Tax Credits and the Cameron Legacy - Interview with Dr Rupa Huq MP

Last week, Labour launched an opposition campaign in Parliament, in response to government proposals, to cut tax credits. Labour lost the vote held in the Commons on the 20th, 295 votes to 317. The government plan to limit the availability of Child Tax Credits to families who have one or two children. Last night saw a dramatic reversal in fortunes, as the Chancellor's proposals were effectively put on ice by the Upper House. Just after Labour's defeat in the Commons last week, I sat down with Dr Rupa Huq, MP for Ealing Central and Acton, to discuss the matter in detail.

Interview with Dr Rupa Huq MP (23rd October 2015)

It's a busy Friday afternoon, at one of Labour's Ealing surgeries. Visitors sit patiently in a reception hall downstairs, waiting their turn. Upstairs, in an office, strewn with stacked red plastic chairs and party leaflets, Dr Rupa Huq MP recounts a tale. "I joined the Labour Party in...the autumn of 1990". One of the most inspiring moments of her formative years was a famous speech made in the Eighties by the then-Labour Party leader, Neil Kinnock. Dr Huq recalls a famous speech he gave with vigour, as if it was yesterday. She is clearly appreciative of Mr Kinnock's efforts as leader. "He did a lot of rebuilding of the Labour Party". It would be fair to say these fractures seem to have returned, but Dr Huq expresses a hope for healing again. "We need to be disciplined and stay together as a party".

Dr Huq has was elected MP of Ealing Central and Acton, back in May, defeating Conservative opponent Angie Bray. The seat is only five years old, but Dr Huq is proud to be the new constituency's first Labour representative in Parliament "It's been a steep learning curve", she tells me."I went up by 13% on what my predecessor had". Dr Huq's success at the ballot box is tempered by the outcome of the election, across the country as a whole. If all Labour MPs had enjoyed the poll boost she received, Labour would have formed the next government. "I never dreamt that I would be an opposition MP", she remarks.

However, Dr Huq has not lost hope. Far from it. It has only galvanized her resolve. "There's more that we can do as a Labour Party in opposition than I thought we could". In her speech to the Commons on the night of the vote on tax credits, Dr Huq made an impassioned speech, in which she warned that as many as 6,500 children in her constituency would suffer from the proposed cuts. Those affected won't actually be notified until just before Christmas, which led to Dr Huq described the government as "Scrooge-like". Despite her party's Commons defeat on the tax credits, Dr Huq is able to see through the government spin, and insists the government's victory was not as convincing as it seemed.

"They won the vote because of the arithmetic, but it's not over yet...I'm hopeful", she adds. How right she would end up proving to be, last night. The arithmetic was inverted, into order to put the tax credit plans on ice, because the Conservatives don't make up a majority in the House of Lords. Instead, Lib Dem, Labour and Crossbench peers (and Lords Spritual) have teamed up to vote the idea down.

Dr Huq is concerned, however by the fact that her party has a new Conservative majority government to contend with in the Commons, and this might just be the first skirmish of many. "There are some good people in there". Heidi Allen is one such example that Dr Huq chooses to mention, but one is left with the disappointing impression that Allen is the exception, not the rule. "At least their wings were clipped a bit by the Lib Dems, last time". Dr Huq claims that the sweeping changes of the Thatcher era inspired her to enter into politics in the first place. The Cameron era, in her view, is far worse. "I think he's had a disastrous record. We still have a deficit". To date, the UK is still running a budget deficit, even though they planned to erase it entirely and balance the books by the 2015 election.

Dr Huq's next comment is particularly striking. One of the things David Cameron tried to do, to soften the Conservatives' image in the eyes of the electorate was to negate Mrs Thatcher's denial in such a thing as society. "We're all in it together" was the motto, and we were all supposed to get along splendidly, in the Big Society (or Big Soc to be frivolous). Dr Huq voices the frustration of many when she makes the following canny observation: "They stopped saying 'we're all in this together', because it's patently untrue". By the time I've returned home a few hours later, a quick search of the 2015 Tory manifesto proves Dr Huq right. The phrase is nowhere to be seen. By this point, I wish I had asked, when did they stop saying it?

