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« David Cameron set for landslide victory, say two surveys | Main | Alan Duncan tipped for big promotion »

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R UK

When will people realize that the 2001 election was a landslide because of a Lib Lab electoral pact. Labour's share of the vote had slumped from 1997.

The 2005 election was rigged by postal voting, and only won by Labour because of the rigging.

Labour were trounced in the polling booth coming in third. They won the 6 million postal votes hands down. Come on, Team. Wake up! Look at the facts. The International Community all know. The story hasn't been told in Britain yet, but one day it will.

John Hustings

"Labour were trounced in the polling booth coming in third. They won the 6 million postal votes hands down. Come on, Team. Wake up! Look at the facts. The International Community all know. The story hasn't been told in Britain yet, but one day it will."

Then why are the Tories trailing in every opinion poll? (And they have been doing so for well over a decade.)

Daniel Vince-Archer

Of all your paranoid ramblings Henry/Malcolm/Roger, that has to be the worst.

How do you explain the fact that the BBC/ITV exit poll of 17,000 people correctly predicted the election result to the exact seat? The margin of error on that exit poll must be absolutely minute.

Also all 5 final major national opinion polls got the result correct to within approx 1% (and the Conservatives did marginally better than the average of those 5 polls).

The chances of all those polls being wrong by an amount such that Labour really lost the election must be about one in a trillion!

Rick

Unless we get tax cuts our economy won't grow faster, and will sink to the stagnant state of the European economies.

The British economy grows at max 3% or the B of P explodes, however even at lower growth rates the trade deficit balloons since manufacturing industry was destroyed.

Latvia et are jokes - these are tiny little countries with no real industry or population exporting labour in search of jobs. Mature economies do not grow fast.

Quality of growth is what matters, unfortunately British growth is not export-driven Germany's is. Britain's is consumption driven not production driven.

Each time house prices increase British GDP grows; if oil output is subtracted British growth loks even more anaemic. Unfortunately Tories seem to propose tax cuts as a form of Keynesian Demand Management and imports just increase.

Sean Fear


Growth is growth Rick. Our standard of living is now higher than that of Germany (but doubtless won't be if Labour stay in power for much longer.)

My point about a depression was that most economists think it sensible to reduce taxes in a depression - in contrast to George Osborne's view.

Back in the twenties, the orthodoxy was that you cut public spending, and increased taxes, during a recession.

Jack Stone - we didn't offer tax cuts at the last election. We offered a lower rate of tax increases than Labour were offering.

John Hustings

"Jack Stone - we didn't offer tax cuts at the last election. We offered a lower rate of tax increases than Labour were offering."

That's not technically right. We *were* offering tax cuts based on a lower rate of *spending* increase.

The thing we were *not* doing was cutting spending.

Daniel Vince-Archer

"Latvia et are jokes - these are tiny little countries with no real industry or population exporting labour in search of jobs."

Let's not belittle the achievements of the Baltic states too much Rick. As a model of post-Soviet transition, the Baltic example compares very favourably with that of their southern neighbour Belarus, which is an economic horror story.

The point about being insignificant countries is one I often hear when I point out the most prosperous European countries aren't actually in the European Union. Rather than attempting to belittle the achievements of these 'tiny' countries, we should recognise them for what they are and try and learn from them.

Cllr Iain Lindley

We shouldn't be belittling the Baltic states but likewise we shouldn't kid ourselves that their economies compare to our own.

Belarus is little better than an authoritarian communist dictatorship from what I've heard and it would be difficult not to be compared favourably to it!

Daniel Vince-Archer

"Belarus is little better than an authoritarian communist dictatorship from what I've heard and it would be difficult not to be compared favourably to it!"

Yes but as an indicator of just how disastrous post-Soviet transition could be (Moldova is another one that springs to mind), anybody seeking to pour scorn on the progress achieved in the Baltic states should consider that things could clearly have been a lot worse.

