Print Story The big Brown mess we're in - Part 1
Politics
By DullTrev (Fri Jul 04, 2008 at 04:36:00 AM EST) politics, Brown, Labour, trust, fun loving cowwqas. (all tags)
This is a personal view of the past year, coloured by emotion.  This is from memory, so the timelines may be mixed and confused, and facts may be completely wrong.  I don't care.  This one is about the visceral side of politics, about my emotional response to all this.

A year ago, I wrote a lament for socialism.  Brown had secured the leadership of the Labour Party without an election, and so became Prime Minister.  I predicted he would be the same as Blair, only with different presentation skills.  Well, I suppose he tried to be the same as Blair, but his lack of presentation skills of any sort scuppered that.



And yet it all started so well, for him, if not the country.  We were beset by repeated floodings, the re-emergence of foot and mouth disease and attempted terrorist attacks in London and Glasgow.  But Brown seemed to be the right man to keep the ship on course.  His response to the floods was seen as good, he cut short his holiday to co-ordinate the response to foot and mouth, and his presence was reassuring following the attempted bombings.  Brown was riding high, his popularity enormous, his poll ratings stratospheric.

But... he also managed to alienate the left of the Labour Party, some of whom had been clinging desperately to the hope his premiership would signal a return to 'traditional' Labour values, with one simple act.  He received Thatcher at Downing Street, in the full glare of publicity, praising her as a "conviction politician".  Now, the visit may very well have been a kindness to the 81 year-old widow, but for Brown, the supposed more left-wing of the Brown-Blair partnership, to welcome her, praise her, appear with her in full publicity was, I believe, a terrible mistake for him.  Oh yes, it enabled him to score some short term cheap points against the Conservatives (who were trying to portray themselves as more, well, fluffy than the Thatcher years), but it damaged his relationship with the core of his own party, those who had been hanging on for him for years.  It revealed an obsession with student style politics, cheap point scoring, and not the kind of conviction politics he was supposedly praising.

From that point on, it all started to go wrong.  The polls were so good that some within the government started to press Brown to hold a snap general election.  This was not necessarily a bad idea, but whichever decision was to be made, it had to be made quickly.  As it was, Brown dithered, and the inheritance tax issue suddenly exploded.

I'm still amazed that this issue was as big as it was.  Inheritance tax is, frankly, a non-issue to the overwhelming majority of voters.  96% of estates are unaffected by it.  And yet, somehow, working and middle class voters, who would never have to deal with it, suddenly saw it as a major problem.  This 'tax on death' as it was dubbed was used by the Tories was used as an example of 'stealth taxes', of a cunning and devious administration pinching pennies from the public.  I even heard one columnist claiming inheritance tax was causing a reduction in first-time house buyers, as they had to pay up on money inherited, rather than buy a house...

This was a chance for Brown to show himself as a conviction politician.  Inheritance tax catches only the very largest estates.  It helps to stop the accumulation of vast family fortunes, dynastic money and privilege.  And yet... he was running scared from Tory attacks.  They had, frankly, left him alone over the summer, his honeymoon period.  To have attacked him while the country was reeling from various calamities would have seemed churlish.  But now the gloves were off, and Brown had to deal with attacks on him for the first time.  And he failed the test.

Instead of going out and defending the whole concept of the tax, he crumbled, and got his puppet chancellor to announce a rapid change.  The change in itself was minor - a combining of spousal allowances, meaning instead of two allowances of £300,000, there was one of £600,000 - and achieved little - anyone in a position to worry about the tax had already arranged their affairs to achieve the same effect.  But the perception was that Brown had finally been 'found out' on a stealth tax, and had backed down.  Suddenly the Tories were able to go back to their old mantra of claiming Labour were a high tax, high spend party, and questions on their economic competence were back on the table, where they hadn't been for more than a decade.

In light of this, and the damaging effect on the polls, Brown finally quashed the rumours of a snap election.  If he'd quashed the rumours immediately, it wouldn't have been a problem for him.  But because he allowed the speculation to drag on for weeks, he was seen to be running from the issue.  Personally, I have some sympathy with him on this issue.  I take forever to make a decision - and when I do make it, it is almost always the same as I would have made long before.  I have issues with making a final decision until I absolutely must - it seems foolish to do so before then.  I acknowledge this as a failing in myself, and I recognise the same flaw in Brown.  I don't think it means the decisions he makes are wrong, possibly quite the opposite.  But unfortunately, these days it is better for a prime minister to make a quick decision, any decision, and stick with it, than it is for him to be seem as 'dithering'.  'Ditherer Brown' was another label the Tories were going to use over and over again in the months to come.  Better to be quick and wrong than slow and right.

