An awful lot has been written about the comprehensive spending review, so much so that it’s quite hard to think of anything new to say. However, I did actually listen to George Osborne’s speech and because it was supposedly the start of the roll back of the state it was important enough to be worth a comment.
And I did feel real anger about the review: not at the cuts, but at the reaction from various Labour politicians and commentators complaining about the increase in unemployment that will follow. They are the ones who wrecked the economy, leaving the UK with a massive debt burden. They are the ones who recklessly signed contracts they knew could not be afforded, leaving defence in particular in a mess. They are the ones who have left a blighted underclass without access to education and social skills to let them escape. They are the ones who left more people unemployed than when they came into office – as indeed every Labour Government has. Let’s repeat that: the people criticising the coalition for putting jobs at risk are the people who every single time they come to power make more people unemployed.
The comment I enjoyed most came from Giles Coren in the Times (I can’t link to it because of the Times firewall, presumably designed to devalue the worth of its authors by limiting their exposure). The heading was Let the Posh Boys Sort it Out; in summary it was saying that there is some relief, having watched a supposedly meritocratic group make a complete mess of things, in seeing some people born to rule getting a grip. I’m not sure if he was being ironic or not but he has a point.
One of Alan Johnson’s criticisms of the speech was the reaction of the Tory backbenchers appearing to relish the “cuts”; I’d certainly agree that Osborne was unnecessarily partisan in what should have been a sober assessment of the situation. Some of us do delight in seeing the state become less important, and in the sound of interest groups bleating about the problems that will arise from them having less money to waste. But that is a Tory, a partisan, perspective: there is also a wider national interest at stake which is much more important. I’ve written many times before about the need to get a grip on spending because of the size of the interest burden which flows out of the country and because of the requirement to keep finding other people to fund our borrowings. Proving that we can sort ourselves out is crucial to that and it is why something on the scale of the CSR was essential.
Other brief thoughts:
- There’s a lot to criticise - aircraft carriers with no planes, reducing spending on Scotland by less than the rest of the country – but it is a great achievement to have got agreement within a coalition to do as much as they have;
- The LibDems may be unpopular now, but as the “cuts” start to work they will get some of the credit and will be back as a credible third party by the time of the next election;
- As again many have written, these are not “cuts”, they are reductions in the growth of spending. Cuts would have been desirable had the economy been in a better state. Because confidence is poor the reductions are probably as much as is possible.
- It would have been easy – as Labour did a couple of times – to reduce capital spending keeping running costs unchanged. But the review has kept a number of infrastructure projects in place, as well as investment in longer term intellectual capital. This reinforces the coalition’s desire to support private sector growth.
- The long term success of this Government will be driven by its ability to reform the welfare system by simplifying it and creating an incentive to work. The CSR provided some first steps in this direction – a sign of intent – but much remains to be done.
- There is a debate about whether the "cuts" are fair. “Fair” can mean many things. It’s as Lewis Carroll said. The coalition will hope that most voters share their meaning of the word: early indications are that they do, but it's subject to change. In the end this will depend on the performance of the economy.
Overall a pretty good start.
Tuesday, 26 October 2010
Thursday, 30 September 2010
Circumspice
There seems to be a strong consensus that the economic problems are due to bankers. A recent poll showed this, Vince Cable showed his economic competence by conflating bankers spivs and gamblers crippling the British economy, Finance Ministers across the world are trying to restrict bonuses to financiers (actually, apart from in the UK they aren’t, but they are talking about it).
This worries me; not because the bankers will be upset – they will cope particularly as they will continue to earn lots of money, but because misunderstanding the cause of the problems makes it more likely we will do the wrong things to so solve them.
The real problem was that we all borrowed too much – individuals, banks and especially governments. We spent money we didn’t have causing house prices in particular – but all assets as well – to artificially rise. This was enabled because governments encouraged banks to gear up, to lend more, to need less capital to support their business. Governments did this because the resulting short term boom made them look good. I say Governments: not all did this; many Asian ones didn’t, not all Europeans did. Iceland was the poster boy for carelessness, but the US, the UK and Eire were not far behind.
I know the banks did some very stupid things – not all of them; for example JP Morgan and HSBC had a “good crisis”- but many lent foolishly, created products their managers didn’t understand and effectively went bankrupt; their shareholders have generally suffered as a result. But the rest of us did stupid things as well, and so did our Governments who not only encouraged the excess but also increased their own borrowings. They also did not get a decent reward for the guarantees they provided the banking system. And who voted for those Governments? Supported their public spending? We did.
If we want to know the cause of the problem: look around.
The UK's public sector deficit is because public spending got out of control. The banks were bailed out but mostly by guarantees which have lapsed; some taxpayer money was invested directly, but a small amount compared with the deficit and it is likley to be recovered at a profit. The bankers therefore played a small part in the problem and in fact there are three ways the banks and bankers are helping us get out of our economic problems:
- As they become profitable, the money we put into them becomes worth more. The state will profit from their investment;
- Banks employ a lot of people and finance and associated services remain one of our few world leading businesses which generate a lot of earnings from overseas;
- Banks and bankers pay a lot of tax.
We would miss them if they went. It’s easy to say we wouldn’t: but who would then pay the bills?
The problem we have to solve is one of excessive consumption – by ourselves but mainly by our Government. That is the problem that needs fixing. Punishing bankers for our mistakes may make us feel better but will stop them from supporting the economy.
This worries me; not because the bankers will be upset – they will cope particularly as they will continue to earn lots of money, but because misunderstanding the cause of the problems makes it more likely we will do the wrong things to so solve them.
The real problem was that we all borrowed too much – individuals, banks and especially governments. We spent money we didn’t have causing house prices in particular – but all assets as well – to artificially rise. This was enabled because governments encouraged banks to gear up, to lend more, to need less capital to support their business. Governments did this because the resulting short term boom made them look good. I say Governments: not all did this; many Asian ones didn’t, not all Europeans did. Iceland was the poster boy for carelessness, but the US, the UK and Eire were not far behind.
I know the banks did some very stupid things – not all of them; for example JP Morgan and HSBC had a “good crisis”- but many lent foolishly, created products their managers didn’t understand and effectively went bankrupt; their shareholders have generally suffered as a result. But the rest of us did stupid things as well, and so did our Governments who not only encouraged the excess but also increased their own borrowings. They also did not get a decent reward for the guarantees they provided the banking system. And who voted for those Governments? Supported their public spending? We did.
