Mansion Tax: a self-indulgence to make a point, not fix a problem

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Nik Darlington 11.10am

In the 1920s and 1930s the sociologist Elton Mayo conducted a series of experiments to test the productivity of workers at the Hawthorne Works in Chicago. Later in the 1950s, Henry Landsberger interpreted the data to show how people change their behaviour when being studied closely. It is a crucially inherent human bias, called the ‘Hawthorne Effect’ after the location of its first monitoring.

Translate it to the public realm today and it can go some way to explaining why figures of public attention and certain significance embrace a stance on an issue purely for political effect. A psychological underpinning for ‘triangulation’ tactics, perhaps, to wrong-foot opponents; or simply self-indulgence, in the knowledge that one’s every utterance is being watched and measured by others.

Something like a mansion tax is such an indulgence. The only problems it solves are those embedded in its proponents’ own thinking.

True, there is a concerning malfunctioning of the free market in property in Britain. We live on a small archipelago, which as much as it might surprise cultural apologists is actually a very popular archipelago. Demand for scarce land and property is great, compounded by our little archipelago containing some of the most ravishing sylvan scenery known to man.

It is correct for any good Tory to question the proper functioning of free markets. Perhaps the most invidious Tory fallacy of recent decades has been the conflation of capitalism with free market libertarianism.

Yet let’s not chuck the proverbial cherub out with the bath water. Penalising the owners of expensive homes is not the proper way to correct property market imbalances. The unintended consequences of an arbitrary tax ceiling are well-explained by Toby Young here.

Furthermore, while it is true that the London property market is a bit berserk in parts, many marketplaces have their relatively crazy quirks. Should we whack a super tax on the salaries of footballers at Manchester United, because they collectively outweigh the wages of all players plying their trade in the lower leagues of Wales, Scotland and Northern Ireland? Actually, if anyone has proper stats on that, do let us know.

But of course not, that would be daft. What’s more, while we ought by default to dislike the coarse linguistics of ‘mansion tax’, who is the arbiter? This country house is a bit mansion-like; this dearer two-bed flat isn’t. The ‘problem’ of high property prices is not confined to London either. Even the good burghers of provincial towns like Cheltenham could fall prey to the punishments that shall befall ‘unearned’ wealth (again, who is the arbiter of whether wealth is ‘earned’?).

The the fact that good ‘working people’ might one day want to work so hard that the fruits of their labour reap a £2 million property is of no concern to proponents of a mansion tax; albeit such a purchase would most likely be weighed down by several years of mortgage debt and the onus to work on and on to pay it off. Moreover, the fact that someone, somewhere, is being hammered at approximately £80,000 a pop for owning an expensive home is little consolation to the person on an annual salary of one-quarter that figure (if you can identify a consolation, please say it).

The mansion tax’s introduction would be a policy of momentary significance and soon forgotten - relegated into the midst of myriad other taxes and conveniently forgotten by a succession of politicians drawn to the windfall begotten by negligent fiscal drag.

Ultimately, if the sole intention of a mansion tax is to send a message - and I cannot discern a practical fiscal rationale - it is philosophical navel gazing, not pragmatic policymaking. In other words, the type of approach followed by socialists supped on grand ideas and structural-theoretical solutions. Merely meaningless gesture politics.

Yet people can do funny things when they know other people are watching.

Follow Nik on Twitter @NikDarlington

Cameron’s EU referendum promise lays down the gauntlet to Labour

Nik Darlington 10.33am

"Mind your speech a little lest you should mar your fortunes." David Cameron has followed the Bard’s advice to the letter. This has been the most mindful build-up to a prime ministerial speech in living memory. Are his fortunes intact?

First of all, I’m still keen on holding the EU referendum on the same day as the next General Election, something I’ve established on these pages before. Yet that is not going to happen now. By insisting it will be held before 2017 (which in practice means between 2015 and 2017), it does make a Tory victory more plausible.

