Alexander Avoided Capital Gains Tax

Next!

You really couldn't make it up if you tried. Now Danny Alexander, bad (very bad) choice of replacement for trougher David Laws at the Treasury, has been caught avoiding Capital Gains Tax - you know, the tax he'll be responsible for ramping up as part of his new job. Sorry, but Cameron has set a precedent, has a principle he must (and I think will) follow, and so has to fire Alexander too. There'll be fewer tears over his loss I imagine than there were for 'rising star' and 'genius', David Laws.

Some will be asking why this is happening. It's very simple really and it has nothing to do with homophobic witch-hunts, Labour sting operations (lol) or right wing, anti-coaltion smear conspiracies. That's loony stuff. The reason is that while they were the no-hoper, hotchpotch third party that generally behaved like weasels in a sack behind the scenes (still do), during the expenses scandal they were basically ignored by the Telegraph in what was a target rich environment. There were only so many pages in the paper each day, and the editors rightly preferred to focus on the major players and the yellows got away with it, even to point where Clegg actually thought he could boast about it in the Commons! This is the hubris. Now that senior Lib Dems, to their huge surprise and thanks to a rare general election outcome, have found themselves doing real government jobs, they are subject to that delayed scrutiny. Moreover, it is all the more intense because they are being picked off one by one instead of en masse, as the Tories and Labour MPs and ministers were. So much the better.

It goes without saying - for me at least - that the Lib Dems fully deserve everything they get, and so the sight of senior MPs and some well known mainstream political bloggers defending one of them, often on the most ridiculous of grounds, is damn well nauseating. One good thing will come out of this new wave of expenses revelations, however: pretty soon, the Conservative government will run out of Lib Dems to put in the vital Treasury Chief Sec. role (they'll be on the Sarah Teather human mouse pretty soon).

Then maybe the country will get the person it really needs in that job - John Redwood - and, I predict, with the coalition still more or less in tact.

Every "cloud" as they say...

Laws Gone

Iain Dale and others are reporting that David Laws has gone. One thing: if true, it is important to establish the precise reason for his 'resignation' (sacking by Cameron). Having said that, it is also important to establish what were not the reasons too. For instance, certainly not the reason would be the one David Blackburn has just supposed in a uncharacteristically shoddy and pretty wrongheaded piece for him:

According to Con Home and several other sources, Laws has resigned. This is hugely regrettable as Laws is a star performer and I feel he has been the victim of a media gay-hunt that belongs to a bygone era. The sums of money involved are slight in comparison to some, and there are arguments that other ministers should resign for having committed similar or worse offences and for having shown markedly less contrition. But it is refreshing that a minister would resign over a personal transgression with haste and dignity.

This is wrong on so many levels, it's hard to know where to begin. First, Laws has had little or no chance to demonstrate he was a 'star performer'. He was starting to look promising and seemed to be grasping the wisdom of the Tory policy on the debt and structural deficit. Well done for that, but stardom it hardly warrants. Second, to 'feel' that he was the 'victim' of some mythical 'media gay hunt' is arrant nonsense. His sexuality had nothing to do with it, aside from the fact that he was clearly embarrassed about it and this provided him with a motive for being so incautious with his expenses and then concealing this potentially damaging fact from his new boss. There was and is no 'media gay hunt'. Outrage about his public/private hypocrisy, yes - bigotry and prejudice, no. That is in Blackburn's imagination and, I think, was uttered because of some kind of personal disappointment rather than any genuine understanding of the sequence and significance of events [like I have, lol]. Again, I've got to say that I find that surprising from this writer.

Third, and most significantly, Blackburn makes some sort of point about the relative scale of previous incidences of irregular expenses arrangements with a frankly childish 'they didn't so why does he?' argument. Well, if he thinks that that false equivalence will wash with anyone then he hasn't understood idea-one of what's been going on here. Cameron stood on a ticket of cleaning up parliament and being tough with his ministers if they step out of line in principle. The amounts involved (and 40k seems like a lot to me) are not important. The way the money was channeled is. Laws bent the rules in a deeply suspicious way, far more even, if we are to entertain Blackburn's relativist argument for a moment, than your average trougher who simply took advantage of those rules but did so by the book, i.e. without adding their own, personal interpretation that advantaged them, or, indeed, a loved one, even more.

