Category Archives: Spending Review

Can the Coalition Govern?


According to the well-repected bog Conservative Home, the Government is in a state of confusion. Cameron is determined to push through a major reform programmed fueled by Conservative ideology; small government, tax cuts (eventually);  constitutional reform (reluctantly), educational reform (expensively), benefit reform (work if you can or else);  self-help (Queen Victoria’s self help maunual has been lost), and neo-colonial glory (no one has told Assad and Ghadaffi).  What is very clear, as the Archbishop of Canterbury has enunciated, no one voted for Coalition policiues. In the jargon there is no electoral mandate. For the moment the government is cemented together by the fear of  electoral  wrath: it is better to be hung together than singly.

Every shrewd observor knows that these issues taken separately will not sink the Coalition. The only issue that will do that is the state of the economy. We must wait for July for the GDP figures for the second quarter. If these are bad the game may be up. What would be bad? Zero growth would be bad because it would signal that there has been no growth for the nine months in which the effect of the Coalition’s economic policies has been experienced. Slightly higher growth with a projection for the year as a whole of 1 percent to end 31 March, 2012 would be bad because the public sector deficit would be at unacceptable levels. If either of these economic prognostications becomes true there the very real consequential result that the Governmen’t legislative programme would have ground to a halt and the Coalition itself in its present form will collapse.

It may be that it is not only Arab countries and Greece that will have become ungovernable. I sense a gathering storm. Populations in many countries will arrive at the conclusion that politicians are not to be trusted and our political systems may colla[se. If citizens do not trust the system to safeguard ther basic  interests they will seek people-power alternatives: they are already doing so in Libya and Syria. There is something intoxicating about nightly tv screens full of demonstrasing crowds with banners and music. Why not us and why not now?

I suspect that our own governemnt is frightened. If the streets fill up with pensioners and trade unionists, if it goes on through the summer, if one policy initiative after another grounds to a halt, what is there to do? What is certain is that the disease of protest and rejection of authority knows no country boundaries. I have made fun of the Big Society but I do recognise that it has some virtues. If you can state, and if it is true, that we are responsible now and not the government, might the dilemma of electoral madate be solved. The Coalition could say, ‘You (we) are the masters now. Don’t blame us blame  yourself (or is it me that needs saving)?

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Lib Dems: They Just Don’t Get It


There is now a Lib Dem mantra designed to show how Government has been materially improved becaus of its involvement in the Coalition. What we have, it might be supposed, is really a Lib Dem administration. The party can come up with a long list of its achievements. One by one Lib Dem policy dreams have been put into place. It is necessary  side for the purpose of this argument to recognise that there are   policies that those of us on the left can support: higher personal tax allowances, improvement of tax credits for the very poor. the triple lock on increases in the state pension, the Pupil Premium to help some disadvantaged poor children. Good on you, say I.

Do these policy changes make people less poor?  Yes, they do in a way. However, alas and alack, the imposition of VAT dwarfs these advantages and the poor will get poorer. I will not dwell on the LiB Dem opposition to any VAT increase in the General Election campaign except to comment the they were against it. We all remember the poster. They were against increases in tuition fees too and then suddenly they were not.

But what is the heart of the matter. Remember, the Lib Dems were against cuts in public expenditure on the scale propsed by the Tories. Now they are not. What they tell us now  is that these cuts are necessary and like Pilgrims Progress to the promised land they bring us all closer to full employment, rising living standards and sunshine. Trust us, you will see how wise we are it is said.

The Lib Dems no longer command trust. But are they right? Certainly the OBR has consistently produced economic forecasts that suggest they might be. We are days away now from a reckoning. The first quarter GDP figures for the for 2011 is soon to be announced. It may be that over the last six months the British economy may not have grown at all, or if it has it will be  at some miserable annualised rate. Unemployment may be rising not falling, inflation will continue to work its way up and not down and real incomes will be squeezed further. I do not know whether the OBR will be asked for a revised forecast but even if they are not asked, it is highly likely that some other respected forecasting institute will make a good fist of doing it.  And what will be observed? I anticipate it: a rising budget deficit and no chance of the Coalition’s economic objective of eliminating the deficit by 2015 being achieved.

Is this not the real charge against the Lib Dems? Not the cavilling  daily objections to their nonsense BUT one overriding error. On the essential and over-reaching issue of how to keep the economy growing and the public deficit falling THEY ARE PLAIN WRONG. The Lib Dems have sold their soul for a mess of potage to find it uneatable. The electorate will not forget it and a day of reckoning is close.

