Thursday, October 28, 2010

Lord Heseltine said the last 60 years had seen
the transfer of wealth, decision making and power from the provinces to London. It has gone on and on and it has certainly had an adverse effect. Something that has taken 50 or 60 years to make the profile of the British economy is not going to change in six months but it is important to recognise the imbalance and to pursue policies to do something about it.
Which is why they are launching the Regional Growth Fund, chaired by the noble Lord and centrally based.

It now appears that part of the process on deciding on bids for a slice of the regeneration cake (now only a third of the size it was) will involve recommendations made to a ministerial panel, leaving the final decisions on the spending of £1.4 billion over the next three years firmly in the hands of the politicians. As Eric Pickles is on that panel, any bid involving pies can expect to be treated preferentially.

Red Boris - defender of the poor

The last thing we want to have in our city is a situation such as Paris where the less well-off are pushed out to the suburbs. I'll emphatically resist any attempt to recreate a London where the rich and poor cannot live together...

What we will not see and we will not accept any kind of Kosovo-style social cleansing of London. You are not going to see, on my watch...thousands of families being evicted from the place where they've been living and where they have put down roots. That is not what Londoners want to see. It's not what we're going to accept.

'Red' Boris Johnson talking to the BBC. For political reasons, Boris needs to be on the right side of this argument, as he will face re-election in 2012 (unless a return to the Commons were to be required in advance of the defenestration of Cameron). Boris knows that there is little chance of the dust having settled on the economy and he will want to insulate himself from the fallout that will damage all coalition local election candidates. In this, he will find support from the dozen Tory MPs who raised their concerns in a meeting a couple of days ago.

While both Nick Clegg and David Cameron have lashed themselves firmly to the mast of this benefit cut, I still suspect that some resolution will be found to quietly ameliorate the effects of whole slate of cuts and tweaks to housing benefit, assuming Osborne can be brought on board. That said, the rhetoric being emitted from the Coalition remains solidly committed to resettling the poor away from the centre of London.

LEP falls short

An announcement is due later today on the progress of the Local Enterprise Partnership schemes, but the noises coming from the BIS are less than positive. Vince Cable, now a full-time resident of a fantasy world, told a parliamentary committee
We are not providing a budget for LEPs. They can bid for money from the RGF. We don’t envisage large start up costs with offices funded by government. Those days are over.
Although the mood music on this has changed and it looks as though the Regional Growth Fund will pass money down to the LEP, even if it only has £500m a year over the next three years to spend nationally. With local authorities facing annual cuts of 7%, they will focus on their statutory duties to the exclusion of the 'nice to have' items - will they be willing to put staff to work on starting the LEP? Businesses will be willing to lead on developing an organisation with real power to deliver, but these LEPs are starting to emerge as toothless talking shops with no delivery mechanism.

But what of the assets of the RDAs? The gameplan seems to be that the government will assume ownership and dispose of them to defray the cost of the liabilities. Ironically, Allister Hayman at the Local Government Chronicle reckons that once you add the cost of these liabilities into the costs of the RGF, you get a figure not a million miles away from the costs of continuing the RDAs over the next few years.

Wednesday, October 27, 2010

Hemming - the nation's most ridiculous MP?


The MP, a lost cat and a stolen kitten

In a crowded field the person who holds the crown as the nation's most ridiculous MP is surely John Hemming, the Liberal Democrat millionaire who sits for Birmingham Yardley. His blog carries "lost cat" appeal for Beauty, and an offer of a reward. Yesterday, Christine Hemming, the MP's wife, appeared in court charged with breaking into the home of Emily Cox, the MP's lover, and stealing a kitten. When asked whether she preferred to be addressed as Mrs or Miss, she replied: "I'm not quite sure." You would think, under the circumstances, that the last thing he would want to do is announce that a kitten has gone missing.
Incidentally, this story has gone global, having been picked up by the New York Times, the Melbourne Herald-Sun, the Toronto Sun, MSNBC in the US and detailed coverage by the Daily Mail over here, with quotes from Mrs Hemming and someone close to the MP.
A source close to the MP said of his living arrangements: ‘John’s love life is tangled to say the least. He has been living in two places for a long, long time, apparently maintaining relationships with Emily and Christine. He hasn’t formally split up with either woman, but when his wife is accused of stealing his girlfriend’s kitten, it cannot be easy to maintain good relationships with both'
Quote of the week comes in the Evening Mail from John, which I think rather understates the gravity:

