What should Gordon do now?

The following draft would be suitable for a brave Labour adviser to send to our Prime Minister at bay:

To Prime Minister
From Senior Political Adviser

When I last wrote to you I praised your early statements in favour of strengthening our democracy and listening to the public more. I recommended that you honoured the Labour promise to hold a referendum on the EU Lisbon Treaty, to signal that you had a different view from your predecessor, more in tune with the British people. You did not like that advice, and turned to others to steer you. I kept out of your way in the run up to the May elections, as I thought it important to let the other advisers have a clear run to give their approach a good test. The polling still shows that 80% of the public do want a referendum, and think you should honour the promise. It has become an issue of trust.

Unfortunately the approach your other advisers urged you to follow has not worked. The Conservatives outpolled us by 20% in the Council contests, and Boris Johnson beat Ken by 6% in the crucial London seats. Let me explain what I think has gone wrong and what could be done to recover from here.

The political strategy has been based on hammering the Conservatives for any apparent mistake in what they say, and for not saying enough about the detail of what they would do. In particular it has been Treasury driven, seeking to cost any aspiration they express, and seeking to show their “numbers do not add up”. This old fashioned approach has not worked, because our own numbers visibly do not add up, and because we are the government responsible for handling the economy. You may remember we got away with supporting the Exchange Rate Mechanism which did so much damage to the Conservatives, because the public rightly blamed the government which actually took them in. They did not concern themselves with the advice we offered from Opposition. I am afraid it is not about the Conservatives at the moment – it is about the government and the problems we need to confront. We can turn to attack the Opposition later, once we have dealt with the real economic and social problems we face.

This political strategy has been buttressed by seeking to send messages about what we stand for, that are not backed up by solid evidence that we can implement them. Your last budget sought to send the message that we are tax cutters, but of course there was insufficient money available, so you had to double the 10p tax to 20p. You sought to send the message that you will be tough on terrorism and crime –unlike the Conservatives – but it has come across that you are taking away important liberties from law abiding people. You have made the Conservatives look moderate and sensible through putting so much political capital behind 42 day detention without charge. You have repeated the message that you are a serious and competent person with your head down dealing with difficult government issues, yet the last few months have been punctuated by error after error in handling data, dealing with backbenchers and implementing policy.

Nor has it helped that the Spin Doctors appointed by your office have become the news themselves, drawing attention to the high salary bill by warring in public when they should be supporting you to the hilt and creating a united front within your office.

The public are worried. They feel under intense financial pressure, as you know, thanks to rising food and energy bills, mortgage difficulties, falling house prices and the Income and Council Tax changes. Not all of these things are under our control. There is no quick fix for rising energy prices, other than a fortuitous change in world energy prices. We are still years away from new power stations in the UK thanks to the delays in settlign the nuclear issue. Food prices could be brought down if we could reform the CAP, but there is no immediate prospect of that as the French President made clear on his visit.

However, some of them are under our control. Part of the reason fuel prices have gone up so much is the tax rises as the pump price rises. You could say you intend to raise just the amount of money from petrol and diesel that you stated in the Budget, which would allow you to cut the fuel tax rate at the pump. It could be used to show people you do not want to continuously clobber motorists, and to remind them that the revenue you did say you would raise is an important part of the national budget.

You could look again at the 10p band and the reduction of the standard rate to 20p. You could reaffirm the importance of getting Income Tax down to 20 p, phase it over the next couple of years, and phase in a larger tax free allowance to help the lower earners who are otherwise losing out.

You could play politics with the Council Tax, now that most Councils are either under Conservative control or No Overall Control, and remind people that local decisions are important in settling its level.

In order to direct more cash into people’s pockets and purses – which is what they want – you are going to have to go back to Prudence, and make more progress in controlling public spending. I was talking the other day to a large company that already handles some contracted out business for us. They confirmed that they could take on more or less any administrative function from within government, and offer to do it for 15-40% less than it costs the government at the moment. They would also offer jobs to all the staff involved in the function, as they could redeploy the ones they did not need as they made the process more efficient. I appreciate that this is not popular with the Unions, but there are no easy options from here. This one combines job guarantees, with preserving government functions, and delivers less cost to give us more scope on taxes.

You could look at the huge costs of computerisation in Whitehall, and slow it all down for a couple of years, to save money without having to announce any major climbdown. You could ask for a reduction in the spending on consultancies and reorganisations and put in controls over new recruitment of staff.

I know you think the problem is largely created by rebel backbenchers and disloyal people within the Labour movement. The rebels will not see it that way. They feel they are going to lose their seats unless there is a change of direction. I would urge you to consider each of their causes on their merits, and not through the prism of loyalty glasses. Is it really worth it to have a further bruising row with them over 42 day detention without charge? Couldn’t the Security Services or the Police produce new advice saying that it might not be so important after all? Isn’t it crucial to come up with a better answer on the 10p Tax Band before it returns to the Commons?