If we want to know the cause of the problem: look around.
The UK's public sector deficit is because public spending got out of control. The banks were bailed out but mostly by guarantees which have lapsed; some taxpayer money was invested directly, but a small amount compared with the deficit and it is likley to be recovered at a profit. The bankers therefore played a small part in the problem and in fact there are three ways the banks and bankers are helping us get out of our economic problems:
- As they become profitable, the money we put into them becomes worth more. The state will profit from their investment;
- Banks employ a lot of people and finance and associated services remain one of our few world leading businesses which generate a lot of earnings from overseas;
- Banks and bankers pay a lot of tax.
We would miss them if they went. It’s easy to say we wouldn’t: but who would then pay the bills?
The problem we have to solve is one of excessive consumption – by ourselves but mainly by our Government. That is the problem that needs fixing. Punishing bankers for our mistakes may make us feel better but will stop them from supporting the economy.
Wednesday, 29 September 2010
Ed or Dead?
It's too soon to say whether Ed Miliband's election as Labour leader is good for Labour or not.
In the short term it is good for the Tories because Labour have elected someone who was the second choice of most MPs and activists and someone who is clearly in the pockets of the trade unions. He is also inexperienced and lacks charisma. And lastly, he gives the impression of not liking people like me - middle class, slightly successful, workers (I'm not a swing voter but many people like me are). As a member of the establishment intelligensia he looks down on us: we are only fit for whatever cash he can extract from us. I talked about him with a Labour supporting friend, who thought he was sincere: but was that because she agreed with what he was saying? He strikes me as deeply insincere.
BUT... deeply insincere is another way of saying ruthless. He is clearly ruthless. And that ruthlessness may cause him to dump the unions, he may learn to look as though he likes me (and people like me), he will get experience and he may absorb character. And therefore become a successful leader. His brother has done him a big favour by moving to the back benches - it is possible he could become a really useful informal consigliere unless there is now a major family rift. So
The key to his success, however, has nothing to do with him: it is whether the economy recovers during 2013 and 2014. If it does, then the coalition will get a lot of credit and Labour's opposition to getting public finances under control will be seen as silly. If it doesn't, then Labour will have a chance to rebound by saying that the coalition damaged the recovery by cutting public expenditure growth too strongly before the private sector had started to recover.
But at least his appointment will give the coalition some breathing space as things get difficult.
In the short term it is good for the Tories because Labour have elected someone who was the second choice of most MPs and activists and someone who is clearly in the pockets of the trade unions. He is also inexperienced and lacks charisma. And lastly, he gives the impression of not liking people like me - middle class, slightly successful, workers (I'm not a swing voter but many people like me are). As a member of the establishment intelligensia he looks down on us: we are only fit for whatever cash he can extract from us. I talked about him with a Labour supporting friend, who thought he was sincere: but was that because she agreed with what he was saying? He strikes me as deeply insincere.
BUT... deeply insincere is another way of saying ruthless. He is clearly ruthless. And that ruthlessness may cause him to dump the unions, he may learn to look as though he likes me (and people like me), he will get experience and he may absorb character. And therefore become a successful leader. His brother has done him a big favour by moving to the back benches - it is possible he could become a really useful informal consigliere unless there is now a major family rift. So
The key to his success, however, has nothing to do with him: it is whether the economy recovers during 2013 and 2014. If it does, then the coalition will get a lot of credit and Labour's opposition to getting public finances under control will be seen as silly. If it doesn't, then Labour will have a chance to rebound by saying that the coalition damaged the recovery by cutting public expenditure growth too strongly before the private sector had started to recover.
But at least his appointment will give the coalition some breathing space as things get difficult.
Wednesday, 18 August 2010
100 Days
What is the significance of 100 days? It is 2,400 hours. Or 3 months and 8 days. It's a meaningless period of time which has yet become, through history, a period to judge a new situation.
JFK said in his inauguration speech: "All this will not be finished in the first 100 days. Nor will it be finished in the first 1,000 days; nor in the life of this administration. Nor even perhaps in our lifetime on this planet. But let us begin.” Perhaps the most sensible thing he ever said; policies - especially changes in policies - take much longer to implement than they do to describe.
So how has the Government done in its first 100 days? Pretty well, I think.
- the coalition has worked so far, proving doubters like myself wrong. I'm sure this is part personal chemistry and part developing firm "rules of engagement" between the parties right at the start. Both parties benefit from being in Government; the Tories benefit in two additional ways: they can be harsher with the budget than if they were on their own because they have cover from the LibDems, and their lunatic fringe cannot hold them to ransom as easily. The LibDems are suffering in the polls at the moment but I suspect they will benefit later as the economy improves.
- they have started to get to grip with the budget deficit. Amidst a lot of noise about "cuts" a limited number of commentators (John Redwood most concisely) have noted that Governmengt spending is not being cut at all, rather the rate of growth is being slowed a bit. But what they are doing is better than nothing, and better than the alternative, and as I noted in my previous post the country is benefitting from lower interest rates and from being given the time to manage things ourselves. Even if there is a double dip recession (not very likely), it's unlikely that reducing the scale of Government expenditure in the UK will be a major cause.
- they have started to get a grip on the absurdities of the last few years of Labour - dumping inefficient school funding programme, getting rid of public bodies paying external people to lobby other public bodies and so on. Everyone has a view on what the Big Society means: to me it means removing the attitude of public sector management that they have an entitlement to direct the public, rather than a duty to serve them. This is a massive cultural change and it wuill take time to implement. But you can sense the tide is about to turn.
- they made a great move in putting Ian Duncan Smith in charge of welfare reform, and (for reasons of getting support in implementation) complementing this with various Labour advisers. But this is one area where the jury is out: it is critical to take a long term view of welfare reform if the cycle of dependency in many parts of Britain is to be reversed. Improving education will not be enough. But welfare reform will costs money, which is why the issue has been blocked for many years. Cameron must ensure IDS can take a long term view.
- the approach to international affairs seems suitably pragmatic for a medium sized power: we should not expect or demand too much, but our history and culture - and armed forces - mean we have a lot to offer if we have the confidence to do so. They have so far not been waylaid by silly Euro-sceptic issues - the LibDems probably help here.
- I do worry about the NHS reforms that have been announced. I am sure the principle - of localisation and removing the Primary Care trusts - is very sensible, but surely the last thing the NHS needs is a lot of expensive further reform. This smacks of a bored minister looking to make a name for himself.