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NHS Reform By Threat


To those of us with some knowledge of the founding, funding and growth of the NHS, it is a source of wonder to see the Tory conversion from outright opposition to apparent support. Now, we are told,  it is the Tory ambition to produce an NHS second to none in Europe. And all this by spending less money and sweeping away an unloved bureaucracy. I rely in my continuing disbelief  in a Freudian slip. Yesterday David Cameron told us that a failure to reform the NHS along the lines the Coalition now proposes would make the NHS unaffordable and  the agreed NHS objective of ‘free at the point of need’ would become unsustainable. Where and when have we heard this before? I rely on my readers to tell me. But am I not right to say that we heard in 1948 when the NHS was formed, and  was rammed down our throats my the Blessed Margaret Thatcher in thirteen long years of starving the NHS of capital and finance. Under the Tories we can never afford it.

Is it possible to build a world class NHS without spending more and more money and increasing the proportion of GDP spent on the NHS. I suggest not. The NHS was firmly rooted at the bottom of most EU Health league tables when Margaret bowed out unwillingly from power. It required massive capital and revenue expenditure under Labour administrations to lift it to mid-table performance.

It has always seemed to the Tories that this expenditure was avoidable if the private sector was permitted to play a larger role in health provision. In recent years the private sector has played a significant role but always under the protection of a benificent state. Is there, just possibly is there, a way of surrendering to private interests, saving administrative costs while preserving the mantra of ‘free at the point of sale (sorry, need).’

And the solution, ‘Give the money to GPs’. Or as it was said in the distant days of ITMA and Tommy Handley, ‘Give them the money Barney.’ It never dawned on David Cameron in  all this bravura that perhaps the GPs did not want this money. Nor that any responsible professional health organisations agreed with his proposed reforms. This is not his style. ‘You disagree with me. That’s a pity. But that is not going to stop me pressing ahead. So it may not work out but I believe it will.’ You learn this sort of thing on the playing fields of Eton.

‘Oh well clever dick, what reforms do you support to get this massive and growing health care under control.’  Well, first I believe in evolutionary not radical change in the NHS. I am not against givng GPs control over their budgets where they wish to operate this way or to making compensatory reductions in central bureaucracy. I am in favour of compensatory savings in central bureaucracy if we proceed this way and not at the expense of the necessary protection NHS services enjoy and need. This is the not the Tory way. You do not learn this approach on the playing fields of Eton. ‘What a cissy. Press on lads.’

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Steady As She Sinks


Imagine the scene. Captain Osborn stands on the bridge of the Titanic as it hits the iceberg and shudders to a halt. ‘Panic, ye not’ , he cries, ‘this ship is unsinkable’. Stay right where you are. It is no use running to the lifeboats for there is not room for you all. It is a feature of the design. There are only two pathways: forward or down. For the moment we cannot go forward but who in their right mind wishes to go down. Have faith. We shall overcome.

Of course, it may not be an iceberg and, if it turns out to be one, perhaps only  small. This is a test of leadership. And communication – don’t forget that. Where is that chap Coulson? He is so good in a crisis.  But what if it is a large one? What if the ship is sinking and nothing can be done? Of course, we don’t know yet. One quarter’s provisional slump in GDP is not not the albatross we all might  fear. Wait a while. Courage mon brave. But it must be admitted that the economic prospects look bad.

Over the last few months, I have argued that the outcome of a crisis is usually somewhere between peoples hopes and fears, that we will not get a double dip recession but rather a long grind forward at the expense of much that we hold dear about the British way of life and a great deal of suffering by millions of people. To remain sane in an insane world requires us to think like this. You avoid the worst by confidently believing in something better. No one can say that David Cameron lacks optimism or courage. But far worse than abundance of self-confidence, perhaps they are plain wrong about the Coalition’s programme of deficit cutting, small government and a Victorian strategy of self help and charity.

