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Pol/Econ Government
Pol/Econ: Alistair and Gordon off the rails
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Thursday, 11 October 2007 Written by Henry Midgley

Its not been a good couple of weeks
for Gordon
British politics over the last few weeks has been convulsed with a row about taxation. Specifically a row about inheritance tax, a tax with a tiny yield to the Treasury and which only affects 6% of the population (historically a low proportion of the population). At the Conservative Party Conference, seeking a headline grabbing initiative, the Shadow Chancellor, Mr Osbourne, announced that the Conservatives would abolish inheritance tax. They would make up the loss of revenue by closing another tax loophole. The Labour party responded with anger- disputing the Shadow Chancellor's calculations but in reality their strategists were taken by surprise. The Cut turned out to be hugely popular particularly in marginal constituencies and Labour believed that it had to do something.

Politically there might be a reason to change the taxation regime but in policy terms there are very few reasons. Inheritance tax is one of the few entirely justified taxes that you can think of. It tends to promote social mobility, reducing the advantage given by the rich to their children through lucrative transfers of capitol. It is also one of the few taxes on capitol within the UK- most other taxation is either on consumption (VAT) or on income (Income Tax). Inheritance Tax is currently at a historical low level- inequality though is historically high and social mobility is also at a historical low. In policy terms reducing or abolishing inheritance tax isn't really an answer to any sensible question for the UK. Much of the British taxation system is inherently regressive and has moved that way over the last twenty five years, it would have been better to say abolish VAT on some essential goods, than to abolish a tax that only millionaires pay.

Despite that the Chancellor, Alistair Darling, felt he had to respond. He announced that inheritance tax would be reduced and its impact upon married couples would be diluted. The details of the policy are still being chewed over in the press, but the headline was reduction as opposed to the Tory abolition. This is still bad policy. Again Darling has reduced a tax which impacts most on those who can afford to pay tax and not looked at reducing tax on the poorest. Furthermore any change to inheritance tax supports social immobility. Ultimately Darling's policy is a lesser evil than the conservative policy but its still not a good policy.


Cutting taxes for Millionaires!
Not Socialism Mr Brown and definitely
not clever!
The worst thing though about Mr Darling's new announcement wasn't the bad policy- most governments have many bad policies. It is awful politics though. Mr Darling and his friend, the Prime Minister, Mr Brown are both on the backfoot. They have yielded the leadership of the debate to the conservative party. Mr Brown was humiliated at Prime Minister's Questions on Wednesday, assaulted by his opposite number Mr Cameron. One Tory MP asked Mr Brown whether his imitation of Tory policy was flattery for the Conservative party or a belated attempt at salvation for his political soul. Quips flew across the chamber and the dour Scot in the centre looked unamused by the affair.

He doesn't have anyone to blame though but himself. After-all Mr Brown could have followed his predecessor Mr Blair's strategy. Mr Blair as soon as the Conservatives announced a policy, would describe it as the next thing to National Socialism. Every MP and minister would go around the country repeating the exact form of words in the same way and pressure groups would be invited to write reports substantiating the charge. Then once the Conservatives had been humiliated, bashed into submission, Mr Blair would walk off with their policy if he thought it was a good election winning (sorry sensible and prudential) policy. He perfected the art, and Mr Brown had to do nothing else but follow the template. But he didn't. The Prime Minister panicked- he decided to follow the winds and grab the policy before the Tories had lost the advantage of first proposing it, now he merely looks stupid.


No wonder he didn't enjoy
Prime Minister's Questions!
These events undermine two of Mr Brown's key strengths on coming into office. He has a reputation for being a gloomy, boring calculator of a man. However he also has the reputation of being a serious thinker with good ideas about policy and being consistent and determined. He has the reputation of being an adult as opposed to Mr Cameron's adolescent. Well the events of the last week have seen the adolescent start proposing policies that the adult has taken up. Mr Brown's seriousness has taken a blow, if this is a good idea shouldn't he have come up with it by himself. Mr Brown has been shown up as inconsistent as well- attacking a policy minutes before adopting it.

It hasn't been a good week for him- especially given the election presentation disaster as well- there is no doubt that this is not enough to destroy Mr Brown's Premiership. He should still be in with a very good chance of winning the next election. But allowing his Chancellor to mishandle the Pre Budget report in such a catastrophic way indicates a weakness that his opponnets will savour!