And, of course, we mustn't forget Northern Rock.

Full disclosure: I've had an account with Northern Rock since the days it was a building society.  I think it's got about £50 in it, just as it has for the last decade.  I also voted for it to stay a building society.  I think there may be one other person out there who voted the same way, but I have yet to find them.

Northern Rock was a strange one.  Its business model was perfect while credit was cheap.  It even had some contingency for when credit became more expensive.  What it didn't have was contingency for when credit became impossible to find.  Northern Rock was like a desperate young house-holder, borrowing money on 0% credit cards to pay the mortgage.  But when the 0% deals ended, they had nowhere to turn.  Like the young house-holder, they had a lender of last resort - not their mum and dad, but the Bank of England.  But like gossipy parents, the BoE couldn't keep its mouth shut, and let everyone know what was happening.  (To be fair, it is entirely possible it would have fallen foul of EU competition rules if it hadn't.)  Whatever the reasons, this loquacity revealed the BoE's complete inability to deal with members of the public.  They told everyone that Northern Rock had come to them cap in hand, but that everything was going to be fine.  Honest.

The next day, there was a run on Northern Rock. 

Queues stretched along streets.  News reporters searched desperately for signs of wild and frantic panic, but were met with taciturn northerners.  "Why are you panicking?" asked the reporters.  "I'm not, I'm being rational.  I am removing money to put it somewhere safer."  The reporters went elsewhere to search for scenes of chaos.  They should have been looking in Whitehall.

Northern Rock was now doomed.  Cash being removed from accounts made its reliance on credit more extreme, meaning they needed more help from the BoE, meaning more people felt they had to get their money out.  Their shares plummeted to become junk.  As a result of their demutualisation, there were hordes of small investors, those given shares when it converted to a bank who had never sold them, never owned any other shares.  The meaning of a shareholder economy suddenly became clear to them.

And all the while, the chancellor and BoE dillied and dallied over the right response.  After a couple of days, they guaranteed all deposits in the bank, but it was too little too late.  Desperate to avoid nationalisation and all the echoes off the 1970s that word brought, the government allowed the bank to limp along, the funds provided by the BoE growing ever greater.  Finally, months into the crisis, the government bit the bullet and took the bank into 'temporary public ownership'.  None in the government mentioned the n-word.

There were claims the BoE had provided the money to Northern Rock only because it was a big player in the north-east off England, a Labour heartland, that they were protecting their vote at the expense of the rest of the country.  The north-east were bemused, both at the idea Northern Rock was that important to them, and at the idea this Labour government would do anything to protect them.  They had already lost their belief.

Northern Rock was a victim of the global credit crunch, which, as we all know, is all the fault of the Americans.  (The fact no-one was forced to buy these bizarre credit vehicles is handily ignored in that nice view, but never-mind.)  It was a victim of a global event, which hammered banks around the globe.  Northern Rock's mistake was that it had never really expanded its traditional banking arm, relying on mortgages to increase their profits without bringing in more depositors to help with liquidity.  It wasn't a bad plan for many years, but when the perfect storm came, it couldn't weather it.

Regardless of the causes of its failure, it, fairly or not, was used as a symbol of economic mismanagement by the government, by Gordon Brown specifically.  He had built his name and reputation by being the Iron Chancellor, on economic competence, on years of quite stunning performance of the UK economy.  Now, finally, the opposition had a way of attacking that.  They seized on it gleefully, the Tories believing they now had a magic combination - they could accuse Brown of cruel and unfair taxation, and of squandering the money in economic mismanagement.  It was like the 1980s all over again.

But it was worse than that.  Everyone knew Brown had been desperate to avoid nationalisation.  And yet, after months and months, he has been forced to allow it.  This portrayed him as both being forced into doing something, and being a ditherer.  His reputation, his image, his character seemed to be falling apart more and more every day.

And then came the biggie.