I confess to an ideological bias of my own. I believe in an enabling society, universal social benefits and rights and a fair degree of central direction and management of the economy. Looking back over the last two hundred years I believe that social democratic ideals work out best. Of course this leads to some people obtaining benefits to which they are not entitled, to benefit cheats and loafing about. It is a price worth paying. That is just my opinion, of course. I would not have set sail in the Titanic or aquiesced in a design with too few life boats or believe in the invincibility of the Captain. Let us all admit it is too late to avoid the voyage we were jockeyed into last May. Each man to his own is the cry as the lemmings force their way to the upper deck and the life boats. Hold on, where’s Nick, Dave and George? Surely they will think it morally right to go down with the ship. Have they somehow slipped a way to fight another battle on another day.? Yet another iceberg, more confident assertions? After all, surely there is no alternative? Steady does it while we sink.

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Let’s Play Consequences


The electorate is a sceptical lot. So far that has worked in favour of the Coalition. After all it has to be accepted by reasonable people that the budget deficit must be lowered as rapidly as possible and if the OBR tells us that there will be more people in employment  by the end of 2011 then who will gainsay them. Opposition doomsayers predicting a 1930’s style depression  for some years can be safely shrugged aside. ‘They would say that wouldn’t they’ being  a common reaction. However, today’s increase in the  unemployment figures may make a difference to all that. Whichever way you look at it these are grim figures. So far the Coalition has benefited from the Labour fiscal stimulus and the first economic upturns in world trade. But as the blessed Gordon has told us there has been no follow through internationally to a viable global economic growth stategy. The moment has been lost and the monetarists have had their day. Goodness! Might Gordon (blessed be his name)  have been right all along? 

So far the Tories have been continued to ride high in the opinion polls at around 40 percent , marginally higher than in the General Election  while the Lib Dems have incurred the  public wrath with 60 percent of their vote disappearing. As the recession grips this will change , although given the nature of Tory  support among the affluent it is likely that support will  remain in the 30’s. The Tory position relies on  self-engendered high levels of confidence and David Cameron’s exuberant leadership. It can be expected that he will lash himself to the mast as the storms break upon the ship of state but not all the crew will remain. Some will cower below deck while others will wash overboard. The storm reaches an early climax in May with local and assembly elections and the AV referendum.

It is not all cheer for Ed Milliband. He has sought to play a long game and to plead unpreparedness for an early tilt at power. Might it not be desirable to build an acceptable platform much earlier than he has supposed? Come on Ed, get on with it. I have always believed that there should be good odds for an early General Election, say June 2011. I notice that the smart money has shifted  to it with the odds shortening  from 20/1 to 4/1. There is still time for you to put your money on. 

And a word to the besieged Lib Dems. Jump now while you have the opportunity to do so. Labour could do a deal not to oppose Lib Dem MPs linking  loosely with Labour at least in those seats in the south where the Libs may still have a chance. After all if the ship is sinking who could blame you for wishing to save yourselves.

You might think that I am in advance of my self and you would be right. But judgement is crucial in politics as in life itself. For God’s sake jump, your country needs you.

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The Politics of Uncertainty


Economic forecasting is an art and all who practice it are merely players. That having been said there is little doubt that the latest OBR economic forecast gives the Coalition more to crow about than the Labour Opposition. The odds of the Coalition’s deficit reduction strategy, or in fancy language the Consolidation,  working out is now over 50 percent, employment will remain high, the economy will start to re-balance, in the jargon, and all should be well and improving when the next General Election is upon us. After all, as we all know economic growth is cyclical, recessions are followed by recoveries, one is taking place, and all is well with the world.

It takes some believing. Exports bounce ahead with an annual growth rate of 6 percent and investment is sharply upwards despite the fragility of currencies and uncertainties in world trade. It might be right though and as my mother used to say, there really are fairies at the bottom of the garden. Why don’t I see them then, if that’s the case. You don’t see them because they only come put to play in the night, when you are asleep. And no, no camping out in the garden

Might all this happen? Yes it might but then on the other hand it might not. For the moment the Coalition has the better of the argument and yahboo is not an answer. There are many good tactical reasons for vagueness and indecision on the Opposition benches but it disappoints. Were Labour really to believe that growth will grind along in the valley of despair and unemployment and short time working is our fate, what do they propose to save us? If by a freak of fortune Labour became the Government in a few weeks time, what would it do? What for goodness sake is the Labour Party’s platform?

I don’t expect to receive an answer and for this vapidity I blame Ed Milliband. Leaders come in many shapes and sizes but one thing is for certain: they must be Pathfinders. By all means consult, detail is a virtue, listening is good BUT you are the leader and what do you say? Where do you wish to lead the Labour Party? What is your opinion? All these questions can be answered without detailed policies with all the t’s crossed. Tell us where you are and where you are going with this. And for God’s sake do it soon. A few more weeks of empty generalisations and you are lost for ever. Who really, in their mind of minds, wishes to go down in history as the Ian Duncan Smith of the Labour Party. Surely one Ian Duncan Smith is enough. Fail now and you are lost for ever.