This situation does apply a challenge to any relationship, however strong

I see your graph and raise you another graph

John Hemming claims that the government's economic policies are

in many ways traditional keynsian
demonstrating either a shocking misunderstanding of Keynsian counter-cyclical theory or a shockingly poor attempt to spin examples of classical economic theory - the same sort of theory that led to the Depression. He maintains the fiction that Labour are arguing against any sort of cuts - which is utter drivel, as Ed Miliband has backed the Darling proposals to halve the deficit over the course of this parliament (although I would actually back the Ed Balls approach of running the deficit down over a slightly longer period). In any case, we do not back slashing government economic sustenance until the private sector is suitably ready to pick up the slack.

And here's my graph, showing the gilt trend over almost two decades, showing that government borrowing has been consistently more affordable since Norman Lamont was last in charge. The trend has been inexorably downwards. There is no evidence to support John's claim that gilt interest rates were about to rocket skyward - government bond issues were easily subscribed, indicating a good demand for them and the low rates are certainly not indicative of a market demanding premium rates. Still less was there any risk of a sovereign debt crisis.

Tory MPs defend benefit claimants in London

It comes to something when you look to the Conservatives to defend the poor in our society.

Over the weekend, we had Nick Clegg defending the cuts to Housing Benefit, telling us of the the moral pain that he had been through when deciding to back measures that will tear apart families and take children away from schools. This from the man who claimed over £23,000 from the additional costs allowance, who thought nothing of charging the costs of his gardener to the taxpayer, but finds it morally difficult to cut spending on people. He does feel your pain though - he's had to stop shopping with Ocado.

Last night, it emerged that some of London's Tory MPs have met to express their concern over the plans to slash benefit in the capital and put thousands at risk of eviction and removal to cheap accommodation outside the city. They have asked for a delay in implementation or for some transitional relief for those affected.

These shifts will have a profound effect on the areas used to decant the unwanted and undeserving poor. The councils will not have sufficient provision to educate the children removed from the city and other services will simply lag well behind the demand. It could be even worse, as local authorities will be given powers to adjust terms under which council tax benefit is paid - potentially removing all but the very poorest from its protection.

Who is speaking in the heart of government for the 14,000 people likely to be affected in Birmingham? Andrew Mitchell? John Hemming? Anyone care?

Nick Clegg claims to have searched his conscience. Perhaps he left it on his desert island.

Paul O'Grady rants against the Tories

He's mad as hell and he's not going to take it anymore. Scousers still don't like the Tories.

Any answers Mr Hemming?


Local members of the Communication Workers Union have been trying to find out their MP's stance on the privatisation of the Royal Mail, but he has declined to meet their representatives, citing a need to serve his constituents as a priority - not that this has kept him in the past from speaking at the World Toilet Summit in Belfast.

I'm a constituent of Mr Hemming and I'd like to know if he supports this government's plans to privatise the Royal Mail. It is a matter of concern to many people in Yardley and we certainly found a good deal of support for keeping the service public when we've been out on the streets campaigning.

Tuesday, October 26, 2010

New Tory MEP for West Midlands

The Electoral Commission confirmed today that they have recommended that the UK's additional European Parliamentary seat, now available following the Lisbon Treaty ratification, be awarded to the West Midlands.

This could be good news for Tory Anthea McIntyre, who is expected to become a full MEP in due course.

Monday, October 25, 2010

Iniquity and inequality on housing benefit

One of the nastiest benefit changes - in a strong field of vicious attacks on some of the poorest and ill-protected in our society - is on housing benefit.

If you are unemployed for a year, you will face a 10% cut in benefit. Perhaps your landlord might be understanding and reduce your rent accordingly - this is clearly the hope of the government, as they attempt to reshape the market to save money. I wouldn't bet on that happening - and research for London Councils says that it won't.

If you are under 35, you will be deemed not to require sole occupancy of a property, so benefit will be paid only at the shared home rate - including to existing claimants.

If you happen to live in an area with high rental costs, your benefit will be capped to force you to relocate.