Unlike his other problems, the 10p tax row was something Brown should have seen coming a mile off.  He has no-one to blame but himself for this one.  It was a taxation policy he created and announced as chancellor.  Essentially, there used to be a starting rate of tax of 10% on the first £2,000 above your personal allowance, followed by the basic rate of 22%.  In his last budget, Brown reduced the basic rate of income tax to 20%, and completely abolished the 10% tax rate - replacing it with the basic rate.  What this meant was that for that first £2,000 above your personal allowance, your tax rate was doubled.  Now, the more you earned that was in the basic rate band, the better off you would be - the 2% cut quickly compensated.  But, of course, if you didn't earn much, you lost out a lot.

Of course, it wasn't as simple as this, it rarely is.  Various tax credits, allowances, and benefits changes meant many people weren't affected at all.  But there was a core of people who were badly hit, mainly young single childless people with low incomes.  (Incidentally, a group who have very low voting rates, but I am sure this had no input into the calculations.)

In simple terms: some of the poorest people were paying more tax, while the better off were paying less.

If the economy had been doing well, I doubt this would have been the issue it was.  But while people were starting to suffer with rapidly rising food and petrol prices, this added tax was too much.  Labour MPs, who had presumably not been paying attention when this was announced the previous year, suddenly started screaming for this tax change to be stopped.  The government remained firm - you couldn't go changing any of the tax plans on a whim, the whole worked as a package or not at all.  It was just too complex to fiddle with.

This was too good an opportunity for the Tories to pass up.  They were able to attack a Labour prime minister for taxing the poor to give to the rich.  Their audacity was breathtaking.  The resonance with the public incredible.  And, sadly, the logic was unarguable.  It was precisely what a Labour government had done.

This row rumbled on.  Ultimately, the government was forced into a climb-down, again.  The possible revolt by Labour MPs, who would have voted against the finance bill, had every chance of success, leaving the government in an impossible position.  Emergency changes were made, allegedly in response to the changed economic environment.  Brown had said nothing would change, and been forced to back down.  He was seen as weak, as a ditherer, and as attempting to get away with an unfair tax.

It still amazes me how many people in the government still don't seem to understand what a huge issue this was.  They have put in place a package which compensates almost all those who would have lost out, and more.  But this one wasn't about the money.  This one was about perception.  Labour's supporters and voters had forgiven many of the government's excesses.  There was anger over wars, over the friendliness to business, their attitude to the US, many, many things.  But through it all was a belief that, fundamentally, the party would protect the worst off in society.  That, ultimately, they would make things better for them.

That illusion was shattered, and no amount of back-pedalling can bring it back.  Some members of the government seem to believe that the changes they made solved the issue, but the real issue was the loss of trust from their most committed voters.  Trust takes a long time to build, and can be destroyed in an instant.  And once you have lost it, it is almost impossible to get it back.

The cross-section of society that has kept Labour in power lost their trust.  The traditional core vote has seen the Labour government attacking them.  The 'middle Britain' voters have had it rubbed in their face that they are being bought at the expense of others.

And worst of all, because of a peculiarity of the British character, the whole farrago was exacerbated by one simple fact: the taxation changes were seen as unfair.  For a government to be seen as unfair is the kiss of death.

This, to me, was the key point.  Before this, Brown could have recovered.  Some astute handling of the economy, guiding Britain through the bad times, could have saved him.  Being seen to ameliorate the worst of the global problems would have been enough.  But after this, he had no chance.  The mood of the country changed against Brown, against the Labour government.  It's just a matter of time.

The farce of the change to 42 days of detention without trial was just a footnote.  By this point, everyone knew that the government would cave and offer inducements to MPs to get them to back it.  Deny it as they might, no-one now believes the rebels didn't get paid off in some way.  And worse for the government is their own backbenchers now know the leadership will back down, that they can be bullied into giving in.  Brown has lost control of his own party - subtly, because the outcome of internecine strife of the Conservatives is still remembered, but he has lost control all the same.

And so we are left with a prime minister who was portrayed as an Iron Chancellor, a man who kept control with a tight grip, a man who would not be swayed, now being perceived as a weak, vacillating leader, who has lost control of his party.  What a difference a year makes.

Where do we go from here?

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The big Brown mess we're in - Part 1 | 14 comments (14 topical, 0 hidden) | Trackback
Glad to see you back by anonimouse (4.00 / 2) #1 Fri Jul 04, 2008 at 05:00:54 AM EST
..even if I don't agree with your politics.

