Gladstone's influence

On another blog I shall be reviewing Dick Leonard's interesting but not entirely adequate double biography of those two Victorian political titans, Disraeli and Gladstone, The Great Rivalry. It is generally accepted that they created modern British politics though the party Gladstone left behind lasted a considerably shorter time than did the one Disraeli left.

There is one other aspect of Gladstone's political activity that, perhaps, is not emphasised often enough and that is his long service as Chancellor of the Exchequer. This is what Dick Leonard says:

There are many who consider Gladstone to be the greatest man ever to have held the premiership ...... Few, however, would challenge his pre-eminence as Chancellor of the Exchequer. He held the post for far longer than any of his successors, serving four times, twice in conjunction with the premiership, for a total of 12 and a half years. He effectively created the post as it exists in modern times, and none of his successors has rivalled the impact which he made.

Before his time, the Prime Minister still wielded substantial financial powers in his function as First Lord of the Treasury, and the Chancellor played only a secondary role, comparable to that of the chief Secretary to the Treasury today. Gladstone subsumed to his office all the financial powers formerly wielded by the Prime Minister and clearly established that the Chancellor should normally be seen as the second person in the government, even though the office remained - in formal terms - junior to those of the sercretaries of state.

In the words of [Roy] Jenkins, one of his most successful followers in the office, he gave his annual budgets 'such a sweep and force that their presentation became a fixture of the national life to Derby Day or the State Opening of Parliament'.

There is some incoherence in that: what exactly does he mean by describing Gladstone (and subsequently Churchill) as being the "greatest man ever to have held the premiership"? Were they the greatest Prime Ministers? In what way were they the greatest men?

Furthermore, I beg leave to disagree with the judgement that Roy Jenkins was one of the successful post-Gladstone Chancellors.

However, the main point here is what the effect of Gladstone's undoubtedly highly influential chancellorship has been and that, alas, one cannot call healthy. Budget Day has, indeed, become one of the great events in the political calendar but the most obvious result of that is the budget is not seriously discussed in any detail. Disraeli's budget of 1852 was voted out and the government fell. Can anyone seriously imagine something like that happening nowadays?

Not only is the Budget always voted through but it is always voted through as a whole - the many different sections are not separated out either for serious debating or voting purposes. Or, in other words, thanks to Mr Gladstone's activity and influence, Parliament or, to be precise, the House of Commons lost its power over the finances that the Executive needs, the very issue over which battles of various kinds were fought between the Legislative and the Executive or between Parliament and the Crown. Ironic, is it not that it should be a great leader of the Liberal Party who should be responsible for that development.

A few general comments about the Budget

There was an e-mail from George Osborne in my inbox; addressing me as Dear Helen, he explained at some length how radical his Budget is. First of all, I had not realized we were on those terms and, secondly, I do not think that kind of over-the-top description of a pretty so-so Budget is appropriate.

Immediate reactions were predictable: Tories whoopped with joy and called it brilliant, those on the left screamed with horror, smokers talked darkly about fascism (like they know what the word means) and the rest of us were left bemused for a while then realized that it was not radical, not brilliant, not evil but an itsy-bitsy, give a little - take a little kind of Budget. Some good ideas, some not so good ones, most things postponed till next year and nothing very daring or brilliant.

There have been a few rational analyses from the Adam Smith Institute, from the IEA and from Reform via Reuters (this being less coherent than the other two). None of them are impressed though acknowledge that there are some good things. I'd say that Osborne is displaying an almost Brown-like obsession with micro-management and dislike for people who make money.

Anyway, discussions about the Budget will go on till at least Sunday though the news from Toulouse and, possibly, China might eclipse them.

A few general points need to be made, however. Osborne's proposed regulation on tax avoidance (which is entirely legal) shows that he is one of those who believes that money basically belongs to the government and we all have a duty to hand over as much of it as they require at any given time, this duty being moral as well as legal.

As the statement from the ASI put it:

The General Anti-Avoidance Rule is a bad idea. It leaves far too much latitude for bureaucratic discretion. It adds another layer of complexity on our labyrinthine tax code. And it is an affront to the rule of law. Radically simplifying taxes is a much better way of ensuring people pay their fair share.

That, however, appears to be contrary not just to the Chancellor's thinking but to that of many others inside and outside the political world. I took part in a number of discussions today with people (many of whom are in not so radical UKIP) who solemnly announced that if there are tax cuts then the money has to be replaced from somewhere else. When asked why they thought the government absolutely had to have this money and spend it on all those projects they sounded stunned. The idea that perhaps the state should not be spending quite such a large proportion of our money and that, perhaps, it would be better if some things the state spends money on now were actually taken out of its greedy grasp was completely alien to their way of thinking.