The upshot is that thousands of people will be forced to move away from their current housing - forced to find two or three months' rent up front for a deposit, to cover their moving costs and to move away from their children's schools, their family and social supportive network and even to leave their jobs, because many working people on a low wage rely on housing benefit to top up their income if they live in some of the more expensive areas of the country - like London. While the Tories highlighted a tiny number of excessive claims, this was only an attempt to justify inflicting pain on thousands more families. According to Helen Williams of the National Housing Federation,

Almost 100% of claimants will be worse off. There's a very real risk that these cuts will push hundreds of thousands of people into poverty, debt and even on to the streets if they end up being evicted.
The amount lost will vary, but it averages at £11-12 a week - and that is a considerable chunk of money. Sajid Javid, Tory MP for Bromsgrove, dismissed it on the Politics Show last week, but when your sole other income is jobseekers allowance at £65 a week, finding an additional £11 to keep a roof over the heads of you and your family will put many into impossible positions - 170,000 pensioners, 240,000 low paid workers and half a million others are expected to suffer this. For many, the gap will prove impossible to fill, especially with inflation and pay freezes, so they will have to throw themselves on the mercy of their local authority, who will insist that you wait for the eviction notice to be served before they look at rehousing, degrading people still further by the prospect of court action. Even better, those who have been evicted may face a money judgement, which will hammer their credit score and reduce further their chances of getting a mortgage in the future (and believe me, it isn't easy for a first-time buyer at the moment) or of finding reasonably priced accommodation, as landlords will be understandably wary of taking on a previously-evicted tenant.

Local authorities are planning ahead. Dave Hill expands on a report from Inside Housing that those in London are already talking to landlords as far afield as Hastings, Watford, Slough, Reading and Luton. Bed and breakfast accommodation is being considered as suitable for long-term occupation, rather than just emergency cases. I understand that Birmingham is about to start a similar conversation with landlords outside the City, as there will be an expected exodus of 14,000 claimants in Birmingham.

Interviewed on the Andrew Marr show this Sunday, Nick Clegg can only see the money and he commented that

We need to do something about a housing benefit bill which has gone up from
£10bn to £21bn in recent years under Labour and there haven't been enough
affordable homes built.
He said that it was not fair that those people who went out to work got less help with accommodation than those who did not. Surely the point is that we expect those who are earning to pay more towards their housing costs? Very few people actually get enough housing benefit to cover all the costs - contributions are the norm - and it seems fair that as you earn more, so that benefit decreases. Clegg seems to have a very variable definition of 'fair.' His ideas for building homes are also intriguing, as they rely on halving the budget for homes and relying on new tenants to pay higher rents to support further building (rents that will be part subsidised by Housing Benefit in many cases).

As I've noted elsewhere, we didn't build enough council or housing association properties while in government. That was a key mistake by the Labour Party, but it is rectifiable. A proper building programme - not one slashed in half, but one that is doubled or more - would create jobs for the depressed construction sector, employing many low-wage workers and create real infra-structure for the future. It would be real value for money and it would provide homes.

This policy amounts to far more than a money-saving wheeze by the government, it is a plan for social and electoral engineering on a scale that would stun Shirley Porter, former leader of Westminster and the current postergirl for this gerrymandering.

John Cruddas said, rightly
"It is tantamount to cleansing the poor out of rich areas – a brutal and shocking piece of social engineering"
and the chief executive of the National Housing Federation, David Orr, added
"Unless ministers urgently reconsider these punitive cuts, we could see more people sleeping rough than at any stage during the last 30 years."

As mentioned in an earlier post, I half expect to see these plans softened as part of the presentational scheme to demonstrate the moderating influence that the Liberal Democrats have on the Tory slashers. I hope that this is part of that staged theatrical performance and will not go through untouched by parliament, because any MP that supports this policy as is should hang their head in shame.

It is wrong.

Not quite the whole truth...

"I signed a pledge to get a fairer system"
John Hemming, 24 October 2010, Politics Show West Midlands

Only half right. You actually signed a pledge promising
"To vote against any increase in fees in the next parliament and to pressure the government to introduce a fairer alternative."
At the time, Nick Clegg was unequivocal
"The Liberal Democrats are different. Not only will we oppose any raising of the cap, we will scrap tuition fees for good, including for part-time students . . . Students can make the difference in countless seats in this election. Use your vote to block those unfair tuition fees and get them scrapped once and for all."

