Monday, 3 May 2010

Labour Candidate Running Scared?

Well, there is still no reply from the Labour candidate for my constituency. If you recall, on 23 April I asked him:
Gordon Brown says that if David Cameron doesn't raise NI as Gordon plans to, that will mean that £6 billion will be "taken out of the economy". I'm confused. Where will it have gone? Won't it still be in our pockets for us to spend in the economy on what we would like to spend it on?
Less than 24 hours later, he replied:
Thanks for the email- the question surrounding taxation at the moment can be summed up by the paradox of thrift. Currently, the government through a variety of spending measures is maintaining the overall level of demand in the economy- in order to do this in a fiscally responsible way, it is necessary to raise this cash from somewhere. So of course, without the rise in NI money will still be in your pocket, but the collapse in private demand demonstrates that people are not spending it (hence the government needing to sustain demand). NI is being raised as it is a fair tax- noone on less than £20k will pay any more in NI contributions, and it requires employers to contribute as well. To put this last point in perspective, the bill for higher NI to M&S will be £10m- they've just given their new Chief Exec a £15 golden hello.
My immediate answer was:
Well, it answers my question in that you accept that the money will not be taken out of the economy, contrary to Gordon's claim.

Of course, if people choose of their own free will to repair their personal balance sheets by saving the money, but Labour choose to force them to give up the money so that it can be spent on their behalf, is that not strikingly illiberal and undemocratic?

If the money was left in people's own hands, they could choose to spend it or to save it - if they chose the latter, then we would not have had to inject such huge funds into the banking system. Our banks would then have funds to invest or to lend - can Labour prove that this (the route of free choice) would not be a more efficient way of allocating the money?
That was on the 25th April. The next day, as I had still not heard from him, I sent a reminder:
A little disappointed not to have heard from you in reply to my email. I look forward to hearing from you, though.

While I'm emailing you, I thought I'd pick you up on the little "politics of envy" moment at the end of your last reply. You seem to be suggesting that it is ok to place additional taxes on businesses, because they can afford it - is that the basis of Labour's tax policies? That anyone with a bit of cash can expect to have it confiscated? I fear that would be detrimental to the competitiveness of our private sector - do you not agree?

I also feel that the M&S award is more of an isolated example than a basis for policy. My firm, for instance, has seen its profits halved over Labour's term in office. That translates directly to a halving of my income and that of my partners. Talking to my clients and my suppliers, it seems that we are more representative than the M&S example you quote.

Despite this, we have managed to find the funds for a staff pay rise of roughly 1%. That means that if the NI rise were coming into effect now, we would have no choice but to tell our staff that there could be no pay rise because your payroll taxes were taking up the entire increase in our salary budget. Is that what you want me to tell them next year?
Still nothing the next day, so I sent a brief chaser which elicited a promise:
Sorry, I've been out campaiging and without email for the past two days. Will get around to replying asap...
...but sadly nothing has been forthcoming. So I sent another reminder last night:
No reply yet? :-(

(Did I come across as bigoted?)
Nothing yet, but I'll keep you posted...

UPDATE: 1425... A reply!
No, I don't think you're bigoted at all- in fact I'd rate you as a singular wit. The NI rise it not about the politics of envy, it's about rebalancing the public finances in a way that doesn't fall unfairly on people with low and modest incomes. We don't have a budget deficit because the government has been wildly profligate- the credit crunch reduced the government's tax take by a quarter. We could have either withdrawn support and slashed public spending to balance the books immediately or maintained spending to keep the economy ticking over until private demand recovered. I think that, whilst we are not out of the woods yet, all the indicators show that the government has been hugely vindicated in taking the steps it has.
Well, we see the usual tactic - mix up several questions so that you can answer none of them.

So, here is my reply:

I didn't say that the NI rise was an example of envy politics - that was a response to your use of the M&S example to justify higher taxes for everyone. Can you answer the point as to whether high taxes will be detrimental to business competitiveness?

I'd disagree strongly with your assertion that this government has not been wildly profligate (although your comment could be read as an acknowledgement that is has). Looking at this graph, courtesy of the Spectator, it is clear that the Labour government has been living beyond our means since the moment that Gordon's promise to stay within Tory spending limits expired:
It is striking that under Tory government, we saw what you are now describing - a temporary blip during and immediately after a recession. However, as soon as Gordon was free to operate as he wished, he ran a consistent deficit that has left us with no reserves. Then, when the recession hit - harder than that which we suffered in the 90s - the situation became catastrophic.

It does therefore seem that Gordon's mismanagement during the good years is the prime reason why we faced the impossible choice between withdrawing support to those who need it, and borrowing truly frightening amounts of money that will cause financial pain for years to come. I would not call it "vindication" when a government places itself in the position of having to choose between these two deeply unpleasant alternatives. Do you not agree that - once again - the truth is that Labour has simply run out of our money?
UPDATE: 04/05/10 20:04

No reply yet, so I've sent a chaser:
Look forward to hearing from you when you have a chance.

By the way, do you agree with Manish Sood?


  1. LOL!!! You weren't seriously expecting an answer were you?
    It's basic economics....Labour don't do that.

  2. Of course not! But I was hoping to see how he would wriggle out ;-)

  3. Oh, I'm sure there are MPs out there just cursing the Internet. After all, if you didn't want to reply to a letter, you just ignored it and if questioned, blamed the Royal Mail for not delivering it!

  4. Well at least you've had a reply. I sent an email to the local Tory candidate a week ago asking him to explain how it is that he could say that he believed the sanctity of human life is "absolutely fundamental" and believe in abortion up to viability. Why, I asked, if you think you can trump something so absolutely fundamental as the sanctity of human life, should I be expected to to trust anything you say?

    No reply. I think, I'll try your "bigot chaser" approach.

  5. My five year old son and I had a discussion a couple of days ago:

    Master A "Who is Gordon Brown?"
    Me: "He's the Prime Minister, that means he's in charge of running the country."
    Master A "Was he elected?"

    I'd better make sure he doesn't meet Mr Brown in the next few days. Being a called a bigot at my son's tender age would be crushing.

  6. So government has to keep spending now because the rest of the economy is slumping.

    So why did government keep spending like mad when the rest of the economy was booming in the mid part of the decade? (Yep, if you're going to be a Keynesian, do it properly, there's a good chap)

  7. Yes, odd that; "The answer is higher State spending. So, what is the question?"