And another thing…

I EXPECT to win the National Lottery on Saturday. There’s no doubt – I just have a feeling about it. Yep, my six numbers are going to appear on those magic balls, and it’s about time!

I wonder how much I’ll win? I hope it’s an even number: four or maybe six million. Three or five would just make me a bit uncomfortable, for some reason.

And then, on Sunday, while I’m cradling my cheque and telling it how beautiful it looks, I will be only dimly aware that simply by having become massively richer overnight, I will have plunged a large number of my fellow citizens into poverty.

Because that’s how relative poverty – and income inequality – are calculated. Footballers, pop stars and certain members of the financial services industry receiving astronomically large amounts of cash warp the whole income distribution map so much that, in comparison, those at the bottom end of the scale – even those whose conditions might have materially improved in recent years – find themselves “realtively” worse off and sinking closer to “relative” poverty.

Faced wth such an imbalance, how can any government try to narrow that inequality gap? By taxing the rich more and giving large cheques through the benefits system to the less well off? Well, yes, you could do that, even though it would be insane. But don’t let that put you off.

Yet it will simply not be possible for any government of any persuasion to reverse that inequality unless they impose really punitive taxes on the riches in our country. There may well be a moral (left-wing) justification for doing so. But taxing people for its own sake, as I’ve said on so many occasions, is plain wrong, stupid and won’t work, except to make some puritanical types feel better about themselves.

Theresa May’s response to today’s report was particularly asinine:

I am certainly not going to pretend that inequality was created in 1997, but we need to say why is it after a government with good intentions and a clear policy focus? They tended to have a one dimensional approach… they look at the symptoms not the causes.

This is about dealing with the causes of inequality and poverty, about helping people move up the rungs of the ladder.

“The symptoms not the cause”? As a soundbite, it’s average, but what does it mean? “Dealing with causes of inequality and poverty”? Fine, but how, exactly?

Yes, we have to concentrate on those at the bottom of the pile: get them off benefits and into work, improve educational opportunities, lift people’s – especially children’s – aspirations. It’s all good, but none of that will narrow the inequality gap – at least, not significantly and not while the “super-rich” remain with us.

It’s not all to do with the “super-rich”, of course (much though I’d love to blame all the nation’s woes on football). The children of the professional and properties classes get huge unearned financial advantage through inheritance. You could certainly address that by putting inheritance tax up to 100 per cent (as was seriously proposed by The New Statesman as recently as the 1990s) but such a proposal would only find favour in the mythical Land of Bonkers.

The reason that gap is so wide is not because poorer people are becoming poorer; it’s because those at the top are stretching that gap, pulling it wider with every six-figure bonus they receive and with every half-a-million-pounds house they inherit. And I’m not convinced there’s anything the government can or should do about that, unless you want to go down the route of a return to a Supertax of 98 per cent.

Now, if you’ll excuse me, I’m off to the newsagent to get me lottery ticket…

FOLLOWING on from my last post, here’s the other side of the same coin.

It seems pretty clear that any link between tax breaks and rates of divorce is non-existent. But what about the statistics on the number of people who chose to get married in order to take advantage of the Married Couple’s Tax Allowance (MCTA)?

This table is also from the Office of National Statistics.

Unfortunately, unlike the previous table on divorce, this one doesn’t give a proportional figure, so we’ll have to stick to the headline figures. Nevertheless, they’re pretty unambiguous.

In 1979, the number of people choosing to get married was 416,927. Since then, there has been an almost interrupted decline. In 2007, the last full year for which figures are available, it was 270,003. That represents a fall of more than a third on the 1979 figure.

There were a few blips on the way: 1983-1987 saw a modest reversal of the trend, as did 2000 and the 2002-2004 period.

Here is the danger of any political party attempting to secure the title of “party of the family”: during the 18 years of Conservative government, the number of people getting married plummeted by more than a quarter. Divorces rose by 8.7 per cent. And during this period, the MCTA was in force.

Labour has a similar tale to tell on the marriage rate, although the number of divorces fell by more than ten per cent between 1997 and 2007.

You could argue (and I have no doubt that some, including the Conservative Party, will): “But the marriage and divorce rates would have been even worse during the Tory years if we hadn’t had the Married Couple’s Tax Allowance.” But that doesn’t stand up to scrutiny either, since the figures I’ve already highlighted show no correlation at all, either during periods where the MCTA was in operation or when it wasn’t.

The Tories never tire of warning us that there are tough economic times ahead. They rub their hands with glee at the prospect of being able to indulge their political instincts with a slash and burn fiscal policy that has the cover of the worldwide recession and the banking crisis as an excuse.

Yet at a time of austerity, they want to spend significant amounts on a tax policy which cannot be shown in practice to have any positive social benefits but which will have financial benefits even for wealthy childless couples.

The Tories are left with what is probably the least convincing, lamest excuse for implementing any policy: it “sends out a signal”. Well, if “sending out a signal” is the sole motivation for the reintroduction of the MCTA, surely alternative ways can be found for doing it without a having to pay billions of pounds of public money?

SHADOW Work and Pensions Secretary Theresa May today confessed to feeling “devastated” after the monthly unemployment figures showed a surprise fall. Friends and colleagues described her condition as “comfortable”.

Theresa in happier times

IT’S BEEN a tough year for an awful lot of people.

I’ve been moved by the public outpouring of support for British soldiers in Aghanistan, particularly in these last few months. My heart goes out to all the families of service men and women who lost their lives in the past 12 months and who face the ringing in of the New Year with an empty place round the family table

And it’s been a bloody awful year economically for far too many of our fellow citizens and their families, trying to cope with unemployment or even the loss of their homes.

And God knows it’s been a traumatic and humiliating year for MPs. The difference between us – MPs – and the two previous groups mentioned, of course, is that we brought our misfortunes on ourselves and can’t blame anyone else for them.

So, here’s to a better New Year, to the safe return home of all our service personnel, and to better ecoomic news – not just for politicians and statisticians but, far more importantly, for ordinary men and women.

And, yes, here’s hoping for a New Year when MPs can start to rebuild the trust we have lost.

So to every one of my readers, let me wish you and your families a very happy, safe and prosperous 2010.

I HATE shopping, but trips to the High Street or the local shopping mall will be even more tedious if we lose our big book stores.

Borders has gone into administration, and the received wisdom is that it’s due to the competition provided by online booksellers (Amazon, mainly) and by discounted books available in superstores such as Tesco.

And I have to accept my share of the responsibility. I’ve bought a lot of books through Amazon over the years – books I would otherwise have bought from Borders or Waterstone’s. I can spend hours (or did before I had kids) browsing bookshelves in either of those chains, and the prospect of not being able to do so in the future doesn’t bear thinking about.

Sellers of books and DVDs are, I suspect, more vulnerable to online competition than are clothes retailers; people still want to see and hold a shirt or a pair of trousers in their hands before buying. But a book’s a book, whether you pick it off a shelf yourself or it arrives in the post.

So are we seeing the demise of the High Street bookseller, and if so, does it matter?

HOW SHOULD  a modern, left-of-centre political party which has been in power for more than 12 years respond to the growing gap between rich and poor?

“Tax the rich” is the obvious knee-jerk reaction from some. And they will have their chance to press home their case once Harriet Harman’s report on inequality is published in the new year.

The logic seems to be this: Labour’s eschewing of traditional Labour tax-and-spend policies has led to the current disparity between the lowest and the highest paid; soaking the rich would therefore, of itself, make Labour popular enough to win a fourth general election as well as narrowing the incomes gap.

Except that this analysis seems to overlook the fact that Labour won the last three general elections with a commitment not to reintroduce punitive tax rates. Are the electorate really turning to David Cameron because they believe he will tax them more?

And there is absolutely no point at all in taxing the highest earners more unless you intend to do something positive for the lowest paid with the revenue raised. Sure, reducing the incomes of the rich would, at a stroke, reduce income equality. Even if you just banked whatever tax you raised and didn’t use it for anything, income inequality would be reduced because you’ve reduced the incomes of those at the higher end of the income scale. Job done?

Well, no, obviously. Such a move would stink. There is nothing intrinsically good or moral in taxing for its own sake. If, on the other hand, extra tax revenues were used to achieve something – raising tax thresholds for the lowest paid, for instance – then that would be worth looking at. The only problem is: how much extra tax would you have to raise to make any meaningful impact on thresholds? Top rate tax rises bring diminishing returns, so there’s no bottomless pit of readies in that direction.