"This government is doing much more extreme things than Mrs Thatcher ever did...Their whole mantra is 'Long Term Economic Plan, but even they cringe when they say it". It's all just a question of how long it is, until the next recession, before this disposable motto is consigned to the dustbin of nice-sounding but actually quite empty phrasing, it would seem. "I think they've been a disaster, and they should be ashamed of themselves", Dr Huq concludes. The facts would seem to back this assertion up. We must not forget, the whole movement against the welfare cuts in the House of Lords springs from the fact that these cuts were promised in the Tory manifesto from earlier in the year. One opinion poll, published by YouGov, suggests that 46% of all voters believed the proposal was unfair, compared to just 28% who thought it was fine.

What certainly seems to have happened here is that the Chancellor has gravely overestimated his abilities, and that the government's reputation is somewhat scuffed, as a result of this defeat. My interview with Dr Huq was incredibly insightful, in this regard. It was the first interview I've ever conducted properly, and it was a privilege to be able to sit down and talk with her last week. It is just the first of many that I plan to do, for this blog.

Until next time,

P

Dr Rupa Huq, the first Labour MP for Ealing Central & Acton

Sources

1.) Dr Huq's speech to the House of Commons, on the tax credit cuts (20th October 2015)

http://www.publications.parliament.uk/pa/cm201516/cmhansrd/cm151020/debtext/151020-0004.htm#15102055000825

2.) Tax credits opinion poll, conducted by YouGov (21st-23rd October 2015)

https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/gtqhxwneyj/YouGovResults_151022_TaxCredits.pdf

Brexit - What do Londoners think?

In a matter of hours, Mark Carney, governor of the Bank of England, is expected to use a speech to outline the financial implications of a British exit (or Brexit) from the European Union. It's still very unclear when the actual referendum will be held. Some speculate it could come as soon as next spring, while others claim it might not be until late 2017.

There's no time like the present, so my colleague Diana and I took to the streets of Central London, the other day, to see what Londoners make of it all.

Here is a link to Diana's own blog post. We shared the interview transcripts for the day, so that explains why the story is duplicated somwhat.

https://wrytershaven.wordpress.com/2015/10/21/londoners-take-on-brexit/

London speaks

It's a chilly lunchtime in Regents Street. The pavements are awash with commuters and tourists, and the roads ooze the usual hubbub of traffic. A flossy store opens its doors for the day. One staff member casually admits having not voted at the general election, back in May,
and her Italian store manager jumps in. The European project is akin to some sort of "mafia", he asserts. Britain was better off, not joining the Euro, he insists, and he tells us why.

His fellow Italians are now poorer than they were when Italy joined the Euro, he explains. He is unable to say how, but he is convinced something foul is afoot, especially given the contrasting success of the German economy. The store manager has a more confident view on Britain's future. Citing British history, he is adamant that Britain is able to define itself outside the EU.

Meanwhile, outside a trendy pub, sales manager Ryan is enjoying a pint and a cigarette. "We will stay in" he says, without hesitation. He collects his thoughts for a moment, holding his cigarette off to the side. Remaining assured, he continues, "No one's really prepared to upset the apple-cart". He insists repeatedly that there is a lack of transparency about both sides of the referendum argument. Despite this, he's convinced that the British public are reluctant to do something so radical.

Whatever the date of the referendum, the polls are showing modest support to stay in the EU. One of the latest polls (linked below), provided by ICM Unlimited, shows 44% favour staying, 38% want out, and another 18% remain undecided. It's still far too early to say which way the undecideds will swing. What I can say with great certainty is that there will be great uncertainty for the duration of the campaign.