- given that the Government has started to do a lot, it is very refreshing that it is also fairly quiet. We do not have daily headlines about how wonderful they are. To me, that smacks of quiet competence, a focus on delivery not presentation and on letting people get on with their lives. Perhaps that is naively optimistic, but it is a good change.
The best thing for me, though, is to read the daily whinges of the quangocracy - people like the association of chief police officers, the UK Film Council and so on -who have drained so much energy and money from the country. They are suddenly realising they have to justify what they do. And most of the can't. These daily headlines are a joy to read.
So overall - a good start.
But to channel JFK: 100 days isn't very long. There's a long way to go.
JFK said in his inauguration speech: "All this will not be finished in the first 100 days. Nor will it be finished in the first 1,000 days; nor in the life of this administration. Nor even perhaps in our lifetime on this planet. But let us begin.” Perhaps the most sensible thing he ever said; policies - especially changes in policies - take much longer to implement than they do to describe.
So how has the Government done in its first 100 days? Pretty well, I think.
- the coalition has worked so far, proving doubters like myself wrong. I'm sure this is part personal chemistry and part developing firm "rules of engagement" between the parties right at the start. Both parties benefit from being in Government; the Tories benefit in two additional ways: they can be harsher with the budget than if they were on their own because they have cover from the LibDems, and their lunatic fringe cannot hold them to ransom as easily. The LibDems are suffering in the polls at the moment but I suspect they will benefit later as the economy improves.
- they have started to get to grip with the budget deficit. Amidst a lot of noise about "cuts" a limited number of commentators (John Redwood most concisely) have noted that Governmengt spending is not being cut at all, rather the rate of growth is being slowed a bit. But what they are doing is better than nothing, and better than the alternative, and as I noted in my previous post the country is benefitting from lower interest rates and from being given the time to manage things ourselves. Even if there is a double dip recession (not very likely), it's unlikely that reducing the scale of Government expenditure in the UK will be a major cause.
- they have started to get a grip on the absurdities of the last few years of Labour - dumping inefficient school funding programme, getting rid of public bodies paying external people to lobby other public bodies and so on. Everyone has a view on what the Big Society means: to me it means removing the attitude of public sector management that they have an entitlement to direct the public, rather than a duty to serve them. This is a massive cultural change and it wuill take time to implement. But you can sense the tide is about to turn.
- they made a great move in putting Ian Duncan Smith in charge of welfare reform, and (for reasons of getting support in implementation) complementing this with various Labour advisers. But this is one area where the jury is out: it is critical to take a long term view of welfare reform if the cycle of dependency in many parts of Britain is to be reversed. Improving education will not be enough. But welfare reform will costs money, which is why the issue has been blocked for many years. Cameron must ensure IDS can take a long term view.
- the approach to international affairs seems suitably pragmatic for a medium sized power: we should not expect or demand too much, but our history and culture - and armed forces - mean we have a lot to offer if we have the confidence to do so. They have so far not been waylaid by silly Euro-sceptic issues - the LibDems probably help here.
- I do worry about the NHS reforms that have been announced. I am sure the principle - of localisation and removing the Primary Care trusts - is very sensible, but surely the last thing the NHS needs is a lot of expensive further reform. This smacks of a bored minister looking to make a name for himself.
- given that the Government has started to do a lot, it is very refreshing that it is also fairly quiet. We do not have daily headlines about how wonderful they are. To me, that smacks of quiet competence, a focus on delivery not presentation and on letting people get on with their lives. Perhaps that is naively optimistic, but it is a good change.
The best thing for me, though, is to read the daily whinges of the quangocracy - people like the association of chief police officers, the UK Film Council and so on -who have drained so much energy and money from the country. They are suddenly realising they have to justify what they do. And most of the can't. These daily headlines are a joy to read.
So overall - a good start.
But to channel JFK: 100 days isn't very long. There's a long way to go.
Wednesday, 23 June 2010
The first coalition budget
In the bad old days of Brown’s budgets, and to a lesser extent Darling’s, it was a mistake to comment too soon because the problems were always hidden in the small print released afterwards. George Osborne has admirably been straight with his presentation so it is easy to see the impact quickly.
The headline comments have been about the increase in VAT to 20%; the headline criticisms that this and the cutbacks will damage the economic recovery and impact poorer people more.
I think there are more points of underlying importance than this:
- The budget has started to get to grips with our budget deficit. As I said earlier, it is so big that interest costs are a major outflow from the economy – and a growing part of the deficit. Early action matters, and the quick next day assessment of the budget by the gilt market was good; the UK’s funding costs have reduced slightly.
- Some of the apparently softer cuts will have a big impact on the deficit: a two year restriction on public sector pay increases –with none for employees earning over £21,000 – and increasing benefits by the CPI rather than RPI will save a lot of money quickly.
- The budget sets a positive direction for businesses in terms of tax reduction and simplification. The most important way we will get out of the current mess is for the private sector to grow. Lower and simpler taxes help confidence. This is the first budget for years to have an approach of freeing the private sector rather than tinkering with it.
I think the criticisms are overstated. The VAT rate will not increase until January 2011, which gives time for the confidence boosting measures to work; it is also likely to bring forward spending to benefit the economy in 2010. Less wealthy people tend to spend a greater proportion of their income on non-vatable goods, and so it is less regressive than you might think. In addition, there are specific measures (tax thresholds; housing benefits) targeted at the poor.
I think the main criticism is that the details of the tax cuts are still to come, in the Autumn expenditure review. This delay is inevitable but still permits uncertainty till then.
Overall, it is refreshing to have a budget that is transparent, focused on sorting out the problems and giving an optimistic direction for private sector growth.
The headline comments have been about the increase in VAT to 20%; the headline criticisms that this and the cutbacks will damage the economic recovery and impact poorer people more.
I think there are more points of underlying importance than this:
- The budget has started to get to grips with our budget deficit. As I said earlier, it is so big that interest costs are a major outflow from the economy – and a growing part of the deficit. Early action matters, and the quick next day assessment of the budget by the gilt market was good; the UK’s funding costs have reduced slightly.
- Some of the apparently softer cuts will have a big impact on the deficit: a two year restriction on public sector pay increases –with none for employees earning over £21,000 – and increasing benefits by the CPI rather than RPI will save a lot of money quickly.