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Time To Get Real


On  29 November an updated report by the OBR will be published and George Osborne will give his reaction to it in the House of Commons. In July, when the OBR last reported,  Alan Budd was at pains to underline that his forecast was subject to massive uncertainy and that the Government’s policies to reduce the deficit had only a 40 percent chance of success. Despite these uncertainties commentators in millions of miles of typescript have confidently forecast the future  whether they were predicting runaway success for the Coalition  or double dip recession. Arguably, anything that has happened over the last six months should be written down to the Labour Government, credits and failures alike, but anything that happens from this point is down to the Coalition whose plans have been solidified. What will the OBR forecast reveal?

1. Uncertainty. Levels of uncertainty will be as great for our economic future is in the main determined outside the UK by happennings largely outside our control. World economic growth has slowed, currencies are in turmoil and British export growth is more precarious.

2. Growth and Employment. Alan Budd’s confident 2011 forecast of growth in the economy and high employment will be scaled back. In 2011 there will be no double dip but a churning along in bottom gear. Unemployment will rise in the immediate future before falling in later years.

3 As a consequence tax revenue will be scaled back and progress on deficit reduction  will be slower.

Here is a point then of realism.This is how the pigeons will , most likely, come to roost.  And what is to be done now after the gloss is worn thin? George Osborne will bluster it out. What else can he do? But  this call to reckoning is not for the Coalition alone, for eyes an ears will point at Labour. The electorate will wish to know what Labour would do if the Government. If Labour wishes to be pragmatic and oppositional and take things year by it must at least come up with a clear statement of what it would cut in 2011/2 and what changes in taxation it now supports.  Labour is in danger of losing public respect by obfuscation. It is time for Labour to be transparent and convincing behind a coherent policy agenda.

If Labour does this the electorate can choose. The lists will be drawn and the true battle begin. The economic future will remain murky but the issues will be rendered clearer. For Labour it is a call for Leadership.

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Welfare Compassion


The pathway to universal social benefits for those who need them has never appealed to the Right in politics. Their message has alway been, ‘very nice but the nation cannot afford it’. In their time the country could not afford a state pension, or the NHS, unemployment benefit, a minimum wage, or a guaranteed income for the disabled and the destitute. This conviction runs  in parallel with a value judgement: these benefits should only go to the deserving poor, and to its associate idea, that not many are deserving. It was once the case that poverty was considered not to be a sin but a misfortune. It was  the Victorians who branded it otherwise.

Social democrats have always considered welfare as a safety net through which the unfortunate should not fall. Human nature being infaillable it was accepted that there would always be some who abused the system but that no device of man could prevent some abuse. Taxpayers were the fortunate: after all they had income and their taxes helped the unfortunate.

Is it possible to select the deserving and weed out the spongers? One can try, it is right to attempt it, but the pathway leads to poverty, discrimination and, yes, a lack of compassion. There are a thousand reasons for some not working: mental or physical problems, looking after children or incapacitated adults – and a lack of work. Now all these people and they run to hundreds of thousands are for the high jump. If they try and fail to get a job any payment being made to them and their families will stop.  ‘Work will make you free’. Hold on, are they not the words above the entrance to the Auchwitz concentration camp? Some of these people, staring at the tellie with instant coffee to hand, know at the start they will fail. And what about the children? We shall look after them say the Coalition at the same time denying this family financial help. How will this be done? If they are shunted to a boarding house in Hastings, homeless, penniless, away from school and friends, are they being helped? Surely it is better and more compassionate to help keep this family together in its own home. It is usually better to have a home than not.

Well it is objected, I exagerate. It will not come to that. But it will for some family near to you, perhaps many near to you. What about your neighbour or your neighbour’s friend?  Let us consider the 8,500 London families whose  Housing Benefit is to be cut, some of these will lose their home and fail to find another. Not all of them you mutter, and serve them right, they, this family, should get on their bikes, assuming that they have them, and find something else. Some will, but some cannot. Perhaps no more than half, you retort, will lose out.  Oh that’s good not more than a  half, being 5,000 families in southern coast boarding houses. No problem. One would be too many, ten a mishap, but thousands of avoidable family disasters? Surely,  a shame on us all!

