Home > The Magazine > Features

Thursday 4 December 2008

Dare to dream and make your ultimate trip a reality

The latest culture as recommended by our staff

Michael Henderson

Michael Henderson suggests

Email registration

Free weekly email update

Great products and special offers for Spectator readers

Click here for great value events

Click here for exclusive articles, offers, tasting notes and discussion

All bets are off

Fraser Nelson

Wednesday, 27th June 2007

Fraser Nelson says that the new Prime Minister has positioned himself in territory that the Tories have left vacant, and is ready to fight a cultural battle to defend the ‘British way of life’ and win over the C1 voters who decide elections

This takes us straight to the heart of the Brown paradox. It is precisely his addiction to tax revenues that has led him to the conclusion that he cannot raise the top rate of tax: higher tax rates, he has finally grasped, mean smaller revenues. This is very different indeed to what he believed before 1997, when he was keen on a new top rate of 50 per cent. But ten years in the Treasury has turned him into that rare thing: a redistributionist Prime Minister who understands and relishes the dynamics of the Laffer curve. This is crucial to understanding his thinking now.

The same instinct has led him to protect the City of London from regulation and tax — or at least not to undermine it actively as all previous Labour chancellors have tended to do. More money is now managed in St James’s, the hedge-fund district, than the whole of Frankfurt. Canary Wharf has become a capitalist Babel, with Chinese, Indians, French and Americans working together in a globalised mix that even Wall Street cannot rival. All this is a deliberate strategy by Mr Brown to keep regulation light and help London take on the world. His trick has been to turn a blind eye to those issued with non-domicile tax status — a perk which has no equivalent in America or Europe. London is packed with such non-doms (many holding British passports) who pay about 25 per cent tax rather than 40 per cent. It is Mr Brown’s discreet tax bait, to lure the world’s financial elite to London. Everyone is at it. Even his own chief fundraiser, Sir Ronald Cohen, is understood to have non-dom status.

This is hardly the policy of a traditional socialist. In effect, Mr Brown has applied low-tax Friedmanite economics to a tiny section of British society — City financiers — and reaped the benefits as talented foreigners flood to London. In one of many role reversals in the political landscape today, it is the Conservatives who now want to close the loopholes that benefit those in the private equity world. ‘If it looks like income, then it would be peculiar not to tax it like income,’ says George Osborne, the shadow chancellor. Similar moves are afoot in America. But not in Brown’s Britain.

Previous page 1 | 2 | 3 | 4 | 5 | 6 Next page

More articles from: Fraser Nelson | this section

Print this article | Email to a friend | Permalink | Comment

Post this entry to: del.icio.us | Digg | Newsvine | NowPublic | Reddit

I will always defend a big spender like J.M. Keynes

Nancy Dell�Olio

Nancy Dell’Olio makes an impassioned case for Keynesian economics as the necessary remedy for the global crisis. It is to the Cambridge economist that we should turn once more

How I became Bulgaria’s etiquette guru

Dylan Jones

Dylan Jones is astonished to find in Sofia that the former communist country has embraced his guide to the mores of modern life — and that not everybody looks like Borat

Rudd has lurched from indecision to phoney war

Matthew Castray

Matthew Castray looks back on the Australian Prime Minister’s first year in office and audits an administration which has reviewed much and done very little

Incompetence is fine: but being offensive is sure to get you sacked

Rod Liddle

Rod Liddle says that something has gone wrong when 15 South Lanarkshire social workers are sacked over a dodgy Gary Glitter joke while none of their counterparts in Haringey has even been reprimanded over the ‘Baby P’ case

Brown has played into the hands of the Tory Bullingdon Boys he loathes

Fraser Nelson

Fraser Nelson says that the Pre-Budget Report killed off New Labour without landing a punch on the Tories. It has paved the way for a new Conservatism, in which Cameron woos aspirational voters, focuses on government debt and looks for responsible spending cuts

Thank goodness we can have a run on the pound when we need one

Martin Vander Weyer

Martin Vander Weyer looks ahead to next week’s Pre-Budget Report and reflects on George Osborne’s contentious remarks about the devaluation of sterling. It looks like Gordon Brown is getting away with his borrowing binge — leaving the Tories isolated

Want to cut taxes? First cut spending. Here’s how

Fraser Nelson

After a week of clamorous competition between the parties over tax cuts, Fraser Nelson offers a guide to paying for them: a programme of spending cuts that would preserve core services but shave off the fat of the Brown years. All that is needed is political will

Osborne stumbles: but is there a bigger story about Mandelson?

Melissa Kite

Melissa Kite says that the shadow chancellor should have known better than to cross the most brutal spin-doctor in Westminster, or flout the conventions of the super-rich. But we should not be distracted from the Business Secretary’s true role in this saga

There is nothing magic about this Keynesian fad

Tim Congdon

Last week, The Spectator said that ‘Keynesianism is not the answer’. Here, Tim Congdon says the government’s economic recovery strategy is a sham based on outmoded leftist thinking

Amid the financial turmoil, Peter versus George is the key battle

Fraser Nelson

Stand by for a mighty clash between two politicians, says Fraser Nelson. The now infamous dinner between Mandelson and Osborne was a cordial parting for power-brokers of different generations who will fight each other savagely for electoral advantage