Derek

Interestingly, Rick, no one seems to bother about the balance of payments any more. It has taken a back seat ever since fixed exchange rates were done away with. Now that currencies are constantly changing in value relative to one another, you rarely hear the balance of payments get mentioned. It is already horrendously in the red. Whether some forms of growth are superior to others is a matter of debate. I used to believe that manufacturing was the best, but now it seems that any growth is good.

Logic dictates that we ought to try to balance imports and exports, but in the world of macro-economics a different sort of logic seems to apply.

One thing seems to be beyond doubt, which is that we must avoid a recession, though how we can go on doing that while taxes go on increasing and business has more and more regulation placed on it I don't know. If the economy stalls, that will be the key to us winning, and we must have radical policies to do something about it. If we don't use DDs suggestions, what else can we do?

Sean Fear


Derek, trying to measure the balance of payments these days is a horrendously difficult task. Our "visible" trade is in deficit; our "invisible" trade in surplus.

Adding up the balance of payments across every country consistently shows that the World is in deficit (presumably to Mars!)

Daniel Vince-Archer

I seem to recall reading somewhere during A Level Geography that Micronesia is the only country in the world without a balance of payments deficit. Of course I'm probably completely mistaken (I'm sure the font of all knowledge, a.k.a. Professor Richard Sandmann, won't hesitate to correct me), as that was the best part of five years ago!

(I'm sure nobody's interested, but the other completely useless fact stuck in my head from that time is that Iceland is the only country without an army!)

tax cut stupidity

We should beware of being boxed in. If we only offer tax cuts when the economy is growing strongly we will only be offering them when we will likely lose. And if we don't offer tax cuts when the economy is weak, we won't have the convincing reassurance that the public look for when times are hard, and likely lose. Remember Kinnock and tax increases versus Major and tax cuts anyone?

Derek

The figures I have are for the balance of trade, so I don't know if that is the same as the balance of payments. Apparently, the UK had a surplus on its balance of trade in goods and services in May 1997, but has now recorded a deficit in every month since January 1998. By August 2005, our monthly trade deficit hit a record high of £5.6 billion. But this has not caused any great consternation on Newsnight, so does it matter? Surely it must?

Sean Fear


The balance of trade only records "visible" trade Derek (ie farm produce, natural resources, manufactuing).

The balance of payments includes "invisible" trade (ie things like insurance, banking, financial services of various kinds, income from investments etc).

The balance of payments is in deficit, but not by any huge amount.

Derek

Trade does include goods and services, Sean. So wouldn't the services include insurance, banking etc?

loyal_tory

“The British economy grows at max 3% or the B of P explodes, however even at lower growth rates the trade deficit balloons since manufacturing industry was destroyed.”

That isn't true. Britain has grown faster than this without balance of payments "exploding"--not that a balance of payments deficit is necessarily a bad thing. And we're suffering "manufacturing industry was destroyed"--not even Labour buys that hoary old myth any more. Buying cheaper manufactured goods from abroad while specialising in more sophisticated services is exactly the sort of "maturity" that the British economy needs, and is responsible for living standards going up as much as they have, ahead of France, Germany, Italy...

“Latvia et are jokes - these are tiny little countries with no real industry or population exporting labour in search of jobs. Mature economies do not grow fast.”

This is nonsense. First of all "real industry" has nothing to do with an economy's ability to grow. Second, on maturity, Ireland used to be part of the United Kingdom. It tended to have higher tax rates and grow more slowly after Independence. But more recently, it has enjoyed lower tax rates and higher growth rates. The same Economist that predicts 4.7% growth for Ireland and 1.6% growth for us.(my mistake: they are in fact predicting that the UK will grow more slowly than France next year itself a cause for alarm that should get any Conservative Shadow Chancellor focused on tax cuts) shows that GDP per head in Ireland will is now $52,940, compared to $38,860 here. That could be us—-but not without tax cuts.

Also before Britain was a “mature” economy, we didn’t grow at anything like the rate of the Baltic tigers. Neither did the United States. But both countries have increased their growth rates and the length of their economic expansions by adopting tax cuts along with other sensible policies.