Yet as Tim Montgomerie writes, it doesn’t “kill off” UKIP entirely. Surprisingly enough perhaps, UKIP’s voters don’t actually rank Europe as their greatest concern: immigration and crime, for instance, are more important. What today’s speech shall do though is present a stark choice to UKIP voters: do you want a referendum or not? If yes, vote Conservative.

Much of that depends on how the Labour party responds. Ed Miliband is stuck between a rock and a hard place. Support a referendum and he looks limp - following Mr Cameron’s lead and betraying Labour’s (admittedly not long held) Europhile principles. Oppose one and he looks undemocratic, betraying the will of the British people. It will be a difficult PMQs for him today, but then again, he’s had plenty of time to prepare for this moment. What is his answer going to be?

Staying with Labour and returning to UKIP, an interesting aspect here is that in certain parts of the country, many UKIP supporters are actually former Labour voters, not Tories. This reinforces how important Mr Miliband’s next step is. Reject a referendum and he possibly loses those voters forever.

There is a risk that the delay, potentially till 2017, creates an uncertain environment for British businesses. If you are an external investor reliant on untrammelled access to European markets, is Britain a safe bet? Mr Cameron’s explicit goal is to win an ‘in’ vote on significantly reconfigured terms - but terms that retain access to the European single market. Is that goal achievable? The tone of this morning’s speech will have reassured and mollified key European allies but there is no guarantee that the negotiation process - or this mooted new treaty - will get us what we want.

The Tory Reform Group has often been branded (from without) as a nest of Europhiles: “unpatriotic” (unfairly so) and “isolated” (these days, admittedly so). There is nothing inherently unpatriotic about wanting Britain to hold a strong hand of cards at the European top table, but as a pragmatist (and I speak for myself here not the TRG) one must recognise the realities of the world we live in.

Times have changed. Many in the TRG would, I wager, still call themselves pro-European; or more accurately, place other causes (such as public services, social policy, the environment, health, justice) far ahead of concerns about the EU.

I would also wager that no TRG member could disagree with the Prime Minister’s essential analysis today: the EU must become more competitive, powers must be held closer to those they affect; the democratic deficit must be closed; and the EU must shed its bureaucratic shackles to become leaner and more flexible.

Mr Cameron recalled the defining, founding ideals of European unity in postwar times. Awarding the EU a Nobel Peace Prize seems ridiculous in this age, but consider its beginnings and that prize is barely recognition enough.

Mr Cameron also recalled what makes the people of this little collection of islands different, and why we have often been seen as the “argumentative” member of the European family.

The past is the past; it can inform us but barely guide us. The European Union’s problem is that for too long it has looked to the future with more than one eye on the past. The world is different. The European Union needs to think differently, behave differently and function differently. That is more readily achievable, I believe, with Britain remaining strongly and critically involved. Not on the outside.

In party political terms, if the Labour party now promises a referendum (as it now surely must), the game is squared. In bigger terms, the best result for Britain would be a significant reforming of our relationship with the EU. And as Tim Montgomerie also writes this morning, perhaps it can allow sections of the Conservative party to let things rest for a while, and concentrate on the policies that voters genuinely do care about, like healthcare, schools, the cost of living and tax.

Things will change, positions will unravel and the realities of European negotiations will hit home hard. Yet for the moment, David Cameron has stolen the stage. Bien fait.

Follow Nik on Twitter @NikDarlington

Just call me Tony

Alexander Pannett 2.45pm 

So Tony Blair has finally returned to British politics? 

Or at least that is what a bored media are peddling. 

In fact what he ‘returned’ to was a sports-themed fund-raising event for the Labour party. Which is ironic considering his money-raising prowess since leaving office has garnered much of the vitriol thrown at him, notwithstanding a rather controversial foray into Mesopotamia. 

For me the main issue is that Blair is clearly approaching the wrong party.  Labour under Ed Miliband is far removed from the Third Way politics and liberal foreign interventionism that Blair championed. With Jon Cruddas running policy, it will move even further from the champagne socialist days of the Islington Mafia. 