I personally didn't care less about the 10p1, but what is becoming increasingly clear is that all this bollocks about "economic cycles" has the potential to be the Northern Rock for the government. What I object to is the lack of tight control over the money they've spent on their favourite projects e.g. the NHS. It is increasingly clear that the government should have been building up reserves during the "nice decade" so that when the Brown stuff hit the fan, it had reserves to rely on.

It takes a certain amount of showmanship and charisma and intuitive feel to be a leader of a nation. Blair had it, Brown doesn't, no matter what you think of their other attributes.

1. But a large number of people who would vote Labia do.


Girls come and go but a mortgage is for 25 years -- JtL
Whilst I have seen that only a few percent pay by Phage (4.00 / 3) #2 Fri Jul 04, 2008 at 05:21:22 AM EST
Death Duties statistic before, I am not sure that I agree with it. If the average house price is greater than £200k. I would expect that number to be a lot higher.

It also smacks of double taxation, and class envy. Old-style labour concepts that are not appealing to me, even though I will not be caught by it. (Admittedly I am a fat cat by your standards).

The thing is people are also realising that he was a crap Chancellor as well. He rode the wave of the global boom all the way to the end. I think that rogerborg said it best when he described it as similar to the cool kid passing the game over to his simple friends just before the kill screen.

Brown is not as competent as he made out. He's gone.

The bad thing is I may be forced to vote LD now that they've dumped their flat-earth tax policies.

Stamp duty as well by Breaker (4.00 / 2) #6 Fri Jul 04, 2008 at 06:14:55 AM EST
That's made home ownership harder for people too - having to find an extra 8K to hand straight on to the Government when buying a house was difficult for MBW and I, and we already earn sheds.

I can't imagine how much harder it must be for those earning less. 

The sensible thing to do would be for first time buyers, waive the stamp duty. 


[ Parent ]
The sensible thing... by leviramsey (2.00 / 0) #12 Thu Aug 21, 2008 at 05:02:50 AM EST

...would be to scrap stamp duty and council tax and replace them with a tax based on the purchase price of a property, paid by the owner of the property.


--
Could I be the next Lee Abrams?
[ Parent ]
VS2FP by Herring (4.00 / 3) #3 Fri Jul 04, 2008 at 05:45:04 AM EST
Once you fix the spelling errors.

christ, we're all old now - StackyMcRacky
Pah by DullTrev (4.00 / 5) #4 Fri Jul 04, 2008 at 06:04:50 AM EST

Spelling is a crypto-neo-fascist-capitalist-military-industrial-complex lie, spread to undermine the proletariat.


--
DFJ?
[ Parent ]
Fite the Maan, bruvva! by Breaker (4.00 / 2) #7 Fri Jul 04, 2008 at 06:30:10 AM EST
You nite!


[ Parent ]
VS2FP, thanks DullTrev by Breaker (4.00 / 2) #5 Fri Jul 04, 2008 at 06:09:18 AM EST
"Where do we go from here?"
Tories.  Heh.

Seriously, I'd prefer the Libertarians. Or the Lib Dems over the Tories.  But if voting for either of these means that Harman gets in again as MP for my borough, I'll hold my nose and vote Tory.  Interesting that in the nearby Bermondsey ward, the results in 2005 were Lib Dem beating the NuLabia candidate by a nose.  Either way, some of the legislation Harman has presided over and introduced are frankly insane and I would love to see her lose her seat.  Don't know if her previous popularity will last though, especially after her gaffe with the stab vest when patrolling the borough with the local police.

Labour MPs, who had presumably not been paying attention when this was announced the previous year
This is what I think is also turning voters away from NuLabia; there is a feeling that the government have stopped listening and are convinced that they know best.  The fact that no one in the party thought to look at the consequence of dropping the 10p tax band before it came in is a shocking oversight.  And it leaves the perception that the MPs have either stopped caring about the way they run the country, or they're all so whipped as to never question what the Cabinet orders.  Neither of which is a vote winner. 

In addition to this it increases the number of people who have to apply for Tax Credits.  And that again goes in the face of people from all walks of life - having the pride to work and being asked to surrender that pride and ask the State to give you your money back. 

The government could have totally reversed this with a bit of sleight of hand - say leaving the 10p tax band as removed, and increasing the personal allowance upwards?  So everyone is better off, even the poor.  And no one has to go cap in hand to the Government for their tax money back.

Look at the support Davis got from all areas of the media over 42 days - left and rightwing - and how shameful GTLSB's whipping the party and not "making deals" with the DWP looked to the public.  Again, the "we know best" mentality laid bare.

