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Wednesday, 29th October 2008

PMQs verdict: Clegg gets the message right

Fraser Nelson 1:04pm

Finally, the right line from Prime Minister’s Questions – and it’s one that Gordon Brown will fear the most. “What people need now is more money in their pockets. He could deliver big tax cuts for people who desperately need help”. It was from Nick Clegg. You can argue – as I do – that the Liberal Democrats’ proposed tax cut is paltry. But the rhetoric and positioning is precisely right. It’s a binary distinction: Brown trusts the state, and wants to spend his way out of a recession. Clegg is saying he trusts the British public, and wants to stimulate the economy by letting them keep more of their own money. When Brown retorted that the “Liberal Party” would somehow damage the British economy by taking out £20 billion of spending, it sounded irrelevant. Clegg has astutely judged that the Tories are missing an open goal because of internal struggles with the concept of tax cuts. It’s a no-brainer in the current environment – has anyone see Barack Obama’s website recently? Obama’s figures, like Clegg’s, are paltry if you add them up. But the positioning is right. Clegg is showing the Tories how to do it.

David Cameron’s strategy at PMQs was to keep pushing Brown on whether he’s accepted he failed to eliminate “boom and bust”. The idea is that Brown, being Brown, will never admit to any failing and he’ll be left looking ridiculous. It worked. He resorted to his fake litany: that he “created” three million new jobs, etc. He claimed that if he’s taken Cameron’s advise “we would not have nationalised Northern Rock” - interesting that the n-word is now used freely. No more pretence about “temporary public ownership”. The Tories, of course, would argue that they’d have faffed less and encouraged the Lloyds takeover so it would never have come to that. Anyway.

Cameron is getting better at expressing the downturn in real terms: “120 homes repossessed very day, 1.2m going into negative equity”. He needs to add 1,500 redundancies a day, wages being cut, poverty rising etc. Then he gave his payoff on boom and bust. “If he can’t admit what he got wrong in the past, why should anyone listen to him in the future?”

Then Brown reeled off the assertion which sent me into apoplexy yesterday – affecting to “explain” it all to Cameron with his fake SARS virus narrative. “The cause of the crisis we are facing started with private banking sector, if he doesn’t understand the problem he won’t be able to come to a solution.” This was the perfect chance for Cameron to say, in hushed tones, that the it is the Prime Minister who has not started to understand the character of his own downturn. Hasn’t he realised, yet, that he flooded the British economy with dangerously underpriced debt so British households ended up literally the most indebted in the world? Hasn’t he yet drawn the connection between the trebling of UK household debt to £1.5 trillion, and Britain’s vulnerability to the downturn? Hasn’t he realised that it is because he filed to repay debt that UK state debt is equivalent to at least £67,000 a household? Hasn't he drawn a link yet between his custody of the public finances, and the plunging pound? Hasn’t he grasped that his failed regulatory system made British banks the most over-extended of any in Europe apart from Iceland? Which part of all this does the Prime Minister find so hard to understand? Would he like to hold a private seminar, because - in a spirit of bipartisan fraternity - it's rather important for the country that he understands what has happened.

Okay, enough of my reverie. Cameron missed this huge chance to give an alternative Conservative narrative to the crisis and simply said: “The Prime Minister says he wants us to listen. We’ve been listening for ten years about his fiscal rules. He has stood there and lectured us about his fiscal rules,” yada yada yada. Cameron is teeing himself up for the Mais lecture where he thinks (wrongly, I understand) that he’ll tear up the fiscal rules.

Brown went on to make some good attack points. The Tories were daft to focus so much on borrowing – it’s inevitable in a recession, the question is whether you use the deficit to spend or relieve taxes. He later argued that George Osborne’s “fuel duty stabilised means now, automatically, the price of petrol would be going up by 5p a litre. He cannot deny it, and this is why people don’t trust the judgement of the Conservative Party.” Osborne argues the idea is at the consultative stage, so the 5p figure is bogus, but Brown does have a point. The flip side of the Tory idea is that it stops fuel prices collapsing when oil prices halve, as they have. This is why, as far as I’m aware, no country in the world has a “fuel duty stabiliser” process.