The party that Blair would find the most familiar home in is the ‘Heir to Blair’ party of David Cameron. Most of the public sector reforms that the Conservatives have been promoting find their genesis in Blair. 

Though this is hardly a new revelation. 

What does seem to me the most symbolic point is that Blair’s tanned features no longer seem to fit in with the perennially raining Britain of the present era. 

If Blair had returned pasty, penniless and sick of the multiple sequels of ‘superhero’ films on offer, then he would have had a connection with modern Britain. 

Instead, we are unsure what to make of our former master. 

But fear not. 

Blair didn’t win three elections without having a notion of the people’s mood. And like a giant metaphorical caterpillar, I am sure he will be dreaming up some new scheme to connect with his lost people and lead them out of doom-laden slavery to the tedium of never-ending crisis. 

I’m not suggesting he is actually going to start parting the Thames with a stick to shave of ten minutes of commute from Greenwich to Dalston. Or that he will climb down from the top of the Shard with a ten bullet-point plan to build more solariums around the country. 

But I do hope he does something vaguely interesting. 

He could try his hand at acting. Maybe the lead role in the film adaptation of Irvine Welsh’s new book, Skagboys? Portraying the descent into fraying moral pointlessness shouldn’t be too hard. 

He just needs to find a currently under-employed loony Scot with a ruthless temper to play Begbie.  

But where to find such a man…..?

Follow Alexander on Twitter @alpannett

From the opinion pages, some timely food for thought about what ‘true Conservatism’ truly is

Nik Darlington 10.16am

A couple of very good opinion pieces in the papers today, both from the Times (£) and both important reading for Tories.

Lord Waldegrave, the former health secretary and an honorary life member of the TRG, offers a valuable historical perspective of “true Conservatism” that values a strong state alongside free enterprise.

"In the old days, the genius of British Conservatism was to have taken not only Smith (and read him), but, in addition, Edmund Burke (and read him, too) as their favourite books…

"Tories knew that people and nations did not live by bread alone. We believed in the State - strong and uncorrupt in the ideal vision… Agreed, the State was not much good at producing groceries or motor cars - let the markets do that, while watching them like a lynx to spot the rackets… What wise Conservatives seek is the right balance."

The self-appointed bright-eyed doyens of ‘conservative’ think-tankery politics might scoff at this little history lesson. And maybe with some justification, as even I wince a touch at an opening salvo of “in the old days…”.

But Lord Waldegrave presses on to make a vital and valid point about public and private enterprise. There exists a fetish in contemporary ‘conservative’ circles, based upon a narrow and clumsy reading of Thatcherism, that public management is inherently bad and private is supreme.

"Quite a lot of people who believe it is a given that private companies are always more efficient than the public services have never worked in real private enterprise. As Irving Kristol, the American intellectual and writer, said, an awful lot of people who favour unbridled competition have tenure. My experience tells me that there is no incompetence whatsoever of which the public sector is capable that cannot be matched in spades by the private sector…

"We should be the party that the electorate trusts to oversee a free-enterprise economy, because the electorate understands that we know that free enterprise, vital though it is, is not the only, or even the most important part of the story of a nation."

Meanwhile, Rachel Sylvester has some useful advice for Tories keen to divest themselves of Lib Dem bedfellows. It could be put as simply as, ‘the party did not win the 2010 election’, but that would be to miss out on Sylvester’s lively commentary and choice quotations.

"…some Tory MPs…seem to be in denial about their party’s failure to win an overall majority at the last election. They demand a more authentically Conservative programme, with a greater emphasis on issues such as Europe, immigration and tax…

"But in fact Mr Cameron depends entirely on Mr Clegg to maintain control of the House of Commons. ‘It wasn’t an act of charity to ask the Lib Dems to join the coalition,’ says one Cabinet minister. ‘Some Tories behave as if the Lib Dems were shuffling penniless down the street when we invited them in and have now turned into an over-mighty lodger. The truth is we wouldn’t have been able to form a Government without them.’

