“We all know that the easiest thing in the world is for an opposition party to blithely talk about all the efficiency savings we will make in government: how we will streamline public spending […] with a few well-chosen cuts that miraculously deliver substantial savings without harming public service delivery at all.” – David Cameron, 2008

“The Conservatives claim that the spending cuts can, in effect, be rendered painless by efficiency savings that they say their advisers have identified.” – Institute for Fiscal Studies, 2010

The Tories like to boast of their proposal for a £12 billion cut to National Insurance. The cost of the cut, so they claim, is to be met by painless ‘efficiency savings’: “no-one will be worse off” says Osborne; “no plan to cut jobs” says Hammond; “no cuts to frontline services” says Cameron.

Many beg to differ. The economist Howard Reed has calculated that the planned spending reductions could lead to 75,000 job losses, fifty-eight leading economists say that the NI cut would “lead directly to job losses and indirectly to further falls in spending through the standard multiplier process”, whilst the Chairman of Standard Life recently argued that the Tory proposals would “damage the services people rely on in times such as these”. It has also been suggested that if the Conservatives win tomorrow they will have to resort to a VAT rise to fund the NI cut – lowering a progressive tax by increasing a highly regressive one; in relative terms, taking from the poor and giving to the rich. Painless cuts will not suffice. As Cameron himself put it in 2008, promises of ‘sweeping savings’ and ‘efficiency drives’ are “the oldest trick in the book”.

Over the past months, Tory Stories has revealed example after example of Tories in local government pulling that very trick. The pattern is well established: vague electoral pledges to remove ‘frills’ and ‘waste’ give way to savage cuts to essential services, often accompanied by a remarkably casual approach to truly unnecessary spending:

Nottinghamshire Conservatives last year promised ‘efficiencies’ under a ‘business administration’ that would “make sure that people are cared for”. They have gone on to sell off thirteen residential homes, increase charges for meals-on-wheels and home care, and cut community transport, welfare rights advice and extra-curricular activities, all whilst hiring a new council spin doctor, redecorating council offices and cutting top band tax by some £100/year.

Surrey Conservatives promised to ‘pursue efficiencies’ whilst concentrating on ‘quality of life’. Yet they have drastically increased spending on publicity (by £1.1 million in 2007-8 alone), frozen the wages of the lowest paid council staff and, in pursuit of ‘maximum savings’, will shortly discontinue a popular school bus scheme. The former CEO last year attacked the council’s “obsession with the control of inputs and resources […] mistaken for a focus on efficiency” and described councillors’ attitude as “private sector good – public sector, bad”.

Hammersmith & Fulham Conservatives used their 2006 manifesto to stress their ‘compassionate’ credentials, pledging ‘value for money services’, cuts to ‘bloated, unnecessary bureaucracy’ and an explicit promise not to charge for home care. On taking control, ‘Cameron’s favourite council’ promptly introduced eye-watering charges for home care, meals-on-wheels and childcare, sold off twelve homeless shelters, closed down youth clubs, community centres and a school and turned a public park into a private polo field.

Westminster Conservatives have declared war on ‘red tape’, promising to ‘become even more efficient’ and ‘retain and improve services rather than cut indiscriminately’. These pledges sit uncomfortably alongside the council’s record of cutting council housing maintenance, 500 council jobs (including neighbourhood policing) and support for voluntary groups, all whilst lavishing millions on a council tax freeze, a £3 million spin budget, a £1 million council website, ‘hospitality’ costs and bonuses for top officials.

Barnet Conservatives last year unveiled its ‘easyCouncil’ strategy. The savage cuts to almost every area of council provision have been presented in the language of ‘targeted intervention’, ‘no-frills’, ‘cheap and cheerful’ ‘flexible’, ‘responsive’, ‘a relentless drive for efficiency’ and ‘consumer choice’. The rhetoric is new and painless, but the policies are not: service cuts for the vulnerable and tax cuts for the rich.