- The budget sets a positive direction for businesses in terms of tax reduction and simplification. The most important way we will get out of the current mess is for the private sector to grow. Lower and simpler taxes help confidence. This is the first budget for years to have an approach of freeing the private sector rather than tinkering with it.
I think the criticisms are overstated. The VAT rate will not increase until January 2011, which gives time for the confidence boosting measures to work; it is also likely to bring forward spending to benefit the economy in 2010. Less wealthy people tend to spend a greater proportion of their income on non-vatable goods, and so it is less regressive than you might think. In addition, there are specific measures (tax thresholds; housing benefits) targeted at the poor.
I think the main criticism is that the details of the tax cuts are still to come, in the Autumn expenditure review. This delay is inevitable but still permits uncertainty till then.
Overall, it is refreshing to have a budget that is transparent, focused on sorting out the problems and giving an optimistic direction for private sector growth.
Tuesday, 1 June 2010
Capital: A Tax on Gains
I don't understand the fuss being made about an increase in capital gains tax - or rather I do, I piut it down to mischevious Tories trying to spoil the coalition. I would exempt people like John Redwood making constructive comments about to improve the situation.
The fact that capital gains are taxed at a very different rate from income is very new - it was brought in in 2008, mainly to help some of Gordon Brown's main funders. Nigel Lawson, as part of his tax simplification process, had equalised the rates. This remained the case for over 20 years. There were allowances for the time the asset was held, and some exemptions for entrepreneurial assets.
Those protesting against the increase mainly focus on two issues:
Some research suggests that lower rates bring in more money. However, this is not conclusive as small changes probably don't effect behaviour and wider economic trends have at least as much impact.
The special pleading about middle class second home owners and shareholders is too self serving. Firstly, more tax on gains on such assets is no hardship. Second, if they were bought pre-2008 they were bought under a regime where income and capital tax rates were the same. So the proposed change is no change. If they were bought after 2008 then (in most cases) there will have been minimal gains if not losses so people can readjust their savings now without any serious penalty.
The different rates have caused a big tax avoidance industry to try to turn income into capital. This is both unfair and unproductive. We should want the tax system to be simpler, and harmonising rates is the way to go. I do think it is fair to differentiate some business assets and to encourage saving by having reliefs according to how long assets are held. But these are the points that Tories should focus on (as Redwood has), and we should be grateful the Lib Dems have suggested rate harmonisation. This fits our principles.
Again, I see this as jealous Tories stirring for the sake of it.
The fact that capital gains are taxed at a very different rate from income is very new - it was brought in in 2008, mainly to help some of Gordon Brown's main funders. Nigel Lawson, as part of his tax simplification process, had equalised the rates. This remained the case for over 20 years. There were allowances for the time the asset was held, and some exemptions for entrepreneurial assets.
Those protesting against the increase mainly focus on two issues:
Some research suggests that lower rates bring in more money. However, this is not conclusive as small changes probably don't effect behaviour and wider economic trends have at least as much impact.
The special pleading about middle class second home owners and shareholders is too self serving. Firstly, more tax on gains on such assets is no hardship. Second, if they were bought pre-2008 they were bought under a regime where income and capital tax rates were the same. So the proposed change is no change. If they were bought after 2008 then (in most cases) there will have been minimal gains if not losses so people can readjust their savings now without any serious penalty.
The different rates have caused a big tax avoidance industry to try to turn income into capital. This is both unfair and unproductive. We should want the tax system to be simpler, and harmonising rates is the way to go. I do think it is fair to differentiate some business assets and to encourage saving by having reliefs according to how long assets are held. But these are the points that Tories should focus on (as Redwood has), and we should be grateful the Lib Dems have suggested rate harmonisation. This fits our principles.
Again, I see this as jealous Tories stirring for the sake of it.
Sunday, 30 May 2010
David Laws
There's been a lot of comment about David Laws. His resignation is a blow not so much to the coalition and Conservative/Lib Dem co-operation but to the resolution of our financial problems. He had more intelligence and credibility than most to identify and sell necessary cuts in public sector expenditure.
So if you believe the financial situation is by far the most important problem facing this country, is it right that a brief media campaign can force out someone very well (if not best) qualified to help sort it out? Especially as the amount he actually claimed was much less than he could have claimed. My first thought was that as he had been reasonable there was no story and he should have stayed. But at the end of the day, he does appear to have claimed the wrong amounts and he did not take advantage of the quasi amnesty last year when all the fuss was going on to clean up his disclosures. This suggests a lack of judgement. He also would not have had the credibility to do his job properly. And lastly: it is important for the new Government that they are seen as clean. So he had to go.
As far as the economic situation is concerned, I know nothing about the new Chief Secretary, but he will have loads of help and lots of market pressure forcing him to cut expenditure. So as always, no-one is indispensible.
The intriguing thing for me, though, is why did the story come out now? Was it the Telegraph just being good jounalists and checking out the stars of the new cabinet? Or was it because Laws' "whiter than white" attitude annoyed people? Or did Liam Byrne (his predecessor) or Vince Cable (shown up as economically inept) resent him? Or was it disaffected Tories or jealous Lib Dems who tipped the Telegraph off? This is the part of the story we'll probably never learn, and the part that will be the best indicator of the strength of the coalition. Guido has more on the conspiracy theories here.
Sunday, 16 May 2010
Free thinkers
Independently minded MPs who don't just follow the party line are popular. But there's a fine line between principled opposition and being a self indulgent pain - and you can usually spot the line. The coalition will give an opportunity for both Lib Dem and Conservative awkward squads to posture, not least because they have lost influence and therefore power. (Their Labour equivalents will be occupied for a few months with their leadership election).
The first signs of the self indulgent pains are emerging as backbenchers line up against the proposed fixed term arrangements.
My problem is that I can't see what the problem is. Given the real problems facing the country, who cares whether we have fixed term parliaments or not? There are good arguments for them - and against. On balance, it's probably a good thing because it puts more power in the hands of backbenchers rather then minsiters. But it's hardly a big deal.
And if we do have fixed term parliaments then surely they should be just that - fixed term. So you must have an arrangment to stop the term ending too easily, especially if there's a hung parliament. So a 55% requirement for dissolution seems fair enough. In practice, if over half of MPs have no confidence in a Government then it will fail.
