Thoughts on politics and life from a liberal perspective

Tuesday, 11 January 2011

Why Alan Johnson's NI "gaffe" matters

On Sky News on Sunday morning, it became clear during questioning by Dermot Murnaghan that the shadow chancellor Alan Johnson did not know what the rate for employers' national insurance is. It is 12.8% although Johnson seemed to think it was 20% at one point.

This has been seized upon as a "gaffe" by the media and Johnson's political opponents. Often these situations when a politician makes a slip are hugely overblown by the media and on many occasions I have found myself lamenting the way such things are covered.

However in this case I really do think it is important. I run my own business (along with some partners) and I am responsible for the company's financial affairs. Therefore I regularly have to sign off on financial transactions and also perform calculations based upon people's salaries. I am only too aware that every time the gross salary is considered, you have to multiply by 1.128. So I can look at this situation of the perspective, not of a politico but someone who signs the cheques for a small business.

That the shadow chancellor does not even know what the rate of employers' NI is a very poor show from where I am standing. I know he indicated he was a bit of an economics novice when he first started in the post but he has had months to get up to speed now. At the very least he should know what the different rates are. They should be absolutely at the forefront of his mind, not least because one of their main policies is to raise the NI rate. The fact that he does not means that he is not properly on top of his brief. For the chief opposition finance spokesperson in parliament to not be on top of this will just drive a wedge between him (and his party) and the millions of people in this country who run businesses.

Can you imagine any of the recent holders of the office of shadow chancellor to have been so sketchy on something like this? Alistair Darling, George Osborne, Oliver Letwin, Michael Howard, Michael Portillo are those who have held this post in the last decade and I am sure all of them were fully up to speed with the main rates of tax and NI.

I think Johnson has used up most of his nine lives now. He has caused other problems for Ed Miliband in the last few months and there has been a suspicion that some of them have been deliberate mischief making. This latest one was obviously not deliberate but I suspect the Labour leader's patience is wearing thin.

I would not be surprised if he was shuffled out of his post at the next available opportunity.


Lady Virginia Droit de Seigneur said...

It's hard to disagree with any of this. Johnson gives the impression of being clueless and not in command of his brief. In a lower profile position you may be able to get away with it but not as Shadow Chancellor and certainly not in the current economic environment.

If Labour want to dislodge the coalition they have to win the economic argument and Johnson is proving a major liability. I don't see him lasting much longer.

The difficulty for Miliband as I see it will be satisfying all wings of the party if he moves Johnson. Right now in the four big jobs you have three people associated strongly with Gordon Brown (Miliband, Balls and Cooper) so it will have to be someone from another part of the party. If you look at the Shadow Cabinet there are an awful lot of mediocrities - perhaps the answer would be to move Balls into the Shadow Chancellor and promote Denham or Hilary Benn

Balls would at least mount stronger arguments than Johnson although an awful lot of swinging voters find him pretty repulsive and if Cameron sorts out the postal vote fiasco he may well be under pressure in his own seat.

My feeling in the end is that Miliband lacks the status and the party lacks the talent to put the pressure on the coalition that they would want. Bit like the Tories in 98 in that regard

Nick Hollinghurst said...

Until recently I, like you (and my wife), ran a small business. We were intimately involved with the minutiae of such things as VAT, PAYE, SSP, SMP and NI. And we knew the difference between a gross profit and a net profit!

But the biggest responsibility every month was signing off the pay cheques upon which a whole raft of families depended. Too few people in public life have ever experienced that discipline and that responsibility - even those in 'real' jobs in large companies are largely shielded from those pressures.

It worries me that so many of our politicians and would-be career politicines have emerged from an upper-middle class background and moved effortlessly from prep to public school, to PPE at Oxbridge and on to an 'internship' in the Westminster village.

At best they learn the conventional wisdom of two decades earlier - at worst they learn nothing at all of relevance to the bulk of the citizens they aspire to lead!

Sunder Katwala said...


I agree that everyone involved in employing people would know this, as I would for the same reason.

Embarassing, I agree. But not very convinced, for two reasons.

But its a "gotcha" interview technique. (I think, by the logic of this piece, you must, though, have thought Nick Clegg thinking the pension was worth "about £30" a much worse gaffe for a politician? I expect Clegg was tired, and said something daft on his feet, but he clearly didn't know much about it).

The political judgements of a chancellor and economic advice are different. If you ranked Chancellors by performance and by economic knowledge, they would not correlate. (There are examples - Churchill - where more economic knowledge would have helped avoid a bad mistake). But there are other examples - Lawson, Brown, perhaps Gaitskell - where a relatively high level of knowledge makes the Chancellor much less likely to take a range of advice, compated to a more political Chancellor like Asquith, Neville Chamberlain, Macmillan, Roy Jenkins, Jim Callaghan or Ken Clarke might.

As that list catches, I think there have been many fewer specialist economist Chancellors than your post implies. Both types have been successes and failures.

It is in the nature of the role that advisors to Chancellors (eg Peter Jay for Callaghan, Ed Balls for Brown) can be v.important and some of the most important figures in any government, though the problem for Thatcher and Lawson was that the prime minister took her adviser's views over those of the Chancellor. But the key test of a Chancellor is political and policy judgement in taking decisions based on advice.

John said...

But its a "gotcha" interview technique. (I think, by the logic of this piece, you must, though, have thought Nick Clegg thinking the pension was worth "about £30" a much worse gaffe for a politician? I expect Clegg was tired, and said something daft on his feet, but he clearly didn't know much about it).

And look how much was made of it. Either you think that a similar amount should be made of it or that Labour being the third most influential party in Britain nothing much should be made of it.

(As that list catches, I think there have been many fewer specialist economist Chancellors than your post implies. Both types have been successes and failures. )

It's hardly SPECIALIST knowledge for an economics spokesperson of even the Green party to know the rates of NI!

Foregone Conclusion said...


Surely there's a difference between an deep knowledge of economics and simply knowing your brief? Most Chancellors can't be expected to be academic economists - that's why they have advisers. But policy in the Treasury is inevitably, because of the nature of the thing, highly technical, and so the Chancellor has to engage with this side of things as well as the broader policy questions.

Personally I'm perhaps slightly more understanding than Mark is - one gaffe by itself does not mean very much (Johann Hari has been using the 'Lib Dems are awful because Nick Clegg didn't know what the state pension was in 2008' line for 6 months now, and now it's just getting boring.) But Johnson's now got to work even harder to engage with the issues on a more than superficial level and appear impressive.

Mark Thompson said...

Foregone Conclusion - I think I normally am quite forgiving of these sort of gaffes. I certainly try to give politicians across all parties the benefit of the doubt. However this one just really rankled with me, maybe because of my position in running a company.

Sunder - Your point about Clegg is fair and I was very surprised that he did not know the ballpark figure for a pension. I suppose the difference is that by the very nature of Clegg's position he has to be a generalist whereas Johnson's speciality is supposed to be finance. However I would not seek to defend Clegg's mistake, he should have had a much better idea of the pension level and he was rightly castigated when he did not.

RoHS said...

I still don't know why?