No politician speaks this language of ‘efficiencies’, ‘frills’ and ‘targeted intervention’ better than David Cameron, whose own atavistic priorities fit seamlessly into the above pattern. It all amounts to a slight of hand, obfuscating the rank transfer of goods and services from the poor to the rich. It is the vulnerable who benefit the least from council tax cuts but depend the most on the home care, youth clubs and bus services so often culled to fund them. In the same measure, it is the vulnerable who will benefit the least from Cameron’s inheritance tax cut, marriage tax break and National Insurance cut but depend the most on the public services due to be offloaded onto the voluntary sector in the name of the ‘Big Society’. As Cameron so accurately put it to his party’s councillors in 2007: “You demonstrate Conservative government – your values, your achievements, represent our party in action.”

In a speech David Cameron gave on Feb 15th he claimed “We are not the same old Conservative Party. We have changed.”

Actions speak louder than words, and this leaflet seems to suggest it’s business as usual for the Tories in Romford.

The leaflet (described in the Observer as ‘dog whistle’ politics) can be seen below:

Update 01/03/10:

Left Foot Forward and Labour List question whether Rosindell was really unaware of the leaflet.

]]> http://www.torystories.com/2010/02/is-cameron-offering-real-change/feed/ 0 http://www.torystories.com/2010/02/boris-johnson-isolated-i/ http://www.torystories.com/2010/02/boris-johnson-isolated-i/#comments Thu, 18 Feb 2010 10:14:55 +0000 Jeremy Cliffe http://www.torystories.com/?p=320 The Conservative Party promises to “renew and reinforce our role in the world”, to ensure that British values are “widely respected”, and to “restore Britain’s reputation on the world stage”.

Stirring stuff, but hardly born out by growing international concerns at the party’s “Europhobic” foreign policy, “lightweight” leadership and “Hooverite” economic arguments. Such misgivings about the party’s isolation (indeed, isolationism) on the world stage have been voiced by, amongst others, the US, French, German, Swedish and Spanish governments, Lord Brittan, the IMF, the Foreign Office, two Nobel-prize winning economists (Stiglitz and Krugman), Hillary Clinton, the Financial Times and no fewer than thirteen Tory MEPs.

As the voice of Britain’s global city, a city whose international profile stands to gain little from such isolation, one might expect Boris Johnson to join the Shadow Business Secretary in rejecting his party’s insularity. Far from it. This two-part report surveys the mayor’s standing on the world stage, highlighting his party’s growing distance from the political mainstream. This first part shows that Johnson is voicing unfounded threats that equate London less with comparable global cities than with fringe tax havens; the second demonstrates the extent of his isolation from his counterparts abroad.

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Mr Johnson has had a busy start to the year. On January 5th he laid into “the recent knee-jerk and ill-thought-out tax grab by the Government to punish bankers”. On January 11th he wrote to the Chair of the Commons Treasury Select Committee to call for an inquiry into the government’s plans for a tax on bankers’ bonuses, warning that “the whole UK economy will suffer”. On January 15th he wrote to Alistair Darling requesting a meeting to discuss “the damage done to perceptions of London as a global financial centre” by the 50p top tax rate and the bonus tax. On 24th January he expressed “instinctive” reservations about US plans to reform the banking industry. On 29th January he told bankers at the Davos Summit that “the people who want to mess around with the City are just bonkers”. Johnson’s attacks hinge on his claim that “9,000 bankers” will leave London.

Quite aside from the justice and popularity of the new taxes, or the fact that top-rate tax is still lower than in six of the richest OECD countries and lower than it was during the Big Bang, Johnson’s warning of an exodus from the City comes up against mixed opinions within the banking community itself as to the effects of the new taxes and regulation.

Deutsche Bank’s CEO brushed aside their impact on London in an interview with the FT in December, saying “There is so much more to it than a short measure in terms of taxation: it is infrastructure, resources, the quality of people, where families like to live, where you have law and audit firms in support [...] If people think one measure could jeopardise the strength of a financial hub they are dead wrong. This is not going to happen.” Meanwhile Mark Field, the Tory MP for the Cities of London and Westminster and a former City recruiter, has called the mayor’s claims “hysterical” and doubted that there was “any qualitative or quantitative evidence” behind them.