So why the fuss? I can see Labour simply want to stir, but I don't understand why the Conservatives would complain. Except as a token gesture of dislike for the coalition. It'll be interesting to see if this protest is just a one off self indulgent release of tension or if the taste for dissent will be catching. I hope not; and I hope that voters identify those MPs who are self indulgent rather then principled. And punish them. Even if it takes 5 years to do so.
The first signs of the self indulgent pains are emerging as backbenchers line up against the proposed fixed term arrangements.
My problem is that I can't see what the problem is. Given the real problems facing the country, who cares whether we have fixed term parliaments or not? There are good arguments for them - and against. On balance, it's probably a good thing because it puts more power in the hands of backbenchers rather then minsiters. But it's hardly a big deal.
And if we do have fixed term parliaments then surely they should be just that - fixed term. So you must have an arrangment to stop the term ending too easily, especially if there's a hung parliament. So a 55% requirement for dissolution seems fair enough. In practice, if over half of MPs have no confidence in a Government then it will fail.
So why the fuss? I can see Labour simply want to stir, but I don't understand why the Conservatives would complain. Except as a token gesture of dislike for the coalition. It'll be interesting to see if this protest is just a one off self indulgent release of tension or if the taste for dissent will be catching. I hope not; and I hope that voters identify those MPs who are self indulgent rather then principled. And punish them. Even if it takes 5 years to do so.
Thursday, 13 May 2010
A new phase
Now the election is over, I'll take down the manifestos etc. After all, they won't be of much use to anyone now. I will link to the coalition agreement as that could be a useful reference document in the future.
The Cabinet and ministerial appointments are mostly good, but there's a couple of real disappointments. Particularly good appointments (I think) are Iain Duncan Smith at Work and pensions, who has done hard work in identifying the causes of poverty rather than just seeking to create a dependent society, and those like Hague, Gove and Fox who have taken on the department they were shadowing. I think I heard Cameron say on the radio that "stability" and a long term outlook must apply to ministerial appointments as well as cost cuts, and I hope that he means it and ministers will be allowed to stay long enough to learn and manage rather than just create headlines. The exception to that stability is Osborne: although Clarke will be a good figure for political reform, I would have preferred to see him as Chancellor simply because he is more credible and has a track record of previously dealing with economic problems. Especially with Cable as Business secretary. Lastly it's hard to see Theresa may being tough enough to be home secretary, a job better suited to Chris Huhne.
As far as policies go, again, they seem pretty reasonable; in fact I think the combined tax policies are better. My worries are the retention of FSA, although macro supervision will move to the Bank of England, and energy security (ie will nuclear power stations get built?).
The Cabinet and ministerial appointments are mostly good, but there's a couple of real disappointments. Particularly good appointments (I think) are Iain Duncan Smith at Work and pensions, who has done hard work in identifying the causes of poverty rather than just seeking to create a dependent society, and those like Hague, Gove and Fox who have taken on the department they were shadowing. I think I heard Cameron say on the radio that "stability" and a long term outlook must apply to ministerial appointments as well as cost cuts, and I hope that he means it and ministers will be allowed to stay long enough to learn and manage rather than just create headlines. The exception to that stability is Osborne: although Clarke will be a good figure for political reform, I would have preferred to see him as Chancellor simply because he is more credible and has a track record of previously dealing with economic problems. Especially with Cable as Business secretary. Lastly it's hard to see Theresa may being tough enough to be home secretary, a job better suited to Chris Huhne.
As far as policies go, again, they seem pretty reasonable; in fact I think the combined tax policies are better. My worries are the retention of FSA, although macro supervision will move to the Bank of England, and energy security (ie will nuclear power stations get built?).
Wednesday, 12 May 2010
Polling Day
It took me longer to post what happened on polling day than it took to form a Government; but perhaps this post will last longer.
Polling day is quite exciting but also hard work if you are involved in a political party. Most people just have to vote - although that seemed to be too hard for about 1/3 of the population - but the rest of us are active. One of my friends who helped at the Council election suggested that all we were doing was giving us something to do to keep us quiet, but in fact the polling day function - also known as get out the vote - does help and I am sure we go out the vote.
What we -and all the parties in all the seats they hope to do well in - do is sit outside the polling stations to find out who has voted. (It helps in an area like ours because so many people know each other). We then cross this off and nag people we think will support us to vote. It sounds easy but its a lot of hard work and co-ordination. We had 30 people in the Belford and Coastal area helping on polling day, and we have about 8% of the electorate in Berwick upon Tweed. My job was to try and make sure the operation worked, which involved a lot of driving about looking busy.
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I think we did well; we had more voters than expected, we managed to call out some who would not otherwise have voted and we think we had a majority of Conservative voters in this area. The result overall was both excellent and disappointing - it was a shame Anne-Marie didn't win, after an excellent campaign and record on helping people in the area, but winning would have been very hard, and she has turned the constituency into a marginal from a safe LD seat. Next time?
We didn't have queues at 10.00 at our polling stations - people were much more sensible than that. But the experience in some seats was shameful, and I hope one of the things that the new Government will have time to do as it looks at political reform is to get rid of the Electoral Commission, which is unaccountable, and to focus on proper management of polling day and voting.
Polling day is quite exciting but also hard work if you are involved in a political party. Most people just have to vote - although that seemed to be too hard for about 1/3 of the population - but the rest of us are active. One of my friends who helped at the Council election suggested that all we were doing was giving us something to do to keep us quiet, but in fact the polling day function - also known as get out the vote - does help and I am sure we go out the vote.
What we -and all the parties in all the seats they hope to do well in - do is sit outside the polling stations to find out who has voted. (It helps in an area like ours because so many people know each other). We then cross this off and nag people we think will support us to vote. It sounds easy but its a lot of hard work and co-ordination. We had 30 people in the Belford and Coastal area helping on polling day, and we have about 8% of the electorate in Berwick upon Tweed. My job was to try and make sure the operation worked, which involved a lot of driving about looking busy.
I think we did well; we had more voters than expected, we managed to call out some who would not otherwise have voted and we think we had a majority of Conservative voters in this area. The result overall was both excellent and disappointing - it was a shame Anne-Marie didn't win, after an excellent campaign and record on helping people in the area, but winning would have been very hard, and she has turned the constituency into a marginal from a safe LD seat. Next time?We didn't have queues at 10.00 at our polling stations - people were much more sensible than that. But the experience in some seats was shameful, and I hope one of the things that the new Government will have time to do as it looks at political reform is to get rid of the Electoral Commission, which is unaccountable, and to focus on proper management of polling day and voting.
