Friday, 30 March 2012

Cash for access: The scandal that won't go away but threatens for the future of party democracy

The latest episode of the party funding-related saga is rife. It is a potent reminder of the problems political parties in the country face in how they generate funding. It must be remembered that this practice is nothing new and neither are any of the arguments for reform to funding to our political parties.

The scandal is at least 20 years old. The Conservative government under John Major was tarnished with sleaze, this trend continued under Blair's Labour government yet still the problem still persists today. 

Membership to political parties has dramatically decreased over the past 30 years. This has had the effect of creating a deficit in party funding from the ordinary individual. This is something that everyone agrees is a big problem as it runs the risk of parties being unable to practice their democratic functions. The question is how to resolve this.

Personally I am very much against notions to make this the duty of the state to fund political parties.This is bad for very obvious reasons, namely that it forces the individual tax payer in to funding extremist and out of touch parties such as The BNP, The SDP and the SWP. Furthermore the system is democratically regressive as funding would likely be determined proportionately to how people vote. This in practice would be the state wielding an attack on small parties and thus entrench the status quo in our political system. Either way, the state has no business either lending support to, or obstruction to the interests of a political parties in this respect, as long as it is legal.

I am equally resistant to the idea of introducing a donation cap. This is very wrong, certainly when there is no plans to make up the cuts to the revenue of political parties with innovative alternatives to fund our parties. What this simply does is leave our political parties further deprived of financial resources which, without cannot carry out campaigns, research, and hold the government to account, among many other vital functions. This therefore would be the worst possible solution if it does indeed build momentum. We cannot afford a knee-jerk reaction that would prove detrimental to democracy.

What I suggest is far more sensible and it's two fold. Parties need to get away from dependence from generous and rich donors by reaching out to the public for increased party membership. For whatever reason this has morbidly declined and is bad for political citizenship and involvement. Political parties have to  reignite interest in their activities by making ordinary people feel that their input makes a difference. There needs to be more effort to achieve this. It can be done at a local level with prominent members of political parties guest speaking at regular events. At the moment politicians only seem to come to the public when they want their vote. This simply isn't good enough. This whole problem is closely related to the loss of public faith in the political class. Politicians must do more to reclaim such credibility.

Of course this will still probably not provide enough financial clout to parties. Therefore at the other end it is important not to put off wealthy people from donating to political parties. Big donations do more good than they do harm as our political parties will be crippled without the support of these individuals.They are a necessary evil. It is vital that the government respond with much consideration and do not bow to populist demands that could profoundly harm our democracy

Friday, 23 March 2012

Osborne's Budget leaves much to be desired

As George Osborne was presenting the much-anticipated Budget in the House of Commons on Wednesday I was particularly interested to discover just how far he would go in delivering on his pledge to support business and thus get the UK economy growing. It is an understatement to say that I was left disappointed.

Whilst measures like acknowledging our successful industries such as medicine, science and technology and reinforcing them with targeted efforts and the confirmation of the credit easing plan for a National Loan Guarantee Scheme were better than nothing, what the budget does not however do is go far enough in making Britain internationally competitive in attracting corporation confidence, nor does it do much to support the cause of struggling small businesses.

The cut in corporation tax from 26% to 24% for one is not enough. The economic argument advocating a move to lower corporation tax to a much more competitive rate of 15% is far more compelling. The underhand measure of the intention to reverse the Supreme Court ruling on Vodafone and bring in a tax amendment is one even more detrimental to our prospects of attracting much needed corporation confidence. This will do little to bring in essential corporation investment in order to increase Britain’s relevance in the world economy.

In terms of smaller businesses, it seems to me that the budget overwhelmingly supports its larger competitors. The Conservatives under Cameron and Osborne, in rhetoric champion small business yet land measures such as a 5.6pc rise in business rates. This is a particularly crippling policy that will undermine and marginalise the role of small businesses in rebooting the economy. This flies in the face of the government agenda to revitalize Britain's rapidly declining high street. Consumer spending in retail is currently not growing in line with inflation- a humbling indicator that people are tightening their belts and cutting back on spending, to the detriment of the well being of the overall economy. This urgent situation is not reflected by Osborne’s budget. Action on these business rates is paramount. Increasing business rates only makes this cause ever more difficult in an economic crisis in which money is scarce as it is.

On a related theme, the budget also fails to cut through the bureaucracy of employment rights which act as a huge disincentive to businesses looking to expand and employ more people. This partly explains unemployment figures. This has a knock on effect on consumer confidence and consumer spending. If a large section of our society is unnecessarily struggling on low unemployment benefit then they the lack spending power which is vital for the prospects of high street retail. Curbing employment rights legislation will have the effect of expanding the work force and taking people out of the lows of unemployment. This will also cut need to increase government borrowing which jeopardises the UK’s credit rating.

In short, this budget fails to deliver adequately in these key areas. It is apparent that the government caved in to populist demands to appear not to be the government of ‘millionaires and ‘fat cats’’. This will prove reductive to our long-term national interests unless Osborne and co get their priorities right and prove themselves serious in wanting to ensure economic growth. This can only be achieved by supporting business and enterprise. Politically challenging, granted, but nevertheless necessary in taking the country out of economic crisis.

Tuesday, 20 March 2012

Why a detailed tax statement is a fantastic idea

Recently there has been a suggestion that Chancellor George Osborne intends to unveil plans in Wednesdays’ budget to provide every taxpayer with an annual statement revealing exactly how much tax they pay to the state and where it is spent. This strikes me as a fantastic idea.

One of the largest conflicts within public life is the balance between desire to buy into the notion of welfarism and the individualistic instinct to prioritise yourself and your family; To bisque in the right to exercise economic freedom over ones hard earned income. What I believe  this detailed statement will do is provide a reality check to those who call for ever more public spending, who do so with little thought for what this means in practice.

The truth is it is very easy to advocate more social spending and to complain about the status quo. To deliver social improvement usually requires more public spending. Where this romanticised spending comes from is the pockets of tax payers-and usually those who are struggling themselves under the demands of an unreasonable tax system. What articles in The Telegraph and The Daily Mail highlight for me is the extent to which ordinary earners are asked to delve into their own pockets to deliver these misguided ideals.

Those who earn in excess of £25,000- by no means anything more than a modest salary, are substantially burdened by high tax demands. The Telegraph reveals that those earning £50,000 pay a massive £15,000 in tax, leaving them with around £35,000, not much more spending power than those who earn a salary half of this. What this represents is the injustice and the disproportionate approach that the political system takes in this country to taxation of our wide-ranging ‘Middle England’. Those at the lower end and upper end are faced with very distinct levels of taxation, despite both being relatively in the same boat. This is very unfair on hard workers on the upper end whom, due to current taxation policy, cannot experience the just benefits of a higher salary that those at the lower end. There comes a point where ‘progressive’ taxation becomes unjust and furthermore, provides an attack on the wrong people.

What the tax statement will help to bring is a sense of reality to notions for greater public spending. It will provide a poignant and tangible link between social ideals and how they impact on their own tax bill, which I expect, will shift the public debate away from resistance to public spending cuts and reignite the country’s realisation that there is no alternative to spending cuts- in spite of however painful they feel, in order to achieve meritocratic justice and economic stability, as was the case going into the election in 2010. It is also my hope that this increased transparency will provoke irresistible demand for overdue tax reform in Britain.