All told, this showed just how far the Tories need to come on the economy. I argue in my political column tomorrow that if Osborne wants to ruly redeem himself, he needs to close the gap between what’s he's saying, and what's needed. That gap was painfully obvious at PMQs today, and we have Nick Clegg to thank for that.

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David

October 29th, 2008 1:24pm Report this comment

I would agree with Clegg that it is more important at a time like this for people to have more money in their pockets. But if you think that's actually what he and the rest of the Lib Dems truly believe, then he has succeeded in playing you for a fool. It's posturing - clever posturing I'll grant you, and it gives the Conservatives a bit of food for thought. But Lib Dems and tax cuts go together like salt and sugar.

David

October 29th, 2008 1:26pm Report this comment

"Clegg has astutely judged that the Tories are missing an open goal "

I've seen no major evidence of such a public shift towards taxation, or that, while people might feel tax cuts are nice, they are not scared off by the 'investment' rhetoric. It would be handy to see some, but I fear this is merely a reflection of your ideological position of tax cuts above all, regardless (seeing as how you asked for cuts when the economy was doing well too, it's not exactly conforting on the coherent economic policy front to see no change at all when the economy has changed- this applies to the Conservatives too, of course).

Alex R

October 29th, 2008 1:33pm Report this comment

Think you could add the following to Cameron's stump.

Brown wants the IMF to act as his early warning system, but why was he acting as ours? Why wasn't he telling people that house prices could go up as well as down and that taking out 120% mortgages was ill advised; why wasn't he telling people that the economy could downturn and they needed to save for the rainy day? Because, blinded by 10 years as Chancellor, he began to believe his own spin that he had abolished boom and bust and the business cycle. We are now paying for his failure to control expectations.

DavefromLuton

October 29th, 2008 2:08pm Report this comment

When the immediate crisis passes and we are all worse off, the question that will need answering is whether it is the USA/sub-prime market/world economy or Brown's policies that have exacerbated our position.
Brown obviously claims the former.
Cameron is still failing to pin the latter on Brown - indeed he scarcely makes the point. Unless he can win this argument he will not win the next election

Urban Man

October 29th, 2008 2:17pm Report this comment

O/T but I have just read that in the latest issue of Total Politics, Sir Alan Beith discusses his memoirs.

I am almost inarticulate with rage.

How DARE someone as defiantly devoid of interest as Alan "Little Alan" Beith write his memoirs?

He is so colourless, he is regarded as a non-entity even within his non-event of a party.

To paraphrase Michael Heseltine, if he looks like a railway porter, sounds like a railway porter and wags his tail like a railway porter, then he is a railway porter, not an international statesman who hides his light beneath a bushel.

Truly, he could bore the buzzards off a dustcart.

The publishers might just as well have chopped down a couple of trees, sliced them, decanted them into a remainder bin and saved him the bother of putting his mind-curdlingly dreary recollections down on paper. Silly little man.

What an outrage. What are they called, these memoirs, "My Struggle"?

Clear off, Alan Beith, you waste of space.

Reg

October 29th, 2008 2:31pm Report this comment

Fraser,

I think you are wrong on this.

Firstly I think Cameron is trying to fix Brown on one point at a time and he is also playing a long game - no election likely for what, 18 months?

Secondly the "fiscal responsibility" stance is dull and not eye catching. The recession is going to hurt people, whatever government does. But fiscal responsibility will allow the BoE to cut interest rates - excessive borrowing will constrain the BofE's ability to do so. The difference is between a short, shallow (albeit painful) recession and a longer deeper, altogether more damaging one. The point about the fall in value of Sterling was well made.

Tax cuts: For years we have all been moaning about "stealth taxes". These are the ones that make the cost of employment high both in monetary and in a broader regulatory sense. There is no doubt that tax cuts for those on the lowest incomes is a good idea but overall "headline" income tax (20% and 40%) aren't punitive (notwithstanding the issue of fiscal drag). It's beginning to occur to me that when the Tories fully reveal their hand it will initially be about fiscally neutral tax simplification measures (beyond those already announced) - this will bring down the cost of tax collection and the administrative burden on business and more importantly the cost of employment.