Tuesday, 11 May 2010
Principled politics
I know the Lib Dems are now my dearest and most trusted friends, and therefore beyond criticism, but I thought the Guardian's photograph and analysis of the major issues for Clegg (as shown by his notebook) during the negotiations was interesting. For someone caring about the country, they showed a surprising number of issues focused on his and his colleagues' position.
http://www.guardian.co.uk/politics/interactive/2010/may/11/election-2010-coalition-nick-clegg
In the meantime, given the election result, the coalition is the best outcome for Britain. I am pleasantly surprised the Lib Dems signed up to a deal with the Conservatives; I was wrong on thinking they'd only work with Labour so maybe I'll also be wrong in predicting it won't last long. There is one real worry: the appintment of Osborne and Cable to important posts dealing with the economy. Neither are capable and hopefully will be supported by people who are. And of course the bond market investors will be the main drivers of sorting out the economy as we need to borrow so much from them.
Conservative Home (an independent site) has a very good (and lengthy) analysis of "what went wrong" without naming too many names; a summary is here, the list of contents here.
http://www.guardian.co.uk/politics/interactive/2010/may/11/election-2010-coalition-nick-clegg
In the meantime, given the election result, the coalition is the best outcome for Britain. I am pleasantly surprised the Lib Dems signed up to a deal with the Conservatives; I was wrong on thinking they'd only work with Labour so maybe I'll also be wrong in predicting it won't last long. There is one real worry: the appintment of Osborne and Cable to important posts dealing with the economy. Neither are capable and hopefully will be supported by people who are. And of course the bond market investors will be the main drivers of sorting out the economy as we need to borrow so much from them.
Conservative Home (an independent site) has a very good (and lengthy) analysis of "what went wrong" without naming too many names; a summary is here, the list of contents here.
Saturday, 8 May 2010
Where Next?
The smoke filled room discussions that are an inevitable consequence of proportional representation are proceeding.
A couple of weeks ago, I would have been horrified at the thought of a Conservative-Lib Dem coalition or even compromise. There are too many areas of difference, especially in economic policy.
But given the result of the election, it must be right for them to talk especially given Brown's clear intention to hang on as Labour leader until he is forced out.
Cameron's statement on Friday was polished and politically astute - if there is not a deal, he knows that come the next election he can point to it and show he wanted to compromise for the sake of the country; if there is then he can start cleaning up the mess and having a wider group on board should help the implementation of expenditure cuts. The size of the two parties combined in Parliament should also be good for market confidence.
There are clearly some lines that should not be crossed (as there will be for the Lib Dems) but if a deal can be done it will be good. Especially as it may mean there's a focus on the economy rather than on other areas. A hidden benefit could be that a new Government won't start meddling in the detail of how hospitals, schools etc work. Letting front line staff get on with things would lead to better public service.
So I hope the stupid parts of the Conservative party don't try to grandstand and oppose just to make them feel better and as revenge for a pretty badly run campaign. That post mortem can happen later.
However, I still have a sneaking suspicion that:
a) the Lib Dems will do a deal with a Brownless labour, and
b) in any event we'll have another election within 18 months.
A couple of weeks ago, I would have been horrified at the thought of a Conservative-Lib Dem coalition or even compromise. There are too many areas of difference, especially in economic policy.
But given the result of the election, it must be right for them to talk especially given Brown's clear intention to hang on as Labour leader until he is forced out.
Cameron's statement on Friday was polished and politically astute - if there is not a deal, he knows that come the next election he can point to it and show he wanted to compromise for the sake of the country; if there is then he can start cleaning up the mess and having a wider group on board should help the implementation of expenditure cuts. The size of the two parties combined in Parliament should also be good for market confidence.
There are clearly some lines that should not be crossed (as there will be for the Lib Dems) but if a deal can be done it will be good. Especially as it may mean there's a focus on the economy rather than on other areas. A hidden benefit could be that a new Government won't start meddling in the detail of how hospitals, schools etc work. Letting front line staff get on with things would lead to better public service.
So I hope the stupid parts of the Conservative party don't try to grandstand and oppose just to make them feel better and as revenge for a pretty badly run campaign. That post mortem can happen later.
However, I still have a sneaking suspicion that:
a) the Lib Dems will do a deal with a Brownless labour, and
b) in any event we'll have another election within 18 months.
Friday, 7 May 2010
The Morning After..
I'll post on the polling day experience later (when we know the result of our constituency), but first some thoughts on the election result.
I'm obviously disappointed because the result does not lead to a definitive Government and is almost certain to lead to another election within (say) 18 months. The uncertainty over this, and more importantly over which parties will co-operate to form the next Government, has lead to a fall in sterling and a rise in the cost the UK has to pay to borrow. As I noted earlier, this really is money taken out of the economy. Hopefully the parties will sort out who will do what before Monday so they can get on with sorting out public finances.
I'm a bit pleased since the result is in line with my expectations posted yesterday, particularly with my comment that all the parties had a bad campaign.
First thoughts:
- the real unfairness of the voting system remains the unfair distribution of seats and boundaries, hence the reason the Tories do not have a majority despite getting so many more votes. All methods of voting have elements of unfairness; I would be focusing on reducing the number of MPs and making seat distribution fairer before introducing another system.
- this particularly emphasises the different result in Scotland, where the seats largely remained unchanged with a small swing to Labour, to England where there was a sizeable swing to the Conservatives. Scotland has more seats per head than England. Is it time to promote Scottish independence?
- the Lib Dem surge didn't happen. This suggests that the excitement either came from people not registered to vote, or it was just a media hype (very likely), or on reflection people realised the Lib Dems were not promoting anything new.
- I'm rethinking whether there will be a Conservative arrangement with the Lib Dems. It is too soon to resolve this - they need to know the results of all the seats to see just how far from a majority the Conservatives are - but the sudden switch of Labour to wanting voting reform, and their continued promotion of Brown as leader, may make it all a bit too unconvincing.
I'm obviously disappointed because the result does not lead to a definitive Government and is almost certain to lead to another election within (say) 18 months. The uncertainty over this, and more importantly over which parties will co-operate to form the next Government, has lead to a fall in sterling and a rise in the cost the UK has to pay to borrow. As I noted earlier, this really is money taken out of the economy. Hopefully the parties will sort out who will do what before Monday so they can get on with sorting out public finances.