Indeed, even Harvey McGrath, a former City fund manager who now chairs Johnson’s London Development Agency, has said “I am not aware of any specific financial institution that has declared that it will relocate from London”. Savvas Savouri, a Chief Economist at the fund Tosca, has also dismissed Johnson’s claims, pointing out that “taxes are rising and regulation is being tightened elsewhere too” and predicting the creation of 100,000 new financial jobs in London in the next 10 years. The LSE economist Dr Tom Kirchmaier has said that “The threat that leading banks will leave is just not credible. There is a lot of rhetoric.”

Thus for a man who describes London as ‘the greatest city in the world’ Johnson appears to have remarkably little confidence in its strengths and attractions. Elsewhere, France has followed the UK’s lead in introducing a bonus tax, in the US Barack Obama’s proposed banking reforms go far beyond regulation in the UK in their radicalism, whilst the rest of the EU is also considering a US-style bank levy.

Johnson appears to acknowledge this, albeit tacitly, talking instead of boutique, low-tax destinations as the likely beneficiaries of the new taxes. In 2008 he commissioned and promoted a report on London’s financial sector that specifically highlighted the lower tax rates of the following ‘rival financial centres’: Luxembourg, Dublin, Bermuda, Switzerland, Hong Kong, Shanghai, Singapore and the Gulf region. On the basis of these ‘rivals’, the report proposed a slew of tax cuts, loopholes and exemptions.

Does Johnson really believe that London should be in the business of competing with isolated tax havens? For a man so fearful of ceding power to Brussels, he seems remarkably nonchalant about the prospect of indexing the UK’s tax levels to those of Bermuda and Dubai.

Furthermore, British overseas tax havens – Bermuda, the Channel Islands, the Caymans et al. – have come under substantial pressure from the Treasury to introduce new regulation and increase tax levels to diversify their economies. There have even been moves to introduce a bonus tax in Switzerland, where there is also a “broad alliance” of political parties in favour of a US-style bank tax. Meanwhile, the G20 has pledged to crack down on tax havens.

It is also worth noting that a 2004 study showed that London’s personal tax regime was the least relevant of fourteen factors in the City’s international appeal, whilst a 2008 study commissioned by Michael Bloomberg showed that the areas that underpinned New York’s financial sector were “deep and liquid markets”, a “high-quality transportation infrastructure”, the “availability of professional workers”, the “high quality of life” and not levels of tax and regulation.

In short, aside from the tax havens, major financial centres comparable with London are introducing regulations just as stringent as those in place in the UK, if not more so. Many too are raising taxes to meet the fiscal and social costs of the economic crisis. Yet only in London does one find a mayor ridiculing the idea of a diversified economy as a “Pol Pot-style purge” tantamount to “demolish[ing] the banks” and telling the world that his city is in the grip of “vindictive […] neo-socialist claptrap”, an “anti-enterprise mentality” and a “rage against the kulaks”. Whether or not this language will put off potential investors remains to be seen.

What is Johnson playing at? Why not spend less time hyperventilating about a phantom exodus from the City and more time supporting the rest of the London economy? Above all, what does this unsubstantiated hysteria say about his ability to represent London with credibility and maturity on the world stage?

For Part 2 see here.

Boris Johnson’s outlandish claims not only diverge from attitudes within the very industries he claims to speak for (see Part 1), they also contrast markedly with the actions of his counterparts abroad, demonstrating yet again the Tories’ international isolation.

Frankfurt’s mayor Petra Roth, for example, has backed the German government’s new regulation of financial markets, is establishing an Institute of Banking Risk Management and Regulation in the city, and has argued that “the local tax burden plays a fairly small role in investors’ decisions about where to base their operations. Centrality, proximity to markets and connections to research, development and other parts of the supply chain are far more important. Most businesspeople value the quality of their city’s infrastructure”.

Meanwhile, Mayor Michael Bloomberg has turned down Johnson’s offer of an alliance against regulation and backed a plan to diversify the New York economy to reduce dependence on the financial sector. The Mayor of Los Angeles, Antonio Villaraigosa, responded to the economic crisis with a powerful attack on “an anti-government philosophy […] that says that sensible financial regulation is bad for the economy and that progressive taxation equals class warfare.”