Sources

1. ICM Unlimited poll (dated 16th-18th Oct 2015)
Available at: https://gallery.mailchimp.com/fbcf81e4dd2761d48aba0b6da/files/Oct_19th_01.pdf

The Fiscal Charter - The Next Cuts are the Deepest

The year is 2020. It's election year; David Cameron stood down as Tory leader in the spring of 2019, and in the ensuing leadership election, Chancellor George Osborne won convincingly. The Tories head into the election, with a fresh-faced new leader. What about dear old Labour? Poor Jeremy Corbyn didn't last long. Was a proper Julius Caesar-style coup. "The Ides of Corbyn" they call it. All in vain, because the guy who ousted him didn't last long. Labour has become brutalised, and purge after purge has left it weary and hungry for power.

Now they have their third leader in just five years. Whatshisname or whatshername. They actually seem to have a chance of winning this time round. Keep it up, Leader X, and watch out, Mr Osborne. The election's not in the bag just yet.

The UK economy seems to be humming along at a modest speed. Despite troubles in Eurozone (yes, still sluggish), things are going swimmingly. Except one thing is different; the budget deficit: it's gone! Whatever happened to it? In the weird and wacky election year that is 2020, deficits have gone out of style, don't you know?

The Fiscal Charter, which just passed in Parliament a matter of hours ago is an ambitious and potentially dangerous plan to make austerity a permanent fixture on the British economic agenda:

"In normal times, once a headline surplus has been achieved, the Treasury’s mandate for fiscal policy is: a target for a surplus on public sector net borrowing in each subsequent year"
(Charter for Budget Responsibility, Autumn 2015 update)

Not content with trying to reduce the budget deficit to zero, George Osborne hopes to go further. He intends to move the budget into surplus by the time of the 2020 election. Then, to make Labour really cry, he wants to make budget surpluses the gold standard for "normal times", whatever those are.

"The new targets will apply during ‘normal times’. If annual real growth in the UK economy is less than 1% the OBR will judge there to have been a significant negative shock, and the economy will be out of normal times....If the OBR judges that a negative shock has occurred, or will occur over the forecast period, the fiscal targets will be suspended."
(BRIEFING PAPER Number 05657, 13 October 2015)

As seen above, there is a caveat. If the economy is hit by, say, a surge in commodity prices (as in 2008-11) or the Eurozone Crisis takes a new and deadly turn, an economy growing at 2% to 3% a year could end up in recession. Once it drops below 1% growth, the Fiscal Charter essentially gets suspended, because "normal times" are officially over. In this low growth period, governments would have free rein to run a deficit, if needs be.

In the chart below, I have presented data showing government expenditure as a percentage of GDP, from 1900 to the present day. The recent peak is the depth of the 2008-09 recession, and you can see how the 2010-15 austerity rounds have brought it down a smidgen since then. The red line seen in the chart represents roughly 35.2%, the level at which George Osborne hopes to leave government expenditure, when David Cameron potentially hands him the keys to No10. The cuts being put into place between now and 2020 will trim the state back to levels not seen since the 1930s.

Source: Bank of England - Three Centuries of Data

This brings me to the concluding points of this post. The Conservatives, buoyed by recent electoral success, believe now is the chance to cut the state back to levels not seen since the 1930s (before the NHS even existed). Labour is suffering a violent electoral defeat spasm. The Conservatives have effectively use the Fiscal Charter vote a few hours ago, to sow division within the Labour Party. It seems to have worked. Shadow Chancellor John McDonnell changed his mind, and decided to try and oppose the Charter, but now the Tories will be able to accuse Labour of being spendthrift.

The result has been decisive. The Charter just passed through the Commons, 320 to 258. 21 Labour MPs abstained, disobeying Jeremy Corbyn and John McDonnell.

The Chancellor is reaching back into his bag, and pulling out the austerity scissors. He moves in. "Back for more, eh?", he says. "Don't worry...This won't hurt a bit..."

Sources

1.) http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Lords/2015-09-14/HLWS187/

2.) http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN05657#fullreport

3.) Government expenditure data provided by the Bank of England
http://www.bankofengland.co.uk/research/Pages/onebank/threecenturies.aspx