I'm a bit pleased since the result is in line with my expectations posted yesterday, particularly with my comment that all the parties had a bad campaign.
First thoughts:
- the real unfairness of the voting system remains the unfair distribution of seats and boundaries, hence the reason the Tories do not have a majority despite getting so many more votes. All methods of voting have elements of unfairness; I would be focusing on reducing the number of MPs and making seat distribution fairer before introducing another system.
- this particularly emphasises the different result in Scotland, where the seats largely remained unchanged with a small swing to Labour, to England where there was a sizeable swing to the Conservatives. Scotland has more seats per head than England. Is it time to promote Scottish independence?
- the Lib Dem surge didn't happen. This suggests that the excitement either came from people not registered to vote, or it was just a media hype (very likely), or on reflection people realised the Lib Dems were not promoting anything new.
- I'm rethinking whether there will be a Conservative arrangement with the Lib Dems. It is too soon to resolve this - they need to know the results of all the seats to see just how far from a majority the Conservatives are - but the sudden switch of Labour to wanting voting reform, and their continued promotion of Brown as leader, may make it all a bit too unconvincing.
Wednesday, 5 May 2010
National Views
This has been a strange election where none of the three parties has really done well - apart perhaps from the Lib Dems, where a sparkling "we're not like the other two" performance in the first Leaders' debate has increased their polling percentages, but they have not really stood up to scrutiny.
Labour has had a series of disastrous moments - surprisingly for a Party which was so brilliant at presentation, partly because of Brown's general incapacity to deal with human beings and partly because the split between Brownites like Balls and Whelan and Blairites like Campbell and Mandelson has prevented a consistent approach. They are probably down to their irreduceable core vote, and the recent suggestions that people should vote tactically and their emphasis on negativity (don't vote for us because we're good, but because the oitehrs are bad) suggests they know that.
They deserve to lose: they had ideas of sweeping changes in the constitution and the management of public services but failed to implement them properly, leaving much running much more inefficiently, and more importantly they have squandered 1997's successful economic legacy, with Brown leaving behind a really serious public debt problem, the most complex and costly tax code in the world and serious unemployment, especially in the young. (I'm not going to link to all those points - they are discussed in more detail in my earlier blogposts).
A neighbour yesterday told me that the UK was not as bad as Greece; I'm not sure about that. We have one major advantage: we are not in the Euro, so have more flexibility to devalue sterling (so increasing inflation and interest rates) to stimulate exports and reduce the value of debt we owe externally. But our total exposure is worse, and we have massive uncounted liabilities from public sector pension liabilities and PFI spending. Just like Greece we are perfectly happy spending other people's money; unlike Greece, we haven't had to start paying it back yet.
Brown was featured in a double page spread in the Times today; they commented on his continual emphasis on child tax credits. A good idea perhaps - but so typical of him. He has created a complex and costly structure so that many who need help can't get it and those who do get it become dependent. But that is how Brown got and wants to keep power: to lock people into dependency and to deprive them of opportunity to break away. Little does he care about the effect of his detailed tax and benefit structures as long as he can be boss. Hopefully, whatever else is the result of this election, he will go.
The polls show that the Lib Dems had a sparkling first part of the campaign, overtaking Labour and equalling the Tories. As time has gone on, the sparkle is a bit tarnished. The Lib Dems policies have not stood up to scrutiny in many areas - immigration, the Euro and Europe and defence to name some, and regular readers will know my view that Cable is incompetent. Some of their tax policies have merit but others appear designed to prevent business growth. The Lib Dems are an old party with as many dubious donations as anyone else (if not more), and with electoral behaviour worse than most. The main problem for me is that the Lib Dems have not really spelled out how they will behave in the event of a hung Parliament, and they have not really convinced they can match the rhetoric. Not being Labour or Tory isn't really a convincing slogan, nor a recipe for long term success.
The Tories have had a poor campaign nationally. Never mind the tactical error of encouraging the leadership debates and allowing Clegg an equal platform, they have not sounded honest on the economy (because despite sounding the right warnings during the 80s and at the last party conference, they have not said just how bad things are and will be) and have not sounded convincing on social issues (by focusing on concepts like "the big society" rather than on the need for freedom and a smaller state). Like Labour, they have to cope with two camps running their campaign. And because many voters have not yet suffered from our economic problems - we are spending other people's money and have not been asked for it back - the Tories are worried that too negative a message won't chime with voters. Cameron has tried all the way through to be positive and optimistic. Despite a poor performance, the Tories offer two things which mean they deserve to be elected:
- they recognise that public spending is not the only answer to problems;
- they believe in the private sector, that economic growth is ultimately what pays for things and will pay for us to get out of debt.
What will happen? I've consistently thought there will be a hung Parliament, which will inevitably increase uncertainty and therefore harm the economy. It's also hard to see such a situation lasting for four or five years, suggesting a further election quite soon.
I think one of two things will happen: a Lib/Lab pact if the Tories don't get enough seats to have a go, and a Tory minority Government if they do. I'd hate to see a Lib/Tory pact because we won't get proper policies and the Tories would get the blame. But lets wait and see....
Labour has had a series of disastrous moments - surprisingly for a Party which was so brilliant at presentation, partly because of Brown's general incapacity to deal with human beings and partly because the split between Brownites like Balls and Whelan and Blairites like Campbell and Mandelson has prevented a consistent approach. They are probably down to their irreduceable core vote, and the recent suggestions that people should vote tactically and their emphasis on negativity (don't vote for us because we're good, but because the oitehrs are bad) suggests they know that.
They deserve to lose: they had ideas of sweeping changes in the constitution and the management of public services but failed to implement them properly, leaving much running much more inefficiently, and more importantly they have squandered 1997's successful economic legacy, with Brown leaving behind a really serious public debt problem, the most complex and costly tax code in the world and serious unemployment, especially in the young. (I'm not going to link to all those points - they are discussed in more detail in my earlier blogposts).
A neighbour yesterday told me that the UK was not as bad as Greece; I'm not sure about that. We have one major advantage: we are not in the Euro, so have more flexibility to devalue sterling (so increasing inflation and interest rates) to stimulate exports and reduce the value of debt we owe externally. But our total exposure is worse, and we have massive uncounted liabilities from public sector pension liabilities and PFI spending. Just like Greece we are perfectly happy spending other people's money; unlike Greece, we haven't had to start paying it back yet.