You are understandably concerned about the state of the housing market. It is too late to stop further declines in house prices, and it is going to take time for the mortgage market to pick up again. If you really do want more money to be available for mortgages then you have to tell the Regulators to back off a bit – they are busily demanding that banks hold more cash for any amount of advance, and telling banks not to lend to anyone who might be stretched by the loan.

The business community is very bruised by the abolition of the 10% Capital Gains Tax rate and the more aggressive approach to business tax in general. There need to be some tweaks and changes to send the signal that the government is not anti enterprise.

If you did offer a referendum on the EU Treaty it would pleasantly surprise the voters and the commentariat. The government should be neutral, allowing pro and anti organisations to emerge to run the debate. If the electorate then voted down the Treaty the government would not be in an impossible position, and could stage a popular demand for renegotiation with our EU partners in the run up to the General Election. I realise that this is likely to be a bridge too far for you , but it might make you think the other ideas in this memo are not so bad after all!

This entry was posted in Blog. Bookmark the permalink. Both comments and trackbacks are currently closed.

7 Comments

  1. mikestallard
    Posted May 3, 2008 at 7:03 pm | Permalink

    John, you are right on all counts. BUT the man is not going to listen to you or to anyone.
    According to today's Telegraph, last night, David Cameron was in Cinnamon enjoying a curry while the results came in and, when they did, he was able to be there for his supporters. You, I bet, were there too. Your first article is sincere and much appreciated I should think.
    And where was Mr Brown? Nobody knows. Apparently he was in bed! this is not a man to listen. Apparently he doesn't sleep well and then gets up in the middle of the night to fire off loads of e mails.
    He is like a slow motion car crash.

  2. John
    Posted May 3, 2008 at 8:14 pm | Permalink

    There is only one thing to say to Brown. "Go!! for gods sake go and take this sorry excuse of a government with you."

  3. Matthew Reynolds
    Posted May 3, 2008 at 10:09 pm | Permalink

    That is simple & brilliant ! If the PM adopts all that you suggest then Mrs Cameron might not be measuring up for curtains & carpets at 10 Downing Street after all….

    If they replaced tax credits with a bigger personal allowance , made the 42 days a free vote issue and slashed QUANGO’s dramatically while cutting out the consultants & IT schemes then a Citizenship Pension could be brought in & Child Benefit sharply increased then Labour could recover . A referendum on the EU Treaty would be popular too .

    Cutting CGT to a 15% flat rate , returning the small business profits tax to 19% and cutting stamp duties on shares & property would be well recieved by Middle England . Taking 3p off of the main corporate tax rate would set business’s mind at rest & might stem the flow of companies going to Eire so that they they pay 12.5% tax rather than 28% .

    By slashing waste & poverty and trying to make the UK more tax competitive Gordon Brown could sink the Tories – but thankfully he would never do that as it would involve changing his mind !

  4. Matthew Reynolds
    Posted May 3, 2008 at 11:09 pm | Permalink

    That is simple & brilliant ! If the PM adopts all that you suggest then Mrs Cameron might not be measuring up for curtains & carpets at 10 Downing Street after all….

    If they replaced tax credits with a bigger personal allowance , made the 42 days a free vote issue and slashed QUANGO's dramatically while cutting out the consultants & IT schemes then a Citizenship Pension could be brought in & Child Benefit sharply increased then Labour could recover . A referendum on the EU Treaty would be popular too .

    Cutting CGT to a 15% flat rate , returning the small business profits tax to 19% and cutting stamp duties on shares & property would be well recieved by Middle England . Taking 3p off of the main corporate tax rate would set business's mind at rest & might stem the flow of companies going to Eire so that they they pay 12.5% tax rather than 28% .

    By slashing waste & poverty and trying to make the UK more tax competitive Gordon Brown could sink the Tories – but thankfully he would never do that as it would involve changing his mind !

  5. haddock
    Posted May 4, 2008 at 1:37 am | Permalink

    My My, what a lot of words…….. most of us when asked what Gordon should do next would use but two, one of them not very polite !

  6. Bob
    Posted May 4, 2008 at 2:25 am | Permalink

    Well he was the only Labourite with gravitas a year ago and he's the only Labourite with gravitas now.People have really seen through their smoke and mail tricks.Instead of pulling a Rabbit from a (tax cutting) hat last year,Brown pulled a t*rd from a nappy.

  7. APL
    Posted May 4, 2008 at 10:35 am | Permalink

    JR: "What should Gordon do now?"

    Gordon Brown should resign. But thankfully he will not. We really have only had 9 months of financial fallout for the eleven years of economic mismanagement. If Brown were to leave now and a general election held tomorrow, the BBC, the Guardian would start to spread the propaganda that the economic crisis is of the Tories doing.

    The Tories need Brown around for another eighteen months, the population at large needs to clearly understand this economic situation is the making of New Labour so they can portion the blame exactly where is rightfully sits.

    Now the important thing, which is by no means clear to me even now, is Cameron more like Heath, or does he more resemble a Thatcher?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page