Clegg's announcement of a new cap on fees - a modification of the Browne report - is an example of the clever politics being played by the government. While clearly planned all along, it allows the Tories to appear tough, while the Liberal Democrats claim to be a moderating influence, even if they have to compromise on a key pre-election pledge. Expect something similar to happen on the iniquitous plans for housing benefit, as Simon Hughes has poked his head above the parapet to lead a fake 'revolt' which will result in the policy being moderated.

The Liberal Democrats really must stop playing fast and loose with the facts of history.

Hemmingnomics

I've ridiculed politicians who simplistically compare the national economy to running a household, but we have a new winner in the Ignoble Economics category, John Hemming, MP for Yardley. Here's his concise history of the economic crisis in a verbatim transcript from Sunday's Politics Show West Midlands

"You can perhaps imagine the situation - the Labour Party were piloting a plane, a crocodile got loose on the plane and it went into a steep dive and what we're trying to do is pull it out of that dive"
That proved impossible the last time a crocodile escaped on a plane, so perhaps that wasn't just tasteless, but a very bad example to choose. On a campaign to improve public understanding of economics, John then switched metaphors in mid-flight and started talking about cake - perhaps he misses the £400 a month he used to claim for food:

What's happened is the national cake is now smaller than it was before the recession and we're proposing that after four years we get back to, say you divide into five slices, two of the slices are on public services. That's more than under the first two Blair governments, so we're not talking about massive cuts in terms of the proportion of the national cake that's spent on public services. The Labour Party's alternative is to go the Greek style, spend our way out of trouble, spending your way out of trouble doesn't get you anywhere.
Actually, there is evidence to say that it does and nobody has yet proposed paying for public services with baked goods, although a form of barter economy cannot be far away with Osborne in charge. But let us talk about the 'Greek style.' This refers to the spiralling cost of Greek government debt and the potential for the Greeks to default on those sovereign debt commitments - the two are interconnected. Curiously, John hasn't always been so worried about Greece - back in March this year, he wrote that
"...it is clear that we are not in the greek territory."
This is against a background of an 18 year decline in the yields on UK government ten year gilts - the cost of British government borrowing has been declining since John Major was in government, as compared to rocketing costs of Greek borrowing, a sign of the faith that the market has in the ability of governments to repay borrowings.

Now I'm no economist - although I am as qualified as George Osborne is in that capacity - so let's take the views of a man who has just won a Nobel Prize for economics, Professor Christopher Pissarides, perhaps slightly better qualified than John Hemming in these matters

"It is important to avoid this sovereign risk. But in my view, Britain is a long way from such a threat and the chancellor has exaggerated the sovereign risks that are threatening the country... Unemployment is high and job vacancies few. By taking the action that the chancellor outlined in his statement, the situation might well become worse.... These risks were not necessary at this point. He could have outlined a clear deficit-reduction plan over the next five years, postponing more of the cuts, until recovery became less fragile. The sovereign risk would have been minimal."
And while we're sampling the views of Nobel prize-winners, let's see what Paul Krugman thinks,

Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages. Or if you prefer more British precedents, it echoes the Snowden budget of 1931, which tried to restore confidence but ended up deepening the economic crisis....

...it was all about the apocalypse looming if Britain failed to go down this route. Never mind that British debt as a percentage of national income is actually below its historical average; never mind that British interest rates stayed low even as the nation’s budget deficit soared, reflecting the belief of investors that the country can and will get its finances under control. Britain, declared Mr. Osborne, was on the “brink of bankruptcy.”

What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.
I will keep saying it. This is a high risk strategy and it is a gamble - the historical antecedents for Osborne's action, so lovingly backed by the Liberal Democrats - are very poor. I desperately hope that Krugman is wrong and that we bump through with low growth, but only because the alternative will be so much worse for millions of people. The fact that if Krugman is right and in 2015, MPs like John Hemming will be out of work and forced to rely on their millions is scant comfort for the pain that will be inflicted on ordinary families.

Thursday, October 21, 2010

Tory MP admits making most of it up.