“Quality of growth is what matters, unfortunately British growth is not export-driven Germany's is. Britain's is consumption driven not production driven.”

Sorry but Britain’s standard of living is higher than Germany’s—that’s the quality that matters: $38,860 per head versus $36,290, according to The Economist. That has been the case for many years now but as Sean says it won’t be much longer if both parties adopt the New Labour policy of merely promising not to raise tax (which tends to degenerate into actually doing so).

“Each time house prices increase British GDP grows; if oil output is subtracted British growth loks even more anaemic. Unfortunately Tories seem to propose tax cuts as a form of Keynesian Demand Management and imports just increases.”

That's right, Britain's economy is just based on oil and people shopping for foreign goods. Come off it. Couldn't be that we are doing better than France and Germany because we have made the transition from an old-style manufacturing economy, or that our financial services sector is one of the most competitive in the world? No, it’s so terrible here that people from Eastern Europe, France, Scandinavia and the Third World leave their own countries because there are jobs being created right across the income scale and taxes are not as high as our continental neighbours.

Tories support tax cuts as a supply side policy to increase the incentives to work, save and invest. This paid huge dividends in the 1980s when it substantially strengthened our economy. The problem with this government is that they've undermined what made the UK economy strong and now our growth rates have fallen as a result.

The Conservative Party needs to explain to the British people what will be required to get strong growth back, and have the determination not to be blown off course.

cfox

"He has said he wants to finish his book and do other outside work. He'd rather do Foreign Sec I remember reading. If only Hague could be Shadow Chancellor, what a battle that would be!"

Can't the party, or William Hague out of his reported annual 1m earnings pay for some help with the book and serve as Shadow Chancellor? Winston Churchill wrote many books while being an active minister in government and he had a big team of hired help.

Alexander Drake

Loyal Tory, if Australia is going to be offered as an example on this discussion, I thought I would offer these points.

There's a difference between what a party needs to do in order to get elected first, and then the sorts of policies it can propose to demonstrate it is capable of governing in the national interest.

I think the better approach for the Conservative leadership is to get in office first, and THEN argue for tax reform from the vantage point of incumbency.

The (then) Liberal Opposition here in Australia tried to run the 1993 campaign around tax reform based on introducing a VAT-style tax system. It was the unlosable election - and we lost it.

However, in 1998 John Howard, after being in office for two years, went to an election arguing for the new tax system, and won. It was a close run thing (and the Liberals only pulled it off because Lynton Crosby ran an on-the-ground campaign that delivered the marginal seats needed) but it worked. The voters recognised it was a change in the national interest.

So - gain the country's confidence that you are a party that is capable of acting in the national interest, and THEN go for tax reform. But don't think the Party has the cred to try and pull it off from Opposition.

(Also, I also think that the term "tax reform" is more saleable than "cuts" - cuts make one think of services when uttered by a Conservative, and we all know where that takes us, electorally speaking.)

Another Australian with an interest in UK politics has his thoughts here on Australian e-jounral On Line Opinion. A lot here won't like it, but if you really want tax reform once you are in Government it is good advice:

http://www.onlineopinion.com.au/view.asp?article=3892

"Opposition leaders must hold their nerve and their line and not be tempted either to maverickism or to idealism. They must sooth and cajole, stay positive and sunny. It may be boring but it is true: the path to government is straight down the centre."

loyal_tory

"Also, I also think that the term "tax reform" is more saleable than "cuts" - cuts make one think of services when uttered by a Conservative, and we all know where that takes us, electorally speaking."

I agree with you about that, but I have to say our leadership election has been conducted on such a superficial level on tax that I just used the term tax cuts on this blog because I wanted to be clear about what I was talking about: reducing tax rates. "Tax reform" can mean higher or lower tax rates.

Surely though, the VAT-type system was easily characterised as a tax increase? And Howard's later success was in part based on repudiating his earlier views on the GST. Also, Howard had a reputation with the public and the media for favouring tax cuts as a matter of personal conviction. The perception of one of our leadership candidates is rather different.