"There is a self-interested reason for co-operation. The Conservatives will boost their chances of winning outright next time if they show that they can work with the Lib Dems… One moderniser describes calls for a return to a more traditional agenda as the 'Allo 'Allo! approach to politics: shout louder in your own language in the hope that the foreigners will understand. ‘We can either be in coalition with Lib Dem MPs or go into coalition with Lib Dem voters,’ he says.

"This Government was popular to start with because it signalled a new, more decent way of doing politics."

The pieces are written from different perspectives but their messages are complementary. And timely food for thought about what ‘true Conservatism’ truly is.

Follow Nik on Twitter @NikDarlington

The delusory demonisation of Conservatives

David Cowan 10.59am

There are many young Conservatives in Britain. But many do not dare admit it. Young Liberal Democrats, Labourites, Socialists and Marxists are lauded as idealists who care about the injustices of the world, whereas young Conservatives are seen to be unpleasant, reactionary and self-interested individuals with no capacity for compassion (pace unpleasant publicity here and here).

Yet this perception has very little to do with the facts and has everything to do with the Left’s need to discredit a party which has done so much for this country, especially for the most vulnerable in our communities. Sir Robert Peel’s Factory Act 1844, Benjamin Disraeli’s Artisan’s and Labourers’ Dwellings Improvement Act 1875 and Public Health Act 1875, Rab Butler’s Education Act 1944, Harold Macmillan’s housing programme, and Margaret Thatcher’s Right to Buy initiative are just some of the Conservatives achievements which have improved the nation as a whole.

The current debate over the coalition government’s spending plans has been the latest cause for demonising the Conservatives, but the truth is that eliminating the budget deficit is saving £1,000 for every family in the country by decreasing borrowing costs; taking £5,000 off every family’s mortgage interest bill by keeping long-term interest rates low; helping people to pay off their credit card bills; and getting lending to small businesses going again.

Britain’s national debt is having a harmful impact on everyone, especially the poor. There is nothing progressive about spending £47.6 billion on debt interest repayments instead of schools and hospitals.

Despite the current economic hardship, the Conservatives have still managed to protect the schools budget and increase NHS spending every year in real terms. They have also embarked on an ambitious programme of reform to modernise our public services and to tackle poverty at home and abroad.

Welfare benefits are being simplified so that being in work will always pay more than being out of work. A rehabilitation revolution intends to get criminals out of the vicious cycle of reoffending. A new Troubled Families Team will provide ‘action plans’ for dysfunctional families to help turn their lives around.

The Conservatives are also dealing with global poverty by increasing international aid to 0.7% of GNP by 2013 so we can train 190,000 teachers, immunise more than 55 million children against preventive diseases, and give 15 million people access to clean drinking water.

Most Conservatives are motivated by a strong sense of duty and responsibility. They believe that there should be a link between effort and reward, that everyone should have the opportunity to be successful, everyone should have the freedom to make their own decisions and choices in life, and we should always help the most vulnerable in our communities.

Follow David on Twitter @david_cowan

This article first appeared on The Cambridge Union Society’s Huffington Post UK blog

Could this be the beginning of the end for Britain in the EU?

David Cowan 6.00am

Last Friday morning was a defining moment in David Cameron’s premiership and the history of the European Union.
The Prime Minister’s veto against modifications to the Lisbon Treaty without protection of Britain’s financial services has forced the seventeen Eurozone countries and up to nine of the remaining members of the EU to try to form a separate fiscal union. Mr Cameron has begun a process which could change fundamentally Britain’s relationship with Europe.
 
Will the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, make a U-turn and grant the modest safeguards David Cameron wants for Britain’s financial services?
Or shall David Cameron have to face up to the challenge of resisting a Financial Transactions Tax (see Alex and Craig on the FTT, or Robin Hood Tax) and financial regulations, which will come through the back door by Qualified Majority Voting in the European Commission? As well as attempts by the Eurozone states to use the EU structure to implement their new fiscal union?
 