Then there were the other discussions with people who fulminated about "greedy bastards" who did not "pay their fair share" and did not "give back to society from which they had benefited". Really, it is as if people like  Hayek, Ayn Rand or Milton Friedman had never written their various seminal works.

People, I explained, who create wealth and make money do not benefit in some unspecified way from society and their best contribution to it is to continue to create wealth. (And, no, I did not believe the assurances that the people who were arguing with me never, never avoided paying all the taxes they could have paid if they did not take certain precautions.)

Even more astonishing were the many assurances that paying taxes in order to support the NHS, the education system and the welfare structure was essential if we wanted to live in a humane and civilized society. It was our contribution to such a society. The idea that people could look at the questionable NHS, the disgraceful education system and a welfare state that has created a huge underclass and call it civilized and humane seemed quite extraordinary. Almost as extraordinary as the assumption that paying taxes is the only way of contributing to the welfare of other people otherwise it is dog eat dog and an I'm all right Jack attitude.

It is at times like this that I despair for this country.

Oh goody!

Those red lines are back.

Still keeping that powder dry

George Osborne's first ECOFIN meeting was a huge success - for the colleagues, as this blog recorded it at the time. Don't be unfair, we were all told at the time; there is nothing he can do about those hedge funds as it had all been decided before this government was ever thought of. Hmmm, well, maybe but that argument of not bothering about the past but looking to the future has not been particularly effective as far as the EU is concerned.

Georgy-Porgy, we were told, is keeping his powder dry for other battles that he will be able to win. Battles such as the one about the Budget. Mr Osborne assured us that nothing on earth would make him agree to an arrangement that allowed the Commission (whose own accounts have not been signed off by the EU's Court of Auditors even once) to examine and pass the Budget before it came to the House of Commons. This is how the FT put it last time:

He may be back in Brussels on Friday fighting on another front, this time opposing a suggestion by the European Commission that national budgets be submitted for prior scrutiny by other EU member states. "National parliaments must be paramount," he said. "I'm perfectly happy to discuss details of the Budget with the Commission but only after it has been discussed in parliament."

Even then national parliaments were not exactly paramount as Georgy-Porgy must have realized from the saga of the hedge funds. Still, the question of who decides on the Budget is an important one.

According to Bruno Waterfield in today's Telegraph, that battle, too, has been lost.

Britain was isolated during a meeting of an “economic government taskforce”, chaired by Herman Van Rompuy, the EU President, last night.

Mr Van Rompuy and the European Commission have tabled plans that will require all of Europe’s governments to discuss their budget plans with other EU finance ministers and officials before they presented to national parliaments.

“A government presenting a budget plan with a high deficit would have to justify itself in front of its peers, among finance ministers,” said Mr Van Rompuy.

“There would still be time to adjust plans before the final budget plans are presented.”

Much will be made of the fact that Britain, not being in the euro, escapes certain punitive measures but there is no getting away from the basic fact:

But EU officials and French diplomats have insisted that British Chancellors of the Exchequer will be required to give their budgetary plans to the EU not after they are given to MPs in Westminster, "but before or simultaneously”.

Undoubtedly, this is the parliamentary right that the likes of John Hampden fought for.

Interestingly, the FT seems to have forgotten that previous promise of Mr Osborne's and concentrates on the fact that these "supervisory powers" (of which they seem to approve) will come into play only on a few "strictly defined" occasions. Experience tells one that once power has been given to an organization, those definitions become ever wider.

Meanwhile, much is being made of the ConLibs' latest gimmick: let me ask the public what they would like me to do. Douglas Carswell has already impressed his small band of followers with this (more of that in another posting) and now we have the Chancellor calling "on the public to identify which services should be cut as part of a 'once-in-a-generation' spending review".

First of all, why does Mr Osborne think this is a 'once-in-a-generation' spending review? Has he learnt nothing from the fact that hyperbole of that kind during the electoral campaign produced a turn-out of 65 per cent and a Conservative defeat snatched from the jaws of victory?

Secondly, we elected Mr Osborne and others in order that they take decisions as they see fit. If we do not like those decisions we shall throw him and his little friends out next time. We did not elect them to play stupid games of the kind one can see on reality TV.

Thirdly, how is he going to decide whose suggestions to take? Of course, he is not going to pay a blind bit of attention and how can he? People sending in emotional suggestions, based on no knowledge of data whatsoever are not going to impress the Treasury. So, in the end, the decisions will be taken by the Treasury with the Chancellor agreeing. What is the point of this ridiculous charade?

In any case, what if the Commission and ECOFIN disapproves of the popular suggestions Georgy-Porgy adds to the Budget and tells him to take it back and think again?