As to his mention of 'other ministers', who, I wonder, does he mean? Cameron? Labour ministers? Cameron can hardly fire Labour ministers who've already lost their jobs, for heaven's sake, so what on earth does he mean? Your guess is as good as mine. Suffice to say, it's the most muddled-up post of his I think I've ever read.

So much for the Blackburn gay witch-hunt theory. The real reason why Laws had to go is because Cameron is keeping his word. He has always understood the scale of anger at the expenses scandal. He also realised that Laws could not be talking about painful cuts in public spending one second and defending his own venality another. That's called an 'untenable position'.

In other words, the only thing Laws' sacking has demonstrated to me is not that he is dignified - I'm sure he is - but that David Cameron really does mean what he has says and that, dear readers, is the really 'refreshing' thing about this new government and about this incident.

But what follows is crucial. A sound, imaginative replacement must be found. Blackburn says, alarmingly, that it might be the lunatic Huhne. That would be a disaster not just for this government but for the entire country and Cameron must intervene to stop it instantly.

The only man with the gravity and intellect for a job like CST in a time of economic trauma and dislocation is John Redwood. Whether the Prime Minister likes it or not, Redwood is the right man for the needs of this country at this parlous point in its history.

What the Libdems want simply doesn't matter.

Update:

Well, they've got it badly wrong and given Danny Alexander the job according to ConHome. That is a disastrous decision and it will come back to haunt this coalition. You cannot compromise on the economy for the sake of the coalition and certainly not with someone as wet behind the ears, untested and lightweight as 37 year-old Alexander (yes, I know, he's been bigged up over the past few weeks because of the negotiations. Big deal).

Too many Tories are going to be too pissed off too quickly with any more appointments like this one. This may even be the one that tips them over. I think this is the first real sign that this coaltion cannot and will not last long. For one thing, unlike the corrupt Labourists, as amply demonstrated by Brown, Conservatives do not believe in the idea of clinging on to power at any price. The coalition could soon be toast.

Quite frankly, after the promotion of another Libdem lightweight to a cabinet role for which he is most certainly not qualified, especially at such a crucial moment for the British economy, I'm not sure how I feel about that prospect yet. Maybe, after all, it wouldn't be such a bad thing.

Cuts And New Structures

Cuts in government expenditure is one issue that has dogged the Tories for nigh on a decade of Brownian dictatorship. As long as Brown was able to fool people into thinking that there was endless money available for massive growth in government spending, then any Tory even suggesting that it was not only desirable but essential to peg back what they argued was an unsustainable expansion of the state was laughed off the stage. Not any more. The bust has come and Brown has not only been made to look a fool, his mismanagement of the economy has been revealed in all its stark reality, with the consequent pain being felt throughout the country. [Check out this devastating article in today's DT, if you want to know how bad that pain is and how much worse it is going to get.]

The Tory predictions of the 2005 general election have come true in spectacular fashion. As Mervyn King said only yesterday, running a structural deficit during what turned out to be little more than a property bubble - ie, a period of unsustainable growth - has just about ruined the UK. The myth of Labour's reputation for economic competence has been exploded once and for all. All we have had, in fact, is a near ten year explosion in state spending with little or no return in terms of improved productivity in virtually every targeted sector. In fact in some areas, such as the NHS and schools, standards have fallen, despite gargantuan chunks of money being thrown at them. One area where there have been improvements, if you can call it that, is in state wage levels. An NHS GP can now earn twice as much as an MP; a state school teacher in his first year, after gaining a fairly modest degree followed by a year of PGCE indoctrination, can expect to clear £30,000 plus, depending on the school. I simply do not believe these people are worth that kind of money. (I know from my own experience that many NQTs certainly aren't!)

It's difficult to cut state salaries, but they can and must be capped. That will help, but genuine, capital cuts are also required if the country is to avoid a return to the disease the last Labour government caused: stagflation. Brown has lost the argument on cuts - even his own party knows that now. He has been caught out lying about, among many other things, Labour cuts, something for which he will never be forgiven. Further, the mood of the public has altered and there are signs that Tory proposals will be taken seriously, as long as they are constructive. There is such a thing as constructive cuts, as long as the new spending levels are managed professionally, something which has been sadly lacking in the chaotic Brown years of profligate waste and corruption.

