Sunday, 12 April 2015

Wolf in Sheep's clothing - or the other way around?

The country has suffered the greatest recession in living memory, every party admits more painful austerity is on the way after May's election and this state of affairs will have to continue throughout the next parliament if there is a vague chance of wiping out the deficit, let alone the national debt. And yet, judging by their actions of the last few days, the various parties think they're living in clover.

The Conservative Party is acting like a chap who thinks he's the latest Euromillions winner, flashing the cash with abandon, promising his mates all the gifts they could want; only to discover later he got the numbers wrong.

The giveaways have come in a rush: regulated rail fares will be pegged with RPI throughout the lifetime of the next parliament; the NHS will receive the £8billion a year by 2020 which independent experts reckon it needs to keep up with our ageing population; and the next Tory government - somewhat failing to understand the principle of volunteering - would offer 15million workers the opportunity of three days' leave every year to volunteer.

All this is being offered at the same time as the party rules out raising National Insurance and VAT and offers another tax cut to the extremely wealthy through its Inheritance Tax plans.

This is not to suggest these are unpopular ideas (indeed, two of them could benefit me personally hugely - than you George!) but nothing has been offered, by way of explanation, as to how the country would pay for such perks.

And they all come on top of the Conservatives failing to say where £1billion of welfare cuts will come from after the vote. Some might think this would be a rather crucial nugget of detail before deciding which way to swing when voters finally enter the polling booth on May 7,

This campaign of giveaways emerged suddenly after a few days of negative attacks, and negative press especially in the case of Michael Fallon's ferocious attempt at knifing Ed Miliband's character. Perhaps this timing was always the tactic but it does seem abrupt; some commentators have not shied away from calling it panicky. And, there is little doubt, it comes in stark contrast to the fiscal discipline to which George Osborne has consistently claimed his party adhered.

For instance, when Labour suggested a 'tough cap' on rail fares in August 2014, Transport Secretary Patrick McLoughlin denounced it as 'yet another unfunded spending promise' that 'would cost £1.8bn over the lifetime of the next parliament and be paid for by more borrowing and higher taxes'.

When Andrew Marr challenged Chancellor of the Exchequer to explain where the extra NHS funds would come from, all George Osborne would say was that it was 'part of our balanced plan'. So far, all the weight is on one side of the economic see-saw.

Also, as some clever person pointed out on Twitter, if the Conservatives were planning this move, why not actually commit to such spending in the most recent Budget?

Labour has not been much better. Savings have been promised but not nearly amounting to the levels needed to have a credible attempt at tackling the deficit.

In a brazen attempt to steal the Conservative Party's clothes, Ed Miliband will, at the launch of Labour's manifesto tomorrow, commit a Labour government to a new 'Budget Responsibility Lock'.

This, the party explains, will ensure that 'every policy... will be paid for without requiring any additional borrowing' and all parties 'in the future will have their spending and tax commitments independently audited by the Office for Budget Responsibility before a General Election'.

Launching the manifesto, Ed Miliband will declare:

'The very start of our manifesto is different to previous elections. It does not do what most manifestos do. It isn't a shopping list of spending policies. It does something different: its very first page sets out a vow to protect our nation's finances; a clear commitment that every policy in this Manifesto is paid for without a single penny of extra borrowing.'

And he is set to go on, rounding on the Tories for their apparently generous spending commitments.

'In recent days you have seen the Conservatives throwing spending promises around with no idea of where the money is coming from, promises which are unfunded, unfair and unbelievable.

'That approach is bad for the nation's books. And nothing is more dangerous to our NHS than saying you will protect it without being able to say where the money is coming from. You can't help the NHS with an IOU.'

Considering the state of the economy when Labour last left office, it is an audacious bid even to attempt to claim the economic moral high ground. For five years, the Conservatives and Liberal Democrats have called - whether reasonably or not - for Ed Balls and Ed Miliband to apologise for Labour's economic record. That being so it is fairly remarkable that the Labour Party has been given the opportunity to swoop on to this political battle ground and attempt a rebrand. Will it persuade ordinary voters that Labour is suddenly fiscally responsible? Its promise of no extra borrowing is surely a position no government could really maintain if faced with tricky economic circumstances.

Moreover, the insistence on rectitude and the refusal of any 'extra borrowing' neatly overlooks the significant distinction between deficit and debt; and this after we have been carefully introduced, in recent years, to some of the economic and linguistic distinctions nestling within these terms. it is all very perplexing.

The Conservative manifesto is being published on Tuesday; they might need to start offering some answers to all the questions.

All concerned should be aware that Paul Johnson, the Director of the Institute for Fiscal Studies, told The World This Weekend that all parties were 'making up numbers'.

'I've found this entire debate from all the parties really deeply depressing. You've had the main parties ruling out whole hosts of relatively straightforward ways of increasing tax, talking about raising tax from some other group, be they the rich or the non-doms or the tax avoiders, but this is all real money and has real effects on the economy, and no sense from anybody about a serious way forward for the tax system.'