If Merkel and Sarkozy drop their opposition to David Cameron’s demands then last Friday’s events will be a footnote in history. A minor diplomatic victory of less value than John Major’s opt-outs from the single currency and the Social Chapter.
It would also lead to a fiasco similar to David Cameron’s ‘cast-iron guarantee’ to hold a referendum on the Lisbon Treaty, since there is no legal basis for a referendum on a new EU Treaty for fiscal union in the Eurozone. The lack of a referendum, while being legally apposite, will inevitably cause much discomfort in the Conservative party.
Last October’s parliamentary rebellion and polling by the Guardian/ICM has shown how Euroscepticism is a more mainstream view than it has ever been and the majority of the Conservative party now believes that it is time to repatriate powers from the EU.
 
However, there are those who do not see this moment of crisis as the right time to discuss EU reform given how Britain is suffering from a crushing national debt, sluggish growth, high inflation and rising unemployment. Indeed the TRG’s chairman, Tim Crockford, has stated that economic recovery is more important than EU reform.
It is true that half of the economic debate is about how we start to reduce the national debt, get inflation under control and make our economy more competitive but the other half is about how we respond to the changes being brought about by the Eurozone states during this crisis. Allowing more taxes and regulations to flow from Brussels will only exacerbate the first half and do nothing to address the second half of that debate. This is not an argument for ‘isolation’ but for greater ‘internationalism’ in trade, as Fraser Nelson has splendidly put it in the Spectator.
 
David Cameron and George Osborne cannot continue to allow EU red tape to hold back economic growth. The Working Time Directive, Agency Worker Directive, European Banking Authority and the Social Chapter are just some of examples of the EU bureaucracy which is suffocating British businesses.
Britain is already 83rd in a list of 142 countries for uncompetitive government regulation.
Tory Reform Group MPs have urged for a serious drive towards deregulation in the EU. The TaxPayers’ Alliance has highlighted an ambitious list of powers which can be repatriated.
This would be a reasonable course of action supported by the majority of the Conservative party and would boost economic growth but it would also be a test of whether or not a ‘multi speed Europe’ can work - though not very likely given how the modest demand for the protection of Britain’s financial services has been refused. A further refusal from the other EU states to allow the repatriation of powers could well act as the trigger for a referendum on British withdrawal from the EU.
 
For the moment we cannot say where events will take us. David Cameron delivers a statement to the House of Commons later today and this may well signal what the next step will be.
Yet however it plays out, this could very well be the beginning of the end of Britain’s membership of the European Union.
Follow David on Twitter @david_cowan

Ruth Davidson’s biggest challenge is tackling Tory irrelevance

Nik Darlington 6.00am

The comedian Billy Connolly said there are two seasons in Scotland, “June and Winter”.

If that’s the case, it’s been a bloody long June. Temperatures in the high teens have made Edinburgh feel veritably toasty this weekend. Gloves and scarves remain unpacked.

And in Holyrood the heat is on for new Scottish Tory leader Ruth Davidson (I’m awfully sorry, typing on a phone renders you impatient and bereft of anything but the most miserable clichés).

Ms Davidson had to face the embarrassment of not being able to name a full frontbench team in time for last week’s First Minister’s Questions. Her deputy leader is decided as the defeated leadership candidate Jackson Carlaw but only after Murdo Fraser turned the job down and quit the frontbench.

Allegedly Alex Fergusson, who publicly backed Mr Fraser, also declined to serve, though the former Presiding Officer has denied the claims.

The majority of Tory MSPs supported Murdo Fraser, along with senior figures such as Sir Malcolm Rifkind, which puts young Ms Davidson in a bit of a bind. At least this is the line taken by Scotland on Sunday’s Duncan Hamilton:

"A win is a win, but let’s be clear: 47 per cent of the Tory party was prepared to sign up to effectively packing up and starting again. That is remarkable. Add into that mix the fact that most MSPs backed Fraser, that some donors are openly questioning their continued commitment and that the new leader struggled for several days to put together a frontbench team because her colleagues refused to take the positions offered, and a picture emerges of an unsustainable political entity."

Mr Hamilton is wrong on that score. Ms Davidson’s leadership is not unsustainable. Colleagues will come into line, not least because a strong perception exists that a number of MSPs actually regret playing their hand too early and supporting Mr Fraser.