Fraser Nelson this a'rtnoon has written another decent piece on this subject. I like Nelson, by the way. If Guido caught Brown out on the smears thing, it's Nelson who's really got him on the economy - and deserves as much credit as the former got for his expose. In his piece today, though, he made some interesting observations about how the Tories might re-organise goverment spending in their first years in office, which are likely to be, thanks to Brown's nation-breaking levels of borrowing and debt, extremely difficult (no change there, then). According to Nelson, however, the first thing to reconstruct will be the mechanisms of cabinet government smashed to pieces by Brown as a consequence of his dictatorial style of what can be loosely described as leadership "where ministers are handed their budgets and told to eat it."

Here’s how it would work. The spending envelope would be set, in the Budget – but it won’t just be the Chancellor demanding cuts. The Office for Budget Responsibility would be up and running too. Very little attention is being given to the OBR, perhaps because it sounds like some spivvy quango which will be an irrelevance. But Americans perhaps thought that about the Congressional Budget Office before Nixon set it up in 1973 – it now has huge authority, and is a powerful check on the administration. If Britain had a CBO then Brown would not be able to lie through statistics so much. The Tories genuinely regard the OBR as a shift in power, removing the ability of the government to vandalise the public finances (and conceal debt) to the extent that Brown has done.

Crucially, the OBR would be responsible for telling the government when it needs to start repaying the debt. Mervyn King yesterday argued for prompter repayment—in the Tory era, we will have an OBR saying “quite right, and here is what we demand of the government.” It would be apolitical, and would not specify if these cuts were to come from extra tax or lower spending. It may (I hope) produce a model for dynamic tax forecasting – thus giving a realistic assessment of the options available to the Treasury. At present, HMT does “ready reckoners” which don’t account for the fact that higher taxes lower the incentive to work. The Treasury is programmed with false, zero- sum, high-tax logic. The OBR has the potential to take a real-world view of taxes – and hopefully a Tory Treasury will too.

Who would do the talking? Sir Alan Budd has been advising the Tories on the OBR, and I suspect that he may well end up chairing it (although other candidates are in the frame). So when the OBR speaks, the Chancellor will respond - in the Budget. That will set out a general spending envelope. Then, the Tories will start to work out who will eat the cuts.

To me, this is very significant in that it implies that after nearly a decade and a half of one, unanswerable man spending the country into oblivion, ably assisted by a constant stream of over-promoted and under-qualified, low-grade ministers given entire departments to play with, that game is over. No longer will ministers be beaten into submission by an all-powerful Chancellor/PM, it seems. And no longer will the Chancellor/PM be able to do such a thing even if he was corrupt enough to be so-inclined if this new quango really will have the kind of power the Tories claim.

However, surely there are constitutional issues involved, which Nelson does not discuss, preferring instead to continue revealing details of the Tory proposals, which, he says, are almost certainly going to be implemented. But the constitutionality of this OBR quango is an issue that must be explored. An elected Prime Minister is also First Lord of the Treasury and he appoints his Chancellor to run the country's finances, who is also (but not necessarily) elected to the House of Commons. At least with this arrangement it can be argued that, however superficially, the will of the people in the area of state expenditure is represented. The same cannot be said were Prime Minister Cameron to go ahead and create this committee, appointing unelected, paid experts ostensibly to oversee the government's performance in the area of budgetary management (presumably in a similar way to the Bank of England's oversight of monetary policy).

In fact, this body, assuming it has powers of censure, will have more authority than, possibly, it is within the gift of the elected guardian of the nation's treasure to cede. But without Cameron giving-up that authority, then the new organisation will be toothless rendering the proposal as little more than a political move to deflect some of the blame for budgetary errors away from the government ("Ah, but, the OBR said this. We did what they said so don't blame us that it's gone wrong." And so on). Clever, but dishonest. Rest assured, it is something the Left will seize upon with typical, breathtaking hypocrisy.

For myself, I agree with the idea in principle. Anything that can restore the reputation of government and parliament and offer genuine transparency and scrutiny after the utter disasters of the Brown years must be a good thing. But I do believe this new proposal for a new uber-quango must be examined from a constitutional standpoint before it is created, and it must be proved to me that it is not just a stunt.

Incidentally, there is one other 'constitutional' issue worth mentioning: how will this affect the 'authority' of the supra-national EU budgetary committees, one wonders? It seems to me there might well be a very wily ulterior motive for the creation of the OBR: to limit the influence and interference of EU policymakers in UK spending plans. In other words, this is Cameron and Osborne's way of cocking a snook at the interventionist Eurosocialists.

If this is true, then for almost the first time with the New Tories, I'm genuinely impressed.