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The Use and Abuse of Statistics


There are maxims worth following whenever a politician makes use of statistics. In particular, in whose interest are the statistics prepared and published and are they being interpreted acurately and fairly. Let us consider the thorny issue of the effect on families in Greater London of ceilings and cuts in Housing Benefit. According to Government statistics,  and let us say they are right, there are 17,500 families and some 82,000 people. The London Boroughs speaking collectively are preparing plans for what to do if all these people could not pay higher rents, could not make other provision and were therefore forced to move.

Ask some questions:

1. Would all these tenants be forced to move? No, but no one has bothered to find out. Come on Government,  survey them first and give us the answer. 2. What proportion of these tenants are short stay anyway with agreements running up to 3 years.? Up to 40 percent of landlords, according to the Landlords Association but they would say this wouldn’t they. 3. Up to 30 percent of landlords according to the Landlord’s Association  They don’t tell us by how much. There are other estimates ranging fr0m 30-50 percent some of which come from Tory Councils. They would say this wouldn’t they. 3. Some of these tenants might be given social housing by their Councils. Source Tory Westminster Council. What is the current waiting list? Not given. It must be lengthy, say up to ten years. No chance. 5. Not to worry anyway the Government has put aside £130 million to mitigate hardship. Sounds a lot. Let’s say every family affected was a hardship case. If this was true 17,500 familes  would each get £742 pounds. Enough to pay 2 weeks rent. Whacko.  Lets be fair. Reduce the number forced to move by 20 percent as a result of lower rents that they could afford, and a further 20 percent for their own ingenuity, and ten percent for short term rentals and a willingness to move on. (Statistical point. These percentages are not additive) and we might say that 50 percent of families, 8,750,   will have to leave their homes  and most will go into boarding accommodation on the South Coast. 5.. At what cost? Not known.  Leaving this aside the Government could give the families concerned and the Councils bearing the cost £130 miillion towards the cost of this, that is £1,484. How long would this last? Are there jobs for them in places like Hastings with very high rates of unemployment? I have not seen any figures. Come on you Council’s, tell us.

You might say that the Coalition Government, in the interest of transparent administration should tell us. If Labour MPs were smart enough they could ask the Parliamentary questions that would give us all the answers. Come on you Labour MPs and Labour C0uncillors. Do your job.

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Can Governments Arrest Economic Growth?


I used to deliver a lecture with the title, ‘Can Governments Arrest Economic Growth.’ My considered answer was, yes, if they tried hard enough. The gist of the argument was that, ‘all things considered’ (the usual cop out) entrepreneurs and the rest of us were determined to improve our lot by hard work, skill and imagination, and that hampered as we  were by government meddling and poor policy making, we usually succeeded. That is where we are now. We should expect the UK economy to bounce back from a depression given the fiscal and monetary stimulous it has been given. Left alone, so to speak, we would come out of it and resume our normal growth.

What is different this time is twofold: we have a huge budget deficit which the Coalition is determined to eliminate in four years and a concious decision to run back public service for ideological reasons. What we all need is economic growth and ‘full employment’ and an end to deficit reduction delusions. The Labour stimulous has given us an inflation rate which will not come down and  there can be no more fiscal encouragement or quantity easing. Zilch and minus zilch for incomes per head for price increases will outscore the growth in wages, unemployment will rise as the VAT increase comes in  January,  and Boy George will be in trouble. He will not admit it. He dare not.

I had hoped, delusionist that I am, that we would then  have a change of Government. I do not believe this now. I do not expect the Coalition will change course, the Lib Dems will not rebel in sufficient numbers, and the Tories will maintain most of their support  amomg eectors as the  the country endures bleak times (there is something masochistic in the British psyche). And so we shall muddle on hoping for the best. It will be said that the British lose every battle but the last. So Boy George will cling to the mast, violently sick, together with the rest of the crew, but buoyed to the last with the conviction that the storm will blow itself out and the ship will find a harbour.

Well it might. It is possible but I plead unlikely. No one in their last mind would want George to fail for we would all go down with the ship. What do we do then as the crew is washed overboard? Best to do whatever there is to be done sooner rather than later you might conclude. Mutinies sometimes succeed but not often. As our Dave might say, if you want to have a mutiny, have a plan. Can someone help me. What, please is the Plan?

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