I would not, for example, recommend the Tories going into an election as an opposition supporting a flat tax (even though I believe it has much to commend it), or any new tax system. But we have won in opposition by promising tax cuts--not precise rates in 1979 but with a promise to cut those rates--and at a time when public faith in more spending on unreformed services was much stronger than it is today.

Rob

"Opposition leaders must hold their nerve and their line and not be tempted either to maverickism or to idealism. They must sooth and cajole, stay positive and sunny. It may be boring but it is true: the path to government is straight down the centre."

Find this very difficult to agree with quite frankly. The path to government is not abandoning ideals and moving towards an unpopular government, it is by moving the centre towards our ideals. We need to provide the electorate with "a choice not an echo" and focus on the economy, and have a strong economic policy based on individual freedom and the free market. Until Conservatives can provide the answers for the greatest questions of government we will never get back in power again. Instead of moderation we need political courage. Tax cuts to encourage growth and enhance freedom and real reform of the public services such as re-introducing a selective school system, privatising the NHS, cutting spending etc. Of course this will be difficult, of course this will be risky therefore we need to start making our case now, and have talented shadow ministers to communicate these ideas. What we must not do is not consider radical policies in an effort to look moderate. "Extremism in pursuit of liberty is not a vice."

(quoted a lot of Barry Goldwater for some strange reason)

Rick

Growth is growth Rick. Our standard of living is now higher than that of Germany

Only in PER CAPITA terms of GDP/head - and Luxembourg and Ireland beat Britain into a cocked hat. These are simple games of arithmetic using a US Dollar.

The simple fact is that Britain has a smaller economy than Germany dependent upon inflating house prices and huge public spending. In 4 years time Britain will follow Germany down the ramp - also 0.5% British economic growth is dependent upon Germany directly.

What matters is the Output side rather than Incomes and GRowth is not Growth Sean, or the State could employ 80% people as in Denmark and boast about superior performance compared to the USA.

Rick

This paid huge dividends in the 1980s when it substantially strengthened our economy.

Actually it was North Sea Oil which provided up to 10% Govt tax revenue which allowed tax cuts and financed the balance of trade deficits. When Britain starts importing oil and gas it will be interesting to see how the terms of trade change adversely.

I think the next government will have quite some belt-tightening to do - China wants oil and gas and coal, and since China manufactures most of Britain's needs, they should be able to pay for it.

Rick

Back in the twenties, the orthodoxy was that you cut public spending, and increased taxes, during a recession.

Yes Sean, but you may recall that Stanley Baldwin had been Chancellor and that The British Empire had fought a war against Germany and Austria-Hungary and incurred huge war debts, especially to the US. The deal Baldwin negotiated in 1922 with the US Treasury was incompetent and committed 40% British Public Spending to Debt Repayment.

Three years later another incompetent Chancellor, W. S. Churchill, returned the Pound to Gold in 1925 and destroyed British exports, precipitated a General Strike, and the Invergordon Naval Mutiny, cut teachers' pay, and deflated the economy, plus which he cut Defence Spending and stopped work on the defence system at Singapore.

It was Neville Chamberlain who proceeded limited reflation by developing special areeas like Trafford Park in Manchester to create work and injecting funds into public health, and after 1935 into rearmament.

It was not the level of public spending in the 1920s that was the problem, merely the direction. In a Conservative Party dominated by The City it was focused on Debt Repayment which was deflationary, and on cutting other spending items deemed to be Inflationary.

Once the Gold Standard was restored by Churchill deflation was necessary to get back to the Pre-War Parity of $4-8675 which managed to destroy export markets for coal, engineering etc; and which Stafford Cripps finally cut to $2-49.

If you have an overvalued exchange rate and a huge foreign debt, which made Britain iin the 1920s rather like Argentina today, there are not a lot of options. I believe it was 1937 before Britain defaulted on its repayments to the USA.

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