Brown was featured in a double page spread in the Times today; they commented on his continual emphasis on child tax credits. A good idea perhaps - but so typical of him. He has created a complex and costly structure so that many who need help can't get it and those who do get it become dependent. But that is how Brown got and wants to keep power: to lock people into dependency and to deprive them of opportunity to break away. Little does he care about the effect of his detailed tax and benefit structures as long as he can be boss. Hopefully, whatever else is the result of this election, he will go.
The polls show that the Lib Dems had a sparkling first part of the campaign, overtaking Labour and equalling the Tories. As time has gone on, the sparkle is a bit tarnished. The Lib Dems policies have not stood up to scrutiny in many areas - immigration, the Euro and Europe and defence to name some, and regular readers will know my view that Cable is incompetent. Some of their tax policies have merit but others appear designed to prevent business growth. The Lib Dems are an old party with as many dubious donations as anyone else (if not more), and with electoral behaviour worse than most. The main problem for me is that the Lib Dems have not really spelled out how they will behave in the event of a hung Parliament, and they have not really convinced they can match the rhetoric. Not being Labour or Tory isn't really a convincing slogan, nor a recipe for long term success.
The Tories have had a poor campaign nationally. Never mind the tactical error of encouraging the leadership debates and allowing Clegg an equal platform, they have not sounded honest on the economy (because despite sounding the right warnings during the 80s and at the last party conference, they have not said just how bad things are and will be) and have not sounded convincing on social issues (by focusing on concepts like "the big society" rather than on the need for freedom and a smaller state). Like Labour, they have to cope with two camps running their campaign. And because many voters have not yet suffered from our economic problems - we are spending other people's money and have not been asked for it back - the Tories are worried that too negative a message won't chime with voters. Cameron has tried all the way through to be positive and optimistic. Despite a poor performance, the Tories offer two things which mean they deserve to be elected:
- they recognise that public spending is not the only answer to problems;
- they believe in the private sector, that economic growth is ultimately what pays for things and will pay for us to get out of debt.
What will happen? I've consistently thought there will be a hung Parliament, which will inevitably increase uncertainty and therefore harm the economy. It's also hard to see such a situation lasting for four or five years, suggesting a further election quite soon.
I think one of two things will happen: a Lib/Lab pact if the Tories don't get enough seats to have a go, and a Tory minority Government if they do. I'd hate to see a Lib/Tory pact because we won't get proper policies and the Tories would get the blame. But lets wait and see....
Local Views
The local paper last week had an interview with the candidates from the three main parties (Alan Beith, LD; Anne-Marie Trevelyan, Con; Alan Strickland, Lab) asking for their views on six topics – their political philosophy, the A1, rural issues, immigration, youth unemployment and a hung parliament.
Most are as you’d expect from their parties and the manifestos (during the election period, see top left of blog for links to the party manifestos); there are a couple that aren’t:
A1: Beith thinks it should be a strategic road and dualled, although his party doesn’t want to spend money on road enhancements of this type.
Immigration: Beith believes there should be more control and a system people should have confidence in – yet the proposed amnesty will not help this.
I don’t think an MP having different views from his party is a bad thing; but Beith’s lack of position within his party (he wasn’t even in the top 50 most influential Lib Dems last year) means he lacks influence and people voting for him need to be aware that they are really voting for a different set of beliefs than his.
Talking to people on the doorstep is always interesting. I sense a frustration that politicians can’t be trusted, a concern that not enough has been done to support North Northumberland, a real interest in what is going on and a surprising indecision about how to vote. I think the Conservative vote will be stronger than people expect because of a need to change. Will it be enough?
On the eve of polling, I’ll repeat my thoughts from the beginning of the campaign:
Nationally, the country has serious economic problems. We are the slowest recovering G20 economy with one of the biggest public sector deficits in the world. We have also had over a decade of largely ineffective initiatives with a new law being passed for almost every day Labour have been in power. The Conservatives are believers in small Government and sound finance – they have a record of achieving higher employment and better finances. In turn, every Labour Government has left office with more unemployment and a bigger public sector deficit than when they came into office and this one looks like being no different. If there is to be a change in Government, constituencies like Berwick need to become Conservative.
Locally, whatever individual help people have received from Alan Beith, this area has suffered from under-investment. This must at least partly be due to the fact that we do not have an MP from one of the parties of Government. Anne-Marie has in a short time made progress on many projects, such as launching the most recent dual the A1 campaign, helping get money for the new harbour wall at Seahouses and getting a mobile MRI scanner to Berwick Infirmary. I think we now need someone of her energy as MP.
Most are as you’d expect from their parties and the manifestos (during the election period, see top left of blog for links to the party manifestos); there are a couple that aren’t:
A1: Beith thinks it should be a strategic road and dualled, although his party doesn’t want to spend money on road enhancements of this type.
Immigration: Beith believes there should be more control and a system people should have confidence in – yet the proposed amnesty will not help this.
I don’t think an MP having different views from his party is a bad thing; but Beith’s lack of position within his party (he wasn’t even in the top 50 most influential Lib Dems last year) means he lacks influence and people voting for him need to be aware that they are really voting for a different set of beliefs than his.
Talking to people on the doorstep is always interesting. I sense a frustration that politicians can’t be trusted, a concern that not enough has been done to support North Northumberland, a real interest in what is going on and a surprising indecision about how to vote. I think the Conservative vote will be stronger than people expect because of a need to change. Will it be enough?
On the eve of polling, I’ll repeat my thoughts from the beginning of the campaign:
Nationally, the country has serious economic problems. We are the slowest recovering G20 economy with one of the biggest public sector deficits in the world. We have also had over a decade of largely ineffective initiatives with a new law being passed for almost every day Labour have been in power. The Conservatives are believers in small Government and sound finance – they have a record of achieving higher employment and better finances. In turn, every Labour Government has left office with more unemployment and a bigger public sector deficit than when they came into office and this one looks like being no different. If there is to be a change in Government, constituencies like Berwick need to become Conservative.
Locally, whatever individual help people have received from Alan Beith, this area has suffered from under-investment. This must at least partly be due to the fact that we do not have an MP from one of the parties of Government. Anne-Marie has in a short time made progress on many projects, such as launching the most recent dual the A1 campaign, helping get money for the new harbour wall at Seahouses and getting a mobile MRI scanner to Berwick Infirmary. I think we now need someone of her energy as MP.
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