco, despite having a private plane to take him straight from every Real Madrid game to their weekly assignation, the moment this particular Herdwick came into his life. His mother will be coming with him, as well as his son, Cristiano Ronaldo, Jr. They want to bring the boy
up communing with nature, able to roam free, walking among the lakes and fells.

Behind the scenes, his agent has bought up CUFC and half of Cumbria on his behalf, including Sellafield, so it is a wise investment. Clearly CUFC will be promoted this year – just look where they are in the table – then zoom-zoom, up they go, back in the top league, at which point his agent hopes they will be offered megabucks by some half-witted Chinese/Russian/Arab moneybags.

Do you believe all that? It is what we now call in the trade fake news, or post-truth – or, to keep it simple, a total lie, or, to be vulgar, complete bollocks. (I made it up, although a pundit on French TV hinted that he thought the bit about Ronaldo’s friend in Morocco might not be too far-fetched. The stuff about Beatrix Potter loving Herdwicks is kosher.)

Fake news is already the number-one topic in 2017. Just think about all those round robins you got with Christmas cards, filled with fake news, such as grandchildren doing brilliantly at school, Dad’s dahlias winning prizes, while we have just bought a gem in Broadstairs for peanuts.

Fake news is everywhere in the world of politics and economics, business and celebrity gossip, because all the people who really care about such topics are sitting all day on Facebook making it up. And if they can’t be arsed to make it up, they pass on rubbish they know is made up.

Fake news has long been with us. Instead of dropping stuff on the internet, they used to drop it from the skies. I have a copy of a leaflet that the German propaganda machine dropped over our brave lads on the front line during the war. It shows what was happening back in Blighty – handsome US soldiers in bed with the wives and girlfriends of our Tommies stuck at the front.

So does it happen in football? At this time of the year, the tabloids and Sky are obsessed by transfer rumours, or rumours of transfer rumours, working themselves into a frenzy of self-perpetuating excitement, until the final minute of deadline day, when the climax comes at last, uh hum – all over the studio, what a mess.

In Reality, which is where I live, just off the North Circular – no, down a bit, move left, got it – there is no such thing as fake news in football. We are immune from fantasy facts. OK, there is gossip about the main players – will they move or will they not, will they be sued/prosecuted/dropped?

Football is concerned with facts. You have to get more goals than the other team, then you win the game. Fact. Because all the Prem games are live on telly, we millions of supplicant fans can see with our eyes who won. No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

I suppose the Russkis could hack into the Sky transmissions, making the ball bounce back out of the goal again, or manipulating the replay so goals get scored from impossible angles, or fiddling the electronic scoreboards.

Hmm, now I think about it, all facts can be fiddled, in this electronic age. The Premier League table could be total fiction. Bring back pigeons. You could trust them for the latest news. Oh, one has just arrived. Ronaldo’s romance  with the Herdwick is off! And so am I. Off to Barbados and Bequia
for two weeks.

Hunter Davies’s latest book is “The Biscuit Girls” (Ebury Press, £6.99)

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge