Thursday, 13 March 2014

Conservatives sleepwalk into new tax consensus..

Good morning. Those pressing George Osborne to do something about the 40p rate gain new ammunition today. The FT has done a study which provides yet more evidence that the Chancellor "leans heavily" on the highest earners to raise cash. It finds that there are six times as many people liable for the 40p rate as there were in 1978. Even more telling is its finding that someone on £75,700 would be on the basic rate of 20p if the threshold had kept up with wage growth. The FT also finds that 40p rate payers as a group will pay more tax than those on the basic rate for the first time this year.
All fascinating, but it won't butter any parsnips in the land of Dave. The PM, asked about the issue in Israel yesterday, said there would be no tax cuts for middle earners in next week's Budget. As the Guardian records, he said he was focusing on the low paid. That means further reductions in the starting point for the 40p rate, as the Tories align themselves with the Lib Dems to focus the tax cutting effort at the bottom end of the income scale and - key bit - make sure those on higher incomes don't benefit as a result. "I am a tax cutting Conservative," Mr Cameron said. "I want to see us relieve people's tax burden. We have chosen to do that through raising the personal allowance, which helps everyone earning under £100,000."
His argument hasn't impressed Nadhim Zahawi, the Stratford Tory who is also on the No10 policy board. As we detail in the Telegraph, he said yesterday that he supported the Renewal scheme for getting rid of the 40p rate altogether, and starting the 45p rate at £62,000. He said the Tories needed their own "iconic tax policy". To which many Tories will say "hear hear". It's a common refrain from MPs that they wish Mr Osborne would produce something exciting that will galvanise their campaign effort. All the indications so far are that we shouldn't expect anything on the higher rates in the Budget, and as for election wheezes, why reveal any now? The real issue is whether he will listen. It looks increasingly as if Lawsonian Tories, who believe in the importance of the penny off the rate as a crystal-clear way of keeping the public engaged in the tax debate, will have to accept that their world has changed. Either that or those arguing for a Tory effort in favour of reversing the tax ratchet are going to have to work harder. As I keep saying, we are slowly but steadily learning that the price of the financial crash and Labour's profligacy is a new tax consensus that will leave us with higher rates affecting more people in perpetuity. That the Tories haven't had a debate about it is troubling.

The Boris v Gove battle is heating up. In his Spectator column, James Forsythquotes a minister saying "Michael is licensed to sink his teeth into Boris's ankles in a way that neither the boss nor George can." The story makes the front page of The Times - the headline is "Boris camp is accused of plotting against Gove" - with claims of "a whispering campaign" by the Mayor of London's aides against the Education Secretary, furious that Mr Gove is backing the Chancellor as David Cameron's successor. In case you missed it,my column explored the reasons why Tories are starting to grumble against Mr Gove, noting that his "loss of form" coincides with the departure of his two most trusted aides. Given that Boris is not in Government, the dispute should be manageable. But the risk is that it suggests that the Conservatives are becoming inward-looking and focused on who should replace Mr Cameron after an election defeat, when their energies should be firmly focused on Mr Miliband and co.
Ed Miliband's EU announcement predictably gets a lashing in the morning papers, led by Peter Brookes' brilliant cartoon in The TimesWe say that "the result of his lengthy deliberations is a classic fudge" and Mr Miliband is denying that "what the country really wants is a vote on how the EU has developed in the 40 years." The Times exclaims that "The danger is that it produces a treaty that accidentally triggers a vote. He will freeze Europe at a time it needs to change. A straightforward promise to have a referendum provides Britain with a chance to settle its future relationship once and for all." The Mail throws everything it has at Ed, and ends its leader with a plea to Ukip supporters: "isn’t the clear message that if they really want that referendum, they should use their votes tactically to keep Labour out?" With a YouGov poll showing that 50% of the country oppose Mr Miliband's policy and only 32% support it, The Sun's headline is "Eur being a coward, Ed." Butthe FT, where Mr Miliband placed his article, is rather more complimentary: "In almost four years as Labour leader, Mr Miliband has moved his party to the left on many issues in a manner that has alarmed corporate leaders. On the big strategic issue of Europe, however, he has now articulated a position that is more pragmatic and in the interests of business than that of his Conservative opponents. If this redounds to his political advantage, it is because of the error David Cameron has made in pandering to the insatiable appetites of his eurosceptic tormentors."
And there's also a word of warning from the sage Lord Ashcroft, who thinks that Mr Miliband has set a trap for the Tories: "By putting the referendum pledge at the front and centre of its 2015 campaign the Conservative Party would not only be missing the chance to talk about the things most voters care about more, like the economy, jobs and public services. It would also, as far as these voters are concerned, be proving again the out-of-touchness (outness of touch?) of which it has for so long been accused."  The message to the Conservatives is simple: the offer of a referendum can win some votes back. but too muchm "banging on" is a recipe to lose them. It's one that Eurosceptic backbenchers should note.
Alex Salmond's intelligence plans for independence would leave Scotland less secure. That's the conclusion of Sir David Omand, the former GCHQ director, who used an exclusive interview with us to make his first public comment on the SNP's blueprint for independence. In a nutshell: not enough money; too little time; no thought to the impact on allies. There's more of the same in the FT, who report that diminishing North Sea oil and gas revenues gave Scotland a larger deficit per head than the rest of the UK. George Soros adds to the bad news for the independence campaign, saying "I don’t think that Scotland leaving and becoming independent and yet remaining part of sterling and the Bank of England is actually practical" and suggesting that even joining the eurozone would be a better option.
The Sun spies the chance for a classic pun and doesn't disappoint. "Did Ukip with your aide Nige?" asks its front page, after the former Ukip MEP Nikki Sinclaire alleged that Mr Farage had an affair with his aide Annabelle Fuller, who is 32. The story gets plenty of attention elsewhere, and also makes the front of the Mail, where Mr Farage's wife is quoted as saying "We will be discussing it tonight". What this shows is that the papers are coming for Ukip, and the party had better get used to a new level of scrutiny. Does it have the discipline to survive the scrutiny?
The Mail reports on a leaked briefing note for David Dimbleby, which reveals that he was urged to ask five questions of Lord Heseltine, compared with only two "soft questions" for Rachel Reeves. Tory MP Andrew Bridgen says: "This leaked document confirms what viewers could see in front of them – bias is endemic at the BBC. The viewing public, and licence fee payers, deserve better than this. But under the new leadership things seem to be getting worse not better." They'll be plenty of eyes on tonight's show.
Various events at home have unexpectedly marginalised the coverage of Dave's trip to Israel, but there are a few snippets worth recording. Mr Cameron assured the Israeli Parliament that he would offer "rock solid" support to Israel, and has condemned a "barbaric" missile attack on Israel that struck yesterday. The PM also said that he would continue to support Jewish ritual slaugher in Britain. In our leader, we say that "Mr Cameron’s visit may be a useful reminder that, however painful the path to peace, it is in everyone’s interests for a deal to be reached – and that Israel’s friends have a duty to say so."
Jeremy Hunt isn't budging over NHS salaries. The Health Secretary is expected to defy calls for a pay rise of one per cent from staff, saying that budgetary pressures mean that the health services can't afford such a rise and they would lead to job losses and a lower standard of patient care. Unions, who will say that ministers should respect the recommendations of the independent pay bodies expected to recommend a rise, and braced for a fight.
Sir David Higgins, the new head of HS2, has identified a very welcome £1.5 billion in savings, and will outline his recommendations for building the line less expensively on Monday. The FT says that Sir David is expected to recommend a U-turn on plans for Euston station, which were scaled down last year in a bid to trim costs, and advocate a full revamp of Euston paid for with the property development profits. He will also advocate scrapping the proposed link between London St Pancreas and the Channel tunnel to save cash.The Morning Briefing is edited by Tim WigmoreFollow Tim on Twitter 

Latest YouGov poll: Con 35%, Lab 37%, Ukip 13%; Lib Dems 9%
The perils of the morning commute:
@AnneMiltonMP: Early for 7.34 - knees still sore so hoping for a seat.What did the person who wrecked the bell on my bike have in mind when they did so..?!
In the Telegraph
Peter Oborne - Labour’s unforced error on the EU is a priceless gift for its opponents
Benedict Brogan - Will David Cameron recognise Israel as a Jewish state?
Dan Hodges - Bob Crow: A big beast who played up to the caricature
Telegraph View - Ed Miliband’s policy on a referendum on the EU is a classic fudge
Best of the rest
James Forsyth - The Tory knives are out for Michael Gove – and Boris is leading the assassins
Lord Ashcroft - Miliband’s referendum non-pledge will win votes for Labour – if the Conservatives let it
David Aaronovitch - Labour doesn’t need a referendum life raftDaily Mail leader - Miliband's betrayal and Ukip's dilemma
Business Secretary Vince Cable announcement on the renewables sector.

8am Pensions Minister Steve Web addresses the Institute of Chartered Accountants Scotland (ICAS) on pension reforms. Edinburgh.

9am Call Clegg on LBC 97.3 radio. 

9.30am Boris media event for the technology sector in London. TechHub space at 207 Old Street, London.

10.30am Home Office Minister Norman Baker will publish a consultation on extending licensing hours for England games during the World Cup. 

12pm Protest outside Parliament as MPs debate and vote on the extension of badger culling in England.