The Mayor of Paris, Bertrand Delanoë, has increased local taxes in a ‘solidarity budget’ to fund support for those hardest-hit by the economic crisis, increasing housing benefit and introducing micro-loans for those in difficulty. Zürich’s mayor Corine Mauch has backed a programme of “anticyclical microeconomic deficit spending according to Keynesian theory” and called for a more diversified city economy, less dependent on the financial sector. The Mayor of Shanghai, Han Zheng has said that the banks are “obsessed with financial innovation and leverage and they’ve put risk management on the backburner” and that China needs “to develop regulations and laws to put those ‘animal spirits’ on a leash so they play within the scope we’ve defined.”

That Johnson is isolated on these issues is notable. And, as it happens, at the same time as his international isolation increases, London’s mayor appears to be gaining a growing fan base in the ranks of UKIP. The party’s website announces that “Mayor Boris backs UKIP position on City”, quoting Johnson, praising his opposition to regulation, and reporting that the mayor has “decided to join the UKIP call for something to be done”. UKIP also backs Johnson’s opposition to the increased top rate of tax. Another UKIP article, entitled “BoJo on the money with City backing”, quotes leading UKIP MEP Nigel Farage as saying “Boris is right on the money” and echoes the mayor’s warnings of a loss of business to ‘Geneva or the Bahamas’. Farage concludes: “we back Boris to the hilt”.

Further questions arise as to the the impression Johnson gives to the international press. Handelsblatt and Financial Times Deutschland, both leading European financial dailies, have described the mayor as a ‘clown’. The German news magazine Focus has maintained that he “lacks the necessary gravity”, whilst Spain’s El Mundo has described him as ‘ridiculous’. El Periódico has reported that “Johnson is famous for coming out with reactionary and racist comments against homosexuals and Africans”.  In France L’Express has described him as a ‘flamboyantly chauvinist […] clown’ with a ‘bad reputation’, and in 2008 Berlin’s Tageszeitung described comments by Johnson as “islamophobic gibberish”.

Further afield, Newsweek has talked of Johnson’s “absence of discernible qualifications to run a great city”, whilst the mayor’s description of his £250,000 Telegraph contract as ‘chicken feed’ attracted ridicule from across the world (to take three examples, in the Sydney Morning Herald, the Süddeutsche Zeitung and Singapore’s Straits Times). Der Spiegel described Johnson’s response to the financial crisis as ‘bluster’, doubted that the new taxes would have any significant effect and suggested that those prophesying an exodus from the City were “letting themselves be led by the nose by the bankers”.

It is surely not unreasonable to ask whether Johnson’s hysteria over the City, his reception in the international press, his isolation amongst other world mayors and his concomitant proximity to what David Cameron has described as the “fruitcakes, loonies and closet racists” of UKIP, together risk undermining London’s standing. That is of course debatable, but what is of much greater consequence is what this all tells us about today’s Tories: Johnson’s recent actions serve as yet another example of the Conservative Party’s growing scepticism towards and distance from the international political mainstream.

After all, the pattern of hysteria, isolation and ridicule does not just pertain to Johnson: it is true too of the party’s rejection of moderate European politics, its ‘cast iron’ promise on the Lisbon Treaty, the growing influence of right-wing evangelicals on Tory social policy and the party’s lonely, discredited and wavering insistence on sudden and deep spending cuts. Boris Johnson’s behaviour tells us much about the Tories’ ability to engage with the rest of the world and govern with reason and moderation, an ability, it seems, that is distinctly limited.

North Somerset Council is looking to make savings; they have discussed commissioning service providers to run the Playhouse, tourist information services and leisure centres. It has been announced that plans for a flagship residential home for those suffering from dementia, promised in 2005 to replace the closing Poppyfields Residential Home, will not go ahead owing in part to the economic downturn.

However the economic downturn has had no effect on their plans to relocate council employees to a new building, a move that will cost the council an estimated £16m (pdf file). This move involves closing non-Town Hall offices in Weston-Super-Mare, affecting an estimated 883 members of staff. On 14 Jan, in spite of several interventions from concerned members of the public, thecouncil approved the plans to purchase the new site, borrowing roughly £14m for the move.

