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The tycoon tax proves the power of the Curse of Clegg

By Paul Goodman
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The row about tax and charity is a scene on a wider canvas.  Yesterday morning, David Gauke reminded Today's listeners that the move is part of "a general cap on reliefs": in other words, part of a "tycoon tax".  George Osborne seems to have become convinced of the need for one, and though he tends to avoid the phrase he briefed the Daily Telegraph to that end earlier this month.

The Chancellor must take responsibility for his Department's policy.  But he isn't the first member of the Government to suggest that everyone should pay a minimum proportion of their income in tax.  An even more senior Minister got there first.  Nick Clegg floated the tycoon tax in the same paper almost exactly a month before, using the same language that Osborne was later mocked for deploying:

  • "He asked his officials to look at the situation in Britain, and was shocked at what the inquiry revealed." (Clegg interview, 9/3/12)
  • “I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right. (Osborne quoted, 10/4/12)

I'm not among those that believe that the good things the Coalition is doing have no connection with the Liberal Democrats (for example, the push to get lower-paid workers out of tax has much to do with them).  Nor is Clegg more blameworthy than his fellow yellow Ministers for many of the bad ones (such as the "fair access" policy).

Clegg curse copyBut the brouhaha over the "philanthropy tax" is different.  It is not only evidence of the law of unexpected consequences (Who's for taxing tycoons?  A lot of people.  Who's for risking lower funds for charities?  Rather fewer), but a reminder that the Deputy Prime Minister himself has a Reverse Midas Touch - what Stewart Jackson MP described as "the Curse of Clegg".

The Sunday Times (£) has claimed that Clegg's venture "took senior Lib Dem figures, including key advisers who had drawn up the party’s policies on tax, by surprise" and "is believed to have been developed by Clegg in private with [Danny] Alexander".  But whatever happened, there is no escape from the Curse of Clegg.  Consider:

  • The NHS Bill.  Shirley Williams and Evan Harris led the original revolt against the bill in the aftermath of the AV referendum.  Clegg then threw his weight behind it - and a thousand or so amendments to an originally coherent measure were the eventual result.
  • Tuition fees.  Need more be said?
  • Fining people who don't vote.  It was reported yesterday that Clegg "is backing proposals to ensure that every individual is responsible for registering themselves on the electoral roll".  In other words, register - or we'll fine you.  I suspect that the Curse will claim this one early.
  • Lords reform.  Other than Liberal Democrat MPs, no-one really wants it - including Liberal Democrat Peers.  Any reform bill will logjam Parliament and wear down the Government.

There are three reasons why Clegg, like the sailor in Treasure Island, has been tipped the black spot.  First, the election debates set him very high.  Second, the tuition fees U-turn brought him down very low.  The contrast between his Mr Clean pledges and office-bound compromises were an ERM moment: they fixed an image of him in voters' minds that will never be scoured away.

Finally, he has gone along since the loss of AV - with increasing abandon - with those in his party who want to define his party against its Coalition partners rather than with them. The Rose Garden moment was unsustainable.  But the pendulum has swung wildly in the other direction.  Not so long ago, the Quad didn't leak.  Now it does, and mainly from the yellow end.

Consider, for example, the pre-budget briefing on the 50p rate and the threshold rise.  The Chancellor was left with nothing to announce.  But the resulting pasty-and-granny-tax publicity didn't just damage him: it damaged the whole Government, of which the Deputy Prime Minister is a part.

He now says that he will "seek to win votes at the next election by publishing details of secret deals inside the Coalition, and blaming the Conservatives for policies that he dislikes".  This leaves with him fewer friends at the top Tory table than he had.  And his place at his party's own isn't always pleasant to occupy.  Remember "Calamity Clegg"?

The Deputy Prime Minister has negative power - the power to block, as proved by the health bill.  What he lacks is its positive equivalent - the ability to turn what he touches into success.  To date, differentiation hasn't meant the Tories getting the blame: it's meant him sharing it.  Clegg himself is a victim of the curse of Clegg.


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