Lisbon treaty - does anyone not think that it is the constitution except in name?  Other than the deluded Government, perhaps?  And again, not only did the "we know best" attitude come across again, despite the weasel words that "it's not the constitution", denying the public a referendum promised in their own manifesto by which NuLabia were elected - smacks of "we know best".

On top of that, they're being outed as having their noses in the trough and trying to maintain their gluttony of taxpayer's cash, they tell us to "stick your vote", (original letter can be found here, you might need to click back to the 1st page in the thread).

As Brown's stealth taxes really start to bind in (wait until 2011 and 2012 for it to really start hurting - clever Brown loaded his treasury when he knew he'd be in charge - all that lovely tax revenue would be his), food and fuel prices are accelerating upwards.  And when people are feeling the pinch at home then they start looking at the Governments finances a little more closely.  In this case, it's been even more bad news - the news that 2.7Bn is to be borrowed to pay off those affected by the 10p tax rate meant further media scrutiny of the government's borrowing.  At which people are asking themselves - if Gordon was so prudent then why the hell have we racked up the debt so high when we should have been paying it off?  Another blow to GTLSB's public perception.

Then there is also party funding - bailed out in the eleventh hour by one of the Unions.  What will the Union demand for saving NuLabia?  They know that there's little left in the pot for pay rises for Union members; will they demand removal of NI caps so that they can make a pay rise claim of 8% or more, and get it because there's more tax take immediately available?  Will they demand the return of the secondary strike?  Either way, NuLabia will be seen as the party that couldn't manage their own finances, and sold the country out to bail themselves out of the hole of their own making.

In short, NuLabia are fucked.  Fucked if they bin the current PM (although that would have to be done by MPs threatening to call vote of no confidence in the government and hoping he'd resign IIRC), and fucked if they don't.  Another unelected leader (I know that this is how the Labour party works but many people are expecting a more Tory like election to take place to determine the party leader) being foisted upon the public would not go down well.  And the people have already shown their displeasure at Gordon in recent by elections.  Besides, is there any credible politician left in the Cabinet?  Prescott is the only heavyweight I can bring to mind that might have the ability to turn things around, but he's long gone, chased out by the Tony and Gordon double team.

No, NuLabia must get hammered in the next General Election, and revert back to being just The  Labour Party once more.  Excise these professional politicians who have never worked or lived in the real world, and regenerate the party from genuine Socialists.  I can see many years in the wilderness for The Labour Party as they rebuild trust and perceived competance.  But I remain hopeful that there'll be a hung parliament before too long - so we can get back some proper checks and balances in the democratic process.

I will be interested if Gordo decides to implement the electoral reform they've promised - although this will now be seen as out and out electioneering.  Which is a pity because I think our FPTP system is no longer tenable.


Pretty much my thoughts exactly by Phage (4.00 / 1) #8 Fri Jul 04, 2008 at 06:48:28 AM EST
Bring back the red banner, or feck off.


[ Parent ]
Time is ripe for electoral reform by Scrymarch (4.00 / 1) #9 Fri Jul 04, 2008 at 09:52:15 PM EST
Australia's changes away from FPTP were by governments about to get whaled at the next election. This includes instant runoff voting and proportional representation in the Senate. It's the only time the self-interest of the party of government and the interest of broader representation coincide; at any other time they would just be chopping off the ladder they climbed up.

The Political Science Department of the University of Woolloomooloo

[ Parent ]
sounds like by aphrael (4.00 / 1) #10 Sat Jul 05, 2008 at 07:37:16 AM EST
all the fault of the Americans. by wiredog (4.00 / 2) #11 Mon Jul 07, 2008 at 04:26:08 AM EST
And if you're American, it's all the fault of the Republicans.

Earth First!
(We can strip mine the rest later.)

And if you're Republican by leviramsey (2.00 / 0) #13 Thu Aug 21, 2008 at 05:05:33 AM EST

It's all the fault of the (neocons|religious right|Rockefeller/country clubbers).


--
Could I be the next Lee Abrams?
[ Parent ]
(Comment Deleted) by SunlightGirl (2.00 / 0) #14 Fri Apr 17, 2009 at 04:44:51 PM EST

This comment has been deleted by SunlightGirl



The big Brown mess we're in - Part 1 | 14 comments (14 topical, 0 hidden) | Trackback