What, other than tax thresholds, are the mechanisms for raising the poorest up? We know how to bring the richest down, but once we’ve done that, how do we use that money raised to benefit the poorest? Increasing benefits? In general, no. Keeping people and families on benefit is a sure-fire way to entrench real, absolute and relative poverty. Increase tax credits? Fine, but apart from the pension credit, tax credits are mainly aimed at making work pay. I’m not aware of any evidence that low tax credit rates are responsible for low take-up of paid employment.

There are certainly plenty of areas of social policy which could do with the extra money, but none of them would directly or easily close the incomes gap.

Tony Blair and – let’s not forget – Gordon Brown put a great deal of effort into reinventing Labour as a low tax party. As a result, we won three general elections in a  row, and as a result of that, we introduced the minimum wage, tax credits and the New Deal, raising nearly a million pensioners and 600,000 children above the poverty line.

So why has incomes equality increased? And is it the inevitable consequence of a booming economy, as the UK’s was until the global recession started to bite?

More to the point, does anyone seriously believe that if the Tories instead of Labour had been in power since 1997, incomes equality would have been narrower than they are today? Without the minimum wage and tax credits it would surely have been even greater.

The Tories, of course, will be rubbing their hands in glee at the prospect of this debate within the party, and praying that we come down unequivocally on the “soak the rich” side of the argument.

Personally, I’d rather we stay in government.

OKAY, he didn’t quite say that, but he might as well have.

“Give up meat to save the planet“? I don’t think so, old chap. I love meat, me: I rarely eat anything that didn’t once have parents.

If the government and its advisers want to get the public onside in the battle against climate change, they’re going to have to accept a few reailities of life. The first of these is that as poorer countries become wealthier, the more they tend to eat meat. China is the most dramatic example of this. Beijing slaughterhouse is like Piccadilly Circus at rush hour these days, or so I’m told. Except with more blood and entrails, obviously.

Similarly with the effect on jobs. Don’t waste your breath telling someone who’s lost their livelihood that their sacrifice will help save the world. He won’t care, and neither should he. If we can’t find a strategy that allows us simultaneously to curb our emissions and grow our economy, then the battle against climate change is already lost.

As for urging us all to go veggie… yeah, good luck with that one, Your Lordship. You couldn’t get me a Bic Mac meal with strawberry shake while you’re out, could you? And go large…

CONSERVATIVEHOME have leapt to the defence of David Cameron, who was pictured drinking Champagne (shock! horror!) at the Tory conference last night.

I was given a chance this afternoon to add a quote to the story, expressing outrage at Cameron’s hypocrisy for such triumphalist shenanigans – an opportunity I declined, since I enjoy the odd glass of bubbly myself and wouldn’t want to be called a hypocrite next time I’m quaffing away in Strangers or anywhere else for that matter.

But the more intersting point of the conhome story is editor Tim Montgomerie’s justification for his party’s ludicrous opposition to Heathrow’s third runway:

I don’t think one vote will be changed by that photo (of Cameron drinking Champagne) but the story on opposing Terminal Three (sic) will win seats along all Heathrow flight paths.

So there we have it. Screw the economy and screw the environment (because the party has admitted it doesn’t oppose aviation growth elsewhere in the country) – so long as they can win some anti-Heathrow seats, then job done.

Such short termism and short-sightedness is more typical of an opposition party than a government in waiting.

MANY economists make money by doom-saying.

Which is why, in every year since 1997 — sometimes more than a few times a year — there have been plenty of talking heads willing to appear in TV studios to offer depressing predictions.

And there were some who positively hoped for one. Some newspapers seemed to want to create a self-fulfilling prophesy, so enthusiastic were they about a recession’s onslaught.

And then it happened, and it was deeper than most had feared.

Now today, the Institute of Chartered Accountants has declared the recession over, and predicted that the UK’s economy will grow by 0.5 per cent in the third quarter of this year.

Obviously that’s good news that everyone will welcome, although few will be popping the Champagne just yet. There is still a massive task ahead of us in getting the jobless totals down for a start.