The council has yet to confirm whether any redundancies are to be made, there has been an ongoing dispute between the executive and a local newspaper about this issue. Whatever the eventual decision, the council’s actions have left a lot of employees feeling pretty insecure about their employment situation. The lack of clarity in Conservative Party policy, from national to local, is worrying.

In July 2009 Havant Borough Council Strategy and Regeneration Board, a scrutiny board set up to make recommendations to the executive, published their recommendations on the continued use of Capita for the delivery of revenues and benefits services (their contract running out in 2013). The recommendation rejected the extension of Capita’s contract, calling for the Council to consider alternative options such as a shared provision of customer services with Hampshire County Council. Although scrutiny committee recommendations are not binding they should surely hold some weight, they are a cross party group and in this instance the scrutiny committee was chaired by a Tory (Cllr Gwen Blackett).

However the executive of the council decided to ignore the committee’s recommendation and put the eight-year extension of Capita’s contract to a vote at a full council meeting. Not only did the executive undermine the scrutiny board, a key democratic tool that aims to hold the executive to account, they then excluded the public from the debates. This debate wasn’t an uncontroversial one: a petition calling for the council to hold public consultation on the contract garnered over 900 signatures.

Once again the Tories show that in spite of Cameron’s rhetoric when push comes to shove they will hold commercial interest above democratic accountability. If your local council is in the habit of excluding the public then let us know, you can send any tip-offs or suggestions for Tory stories to info@torystories.com.

The most recent of these questionable decisions concerned the redevelopment of 282-288 Goldhawk Road, which entails building a high-density, 66-unit complex on the Starch Green conservation area (see photo above) against the will of the local residents association and the 381 people who have signed a petition in protest. The council was accused of rushing through approval of the development without due concern for residents.

Council Leader Stephen Greenhalgh had previously pledged not to present future applications to residents as a ‘done deal’ after an outcry at the approval of the Goldhawk Road Industrial Estate development – now the subject of a call-in by the Secretary of State. But this is exactly what happened when the same dubious process was repeated for the development on Starch Green. Despite substantial objection, the application by Places for People was approved at a rushed planning meeting on December 16th – the agenda for the Planning Applications Committee meeting having been drawn up before the deadline for the ‘consultation’ had been reached, giving some indication of the extent of the council’s commitment to listening to locals’ views. Councillor Colin Aherne commented at the meeting “They’ve already made up their minds that they’re voting in favour of this application, and all the rest is smoke and mirrors.”

And this is just the latest in a whole series of planning approvals in which residents’ views have been bulldozed by the council’s determination to sell off land. As Andy Slaughter MP puts it, “what makes this sinister is the volume of bad planning decisions and the fact they all point the same way. What suits developers is in; what suits residents is out.”

We local residents are up in arms about this Conservative Council’s refusal to ‘put residents first’. We are aware that David Cameron hails H&F as a prime example of his party’s ‘green’ and ‘progressive’ credentials – he chose to kick-off his general election campaign in the Borough on January 5th in an effort to persuade residents to elect Conservative candidate Shaun Bailey at the imminent general election.

Reducing council tax each year may benefit certain local residents, but it comes at a high price – which, in this case, seems to be the need to court developers and sell off prime pieces of council-owned land whilst approving planning applications without any regard for the opinions and quality of life of the community at large.

Firstly, raising council tax by a modest 3 per cent would raise £9m. The weekly cost would be 46p for a Band A house rising to £1.37 for a Band H house. Under the current proposals, in contrast, many vulnerable people will be forced to pay over £10 per week more in charges.

Secondly, there is a predicted under-spend this year of £10.4m. The council has decided to put £5.4m of this into reserves. It could use the full £10.4m to protect vital services.

Thirdly, the council has reserves of over £150m, of which £24m is unallocated. Reserves are there to help in hard times, and in a recession public services are needed more, not less. The council could use £2m of its reserves to avoid public service cuts.

Fourthly, the council spent over £19m on agency workers last year; the highest spend of all East Midlands councils. If it implemented proper management measures it could easily save 10 per cent, which comes to £1.9m.