Clegg's input is useful because he is arguing the case about the difference between cuts and efficiency. I suspect Cameron et al will move onto this in due course when they sense the time is right.

Just an opinion!!

mac

October 29th, 2008 3:11pm Report this comment

Fraser, you say Cameron 'missed this huge chance' - 'yet again', you might have added - and later you say that Osborne needs to explain 'what's needed'. Weeks are passing are there's little sign of the Tories being able either to string together a policy narrative that resonates with a disgruntled electorate or even to wrong foot Brown. It's cause for real concern if the main opposition to Brown's economic bungling is Clegg . . .

You have counselled patience because, you tell us, George Osborne' is "clever". It would be reassuring to think that this cleverness will manifest itself soon with some political heavy hitting, but the auguries aren't good when one considers that only Ken Clarke and Michael Heseltine have seemed able to counterpunch on anything like equal terms recently.

Ivy Eileen

October 29th, 2008 3:36pm Report this comment

Why, 3 hours after the event, does the Number 10 website still state "coming soon" for the PMQ transcript ?

What's the problem ?

Tim Carpenter LPUK

October 29th, 2008 4:09pm Report this comment

£20bln less spending is seen as a big shocker, as if we cannot find such a sum in all the waste out there, all the extra 900,000 salaried unemployed.

£20bln in cuts? £200bln is more like the right figure. End income tax and then people will have more money in their pockets, no need for tax credits and a whole army of paper shufflers to boot.

crown blog

October 29th, 2008 4:18pm Report this comment

Brown forgets to mention that with the fuel duty stabiliser, petrol prices would have been lower by 5p in the last few months.

Mark

October 29th, 2008 4:27pm Report this comment

I agree with Reg that Fraser is missing the point.

Brown went on about borrowing in a series of non-answers. But the distinction is between (i) an increase in borrowing to fund higher social security payments and take account of lower tax returns and (ii) attempting to spend your way out of a recession.

Brown was deliberately confusing them but was hit hard by the quote from his speech in 1997. He was visibly less confident than last week and is suffering from the fact that the recession is real, hitting ordinary people and, because of the currency, plainly hitting the UK harder than many other countries.

I agree that Cameron and Osborne have to set out the alternative to spending your way out of a recession. Osborne's article in today's Telegraph goes some way to doing that: he makes the good point that extra government spending (i.e. spending your way out of a recession) not ony won't work but also will make it harder for the MPC to cut interest rates.

A cut in interest rates puts money in the pockets of ordinary people -half a percent cut is roughly equivalent to one month's mortgage payment for many.

I do agree, though, that the Tories should take up Clegg's point about bad spending. Or at least the need for efficiency drives etc.

Overall, Cameron 8, Clegg 7, Brown 3.

Fraser Nelson

October 29th, 2008 6:12pm Report this comment

Reg & Mark, I don't disagree with you. I see Cameron's logic, it's just that I have come back from a week in America listening to Obama scoring big time with tax cut rhetoric. And then I hear it from Clegg, or all people! It could well be that GO will use this closer to the election. (Hence my faith, mac!) Plus if Cameron's aim was to insert himself into the evening TV news coverage of tonight's Darling lecture, he has just succeeded.

BluePorcupine

October 29th, 2008 9:29pm Report this comment

"But Lib Dems and tax cuts go together like salt and sugar."

Better check the party website, David. The cut in the basic rate to 16p was passed as party policy at the September 2007 conference, and the notion of additional cuts to the overall government spend if possible was passed in the September conference just gone.

Inamicus

October 29th, 2008 10:36pm Report this comment

Urbanman: Alan Beith is one of the most decent people in politics, is very highly regarded in the North East and must be doing something right to have clocked up 35 years in Parliament and still be respected across the party divide. His book is as much about his faith and his loss of wife and son as it is about politics.

David from Ealing

October 30th, 2008 8:12am Report this comment

Urban Man: And to have increased his majority from 57 when he was first elected to 8,600 is pretty impressive. Sometimes it's the quiet people who actually get things done. Alan Beith gives politics a good name. Rudeness like yours is unnecessary.