The Institute also predict that America’s economy is about to start the long haul to recovery. So the question I ask is: would we be seeing these signs of recovery in the absence of Gordon Brown’s and President Obama’s stimulus packages? And, more to the point, would we be seeing them this early, when most economists have predicted a recovery to start next year at the very earliest?

Comments welcome, but please wipe the foam away from your mouths first — it can play havoc with your keyboard.

THERE’S a terrific scene in the TV adaptation of Chris Mullin’s A Very British Coup in which the newly-elected left wing prime minister, Harry Perkins, is catching the train to London and is asked by a journalist: “Do you intend to abolish first class, Mr Perkins?” To which Perkins replies: “No, I intend to abolish second class. I think everybody’s first class, don’t you?”

And there we have it: a template for New Labour half a dozen years before Tony Blair became leader of the Labour Party. New Labour’s appeal was based on an explicit acknowledgement that success, ambition and the pursuit of wealth are all Good Things. Suddenly the taxation of the wealthier was not an end in itself but simply a necessary evil. And it was okay to want a better job, a higher income, nicer holidays, a bigger house. Voting Labour became something you did for yourself as well as for the greater good.

That’s why we won.

Yesterday Compass launched a campaign for a High Pay Commission. Its inaugural statement reads:

The crisis we find ourselves in is one significantly caused by greed. The salaries of those at the top raced away while the median wage stagnated. Inequality grew, and an economic crisis ensued. The unjust rewards of a few hundred ‘masters of the universe’ exacerbated the risks we were all exposed to many times over. Banking and executive remuneration packages have reached excessive levels. We believe now is the time for government to take decisive action.

Fortunately, the chancellor has already dismissed the idea. But as dog whistle politics go, it’s pretty effective. After all, so many have suffered as a result of the banking crisis and no-one ever lost votes by having a go at those we perceive as spoiled and arrogant rich kids. But I can’t help thinking that the authors of that statement are the kind of people who might approve of attacking a Tory by-election candidate as a “Toff” and using top hats as photo props.

When the national minimum wage (NMW) is discussed, it’s often described as a concession by Tony Blair, as if it were something he had to tolerate in return for more “New Labour” measures such as public service reform. Wrong. The NMW was as much a New Labour as an Old Labour achievement because it levelled people up. It was exacly the opposite of class warfare, which is why there is now a consensus between the two parties that it should remain regardless of who forms the next government.

I imagine the so-called High Pay Commission (I wonder how much the chairman would be paid?) would have the aim of setting a national maximum wage. I doubt if a clearer example of the politics of envy has been aired at any time in the last 12 years.

This proposal has “securing our core vote” written all over it. Except it wouldn’t, because once you’ve addressed the understandable anger at certain individuals’ exorbitant salaries, pensions and bonuses, you’re left with the principle that a Labour government is setting a ceiling on individuals’ wealth. And that’s not what governments should be doing, because once you’ve established that principle, once you’ve raised a few cheers by ostentatiously depriving some bankers of their bonuses, where do you go next? What do you do when the media get round to identifying the next figures of public hatred? Target them too? How far down the scale do you go? After all, multi-millionaires may not be able to justify their bonuses to the general public, but neither can civil servants earning six figures or MPs earning five justify their incomes to some of those living off benefits.

Undoubtedly, there are already those typing in the comments box to the effect that, since the government already own the banks, it has the right to intervene to limit financial rewards of those still running them. As indeed it does. But most of the banks and financial institutions aren’t in the public sector. The principle that high bonuses are A Bad Thing is surely applicable across the board, whether a company is publicly or privately owned.

If government decides it can intervene in the market to dictate wages, why shouldn’t it have a role in deciding other areas of corporate policy? And if it starts doing that, it might as well nationalise the-… Oh. Okay, I get it now…

As disgraceful and unjustifiable as these bonuses were/are, they did not lead directly to the banks’ bankruptcy. Poor lending and investment decisions and reckless risk-taking did. So although we might feel better confiscating money from rich people, the actual effect on our economy would be negligible. And making yourself feel better is a very poor motivation for policy, whatever “the court of public opinion” might say on the matter.

And when any party starts producing policy “to secure the core vote”, it might as well write of the next election, go quietly into opposition right now and start thinking about the election after next.