But where Mr Hamilton has a valid point is in praising Murdo Fraser’s “candour and honesty”, which set alight a political leadership campaign that most Scots wouldn’t naturally give the time of day.

For a couple of months, the Tories were the talk of the Scottish media. No one had the slightest idea who the Labour party candidates were, even Edward Miliband.

Now that the contest is over, to many people it’s just the same “bloody Tories”. Even the fact that the winner is a young lesbian kickboxer couldn’t excite people for long. The talk is still about Murdo Fraser.

Duncan Hamilton says he can “sit tight” because “many don’t believe that the new leader will be there for long”. Or he can “leave the Tories now and start a new party” with the “bulk of MSPs and some serious donors”.

Except there is not a shred of credible evidence to support either of those claims. The only thing of note offered by an otherwise insight-free article in the newspaper’s ‘Insight’ section is this: after a summer in the spotlight, Ruth Davidson’s biggest challenge is to prove that the Scottish Tories are not irrelevant. That means taking on the SNP in the area they are strongest - standing up for Scotland. And in policy terms that means redrawing that line in the sand that Ms Davidson calls the Scotland Bill.

The Government says we’re all in it together. We must prove it.

Jason Frost 6.00am

“In one of the biggest surveys of the British public, Lord Ashcroft concluded that the ‘party of the rich’ label is still the biggest barrier for the Conservative’s target voters. There is a north-south divide gap too. The Tories are doing less well in Northern England than they were when Margaret Thatcher was elected. Mr Cameron cannot be blamed for this but….he is responsible for recent decisions that have begun to recontaminate the brand. Voters, for example, are most anxious about jobs and incomes but the Coalition spends much time talking about the deficit.”

So wrote Tim Montgomerie in the Times recently (£). Some people feel betrayed by the Government, and consequently the painstakingly reconstructed brand of Conservatism is again beginning to slide back to being just the uncaring ‘party of the rich’.

This can only result in electoral oblivion and historic irrelevance. Such a prospect has of course threatened before. The former Prime Minister Benjamin Disraeli wrote in Sybil (1845) of:

“Two nations; between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by different breeding, fed by different food, ordered by different manners and are not governed by the same laws. They are the RICH and the POOR.”

Many a commentator would do well to hold these words in hallowed reverence, for their meaning reflects all too well the perceived social and economic climate of today.

And yet, it is in these words that could lie the Government’s, but more importantly Conservatism’s, potential salvation.

These ‘Two Nations’ must once again be reforged into one; One Nation under the trusted leadership of the Government.

How? Our modern ‘Poor’ must once again be understood by ‘the Rich’, but in a respectful, as opposed to paternalist, sense of mind. This ‘Rich’ - as the Government puts it, those with the “broadest shoulders” - must offer hope and leadership in all areas, and a good starting place would be financially, as Mr Montgomerie quite rightly suggested.

"When tax cuts become affordable, low income households should be at the front of the queue. Lower petrol duty and National Insurance must come before a cut in the 50p tax rate…. The tax system needs rebalancing… Extra taxes on high-end properties should fund emergency tax relief for families hurt by inflation.”

Through such acts ‘the Rich’ will have shown some element of dutiful, and very responsible, sacrifice in these times. It would demonstrate the Government’s changed, moral priorities.

In addition, the Government should bring forward and champion some of the measures they have already floated but are yet to implement.

The appointment of worker representation to the management and remuneration boards/committees of leading companies. This would subject decisions to greater accountability and improve industrial relations through more direct contact between shop-floor and boardroom (in contrast to the mediated contact through Trades Unions).

There must be more active encouragement of individual, as opposed to corporate, endowments to universities, e.g. scholarships or sponsorship, contributions to hospitals, and even to the funding of apprenticeships and enterprises in the private sector by individuals.

The coalition’s mantra, ‘We are all in this together’, is exactly the right call to the nation. It stresses our united nature. But it is time it was backed up with actions.