Fifthly, the council’s predictions assume that there will be no increase to the council tax base, i.e. the increase in revenue because of newly built homes. Growth of new homes has slowed dramatically, but it has not stopped. Using nationally available figures we predict a modest growth in the tax base of 0.5 per cent. This gives an additional £1.5m.

Sixthly, the council created extra cabinet posts after the June elections and recently advertised for a new communications role. Scrapping these unnecessary posts would save over £130,000.

The above items come to over £24m. We are still working on our proposals and we believe we can identify at least another £3m. It is not yet too late for the council to change its proposals; the final budget decision is not until 25 February, and the public consultation is open until 22 January. If it does not take up these opportunities to close the budget gap, we will have to assume that the cuts are purely ideological, something that would also reveal a lot about David Cameron’s plans for the country. Time will tell.

“I want the Conservative Party to learn from what local Conservative councils are doing right now” George Osborne said in September 2009. Surrey County Council (SCC) seems to agree: its Conservative leader recently said that he wanted “David Cameron to be coming to us for advice”.

It wouldn’t be the first time. David Cameron was in Surrey in May 2006, inspecting the council’s new ‘Pegasus’ school bus scheme. He told ITN that “Here in Surrey the council has actually spent five million pounds of its own money […] to expand these school buses and it’s cut the number of cars at the school gate in the morning by twenty percent. […] It’s a really exciting agenda and one that I am determined the Conservative government is going to pursue.”

The council, however, seems less determined: three years later, the very school where Cameron launched Pegasus found itself fighting the scheme’s termination. Having considered four possible options for its future, the Conservative council opted for “maximum savings at the earliest possible date”: ending the service in July 2010 and selling the twenty-two buses at a loss of £1.7 million. This was a controversial decision, it being noted that “withdrawing Ride Pegasus would affect access to learning for those students not statutorily-entitled to transport” and that, as the council’s cabinet member for transport conceded “there is no doubt that this is a very popular service”. By the date of the council’s decision 1,500 signatures had been gathered in opposition to Pegasus’s discontinuation.

The move came shortly after the council had allocated a 2009/10 budget of £147,000 (the cost of roughly two months of Pegasus operations) to preparations for the 2012 Olympics, employing a 2012 ‘Coordinator’ at £46,000 per year. No part of the games will take place in Surrey. SCC has also been criticised for taking Ofsted to court to overturn a one star rating it gave the council. The unsuccessful appeal, opposed by all non-Conservative councillors, cost £10,000 in legal fees and almost £5,000 in costs paid to Ofsted. In particular, Ofsted had criticised SCC’s children’s services, concluding that “The contribution of local services to improving outcomes for children and young people at risk, or requiring safeguarding, is inadequate.”

All this begs the question of whether or not the council is serving the county well. Its former interim CEO Michael Frater does not seem to think so. In his July 2009 handover report he accused the council (on which the leading Conservative group holds 56 of 80 seats) of a “failure of leadership, culture and governance”, describing a “macho” culture of “blame and bullying” and a “breakdown in trust”.  The council, he said, was “very internally focused, obsessed with itself, with its own processes and bureaucracy”.

“A complication to this attitude is an implicit, and often explicit, attitude by some Members that could be summarised as ‘private sector good – public sector, bad’” Frater wrote, also criticising a “highly centralised model of control” which “has encouraged micromanagement and ‘control freakery’”.

He argued that “The most striking aspect of the management style in Surrey is how bureaucratic it has become as a result of an obsession with the control of inputs and resources […] which is then mistaken for a focus on efficiency. This is perhaps inevitable given the lack of a clear vision and strategy […]”

Frater’s comments were supported by Surrey County UNISON, which congratulated him for speaking out and described his report as “entirely accurate”.

All eleven of Surrey’s MPs are Conservatives, four of which (Chris Grayling, Michael Gove, Jeremy Hunt and Philip Hammond) are in Cameron’s Shadow Cabinet.  David Cameron and George Osborne surely have plenty to learn from their colleagues in Surrey, but precisely what is a matter for debate.