70% of everything Nadine Dorries writes on her website (it isn't a blog as you can't comment on it) is fiction. This woman is just an embarrassment to the Conservative Party.

Seems you can make it up.

In pursuit of beauty. Meow.


I think we can say that it has been an odd kind of day for two MPs in particular.

First and foremost for political observers in Birmingham, is John Hemming, MP for Yardley, who has taken his campaign to replace Lembit Opik as the joker in the Liberal Democrat pack to new heights. He used his website to publicise the search for a missing kitten, Beauty and I'm only to happy to throw the weight of the PoliticalHackUK posse behind the search for his daughter's kitten. We've lost three kittens over the years - mostly to traffic - so I understand how awful it is. Besides, John needs cats to guard the drinks cabinet.
Rapidly, the story moved on, as John's wife faced the Birmingham magistrates, having been charged with burgling the home of John's lover, Cllr Emily Cox and the theft of a tabby kitten, valued at £20. Sometimes, you just can't make this stuff up. Naturally, now charges have been laid, the matter is sub judice and I feel constrained from commenting further, other than to note that this story has some way to run yet. There will be a trial at the Crown Court and other things may develop as John has described his domestic status as 'an unclear situation.' Not for the first time.

Monday, October 18, 2010

And while I'm at it, John Lines was on as well

Cllr Lines spent his interview on the Politics Show deflecting questions by pointing ahead to the spending review on Wednesday and suggesting we should wait to see the outcome of that, although the information released to date suggests that if anything, the forecasts that 14,000 people will be forced to move out of their homes in Birmingham and into cheaper properties will prove an underestimate. Sajid Javid, the well-heeled MP for Bromsgrove pooh-poohed the report, claiming that the average loss under the proposals will be £9 a week, although that is scant comfort for those facing larger losses who will certainly be forced to relocate.

John Lines then told us that fewer houses had been built under Labour than at any time since 1921, a figure that dates from a 2002 survey and relates to the building of all properties, not just local authority/social landlords, measured against population. That may even be questionable, as we only built 49,000 homes in 1946, compared to the average of 145,000 built during the Labour years in office, according to figures from the Department of Communities and Local Government.

As might be expected, the picture is rather more complicated than John Lines wants you to realise. On average since 1946, the private sector - beloved of the Conservative Party - has built around 125,000 homes a year, with a big boost in the 1960s. The real downshift in housebuilding happened during the 1980s, under Margaret Thatcher - equally beloved of the Conservative Party - when councils effectively stopped building houses. Up until 1979, local authorities built an average of 120,000 houses each year, not hugely out of pace with the private sector over the same period, but after Thatcher came to power and demanded the sale of council houses, the construction rate plummetted, to the point where fewer council houses have been built since 1986 than were built in 1977 alone.

By the way, John Lines is the only man in the country who actually believes that Thatcher wanted to reinvest the proceeds of those council house sales in new council house building:
When the homes were being sold, Margaret Thatcher had a vision that the money should be re-invested into public housing. It never actually worked out that way. Money was spent elsewhere.

But I digress.

I make no bones about it, Labour dropped the ball on this one for the past thirteen years - partly out of fear of deflating the housing market by increasing supply. We should have built more council properties and this was one of the major failings of our government. Despite their best efforts, social landlords have proved unable to pick up the slack - not helped by local authorities like John Lines' Birmingham, which have preferred to sell land to private developers rather than helping the housing associations build new affordable rented properties.

So what of the future? This government has promised to build more houses than the last, but as with many promises from the Conservative/Liberal Democrat coalition, it may prove to be entirely worthless. The most recent drop, in the 2009/10 financial year, saw only 113,000 houses completed, the worst since 1923 (excluding the war years and 1946), according to the National Housing Federation ('scaremongerers' in the words of Cllr Lines). This was entirely due to a massive drop in private sector construction completions, no doubt aided by a new reluctance on the part of lenders to grant mortgages and demonstrating how the market - beloved of the Conservative Party - cannot be the sole solution to our nation's problems.

Following Tory NIMBY policy, regional targets for housebuilding have been scrapped, gardens have been redesignated greenfield land and housing density rules have also been removed. According to the Federation, these changes have already led to the scrapping of plans to build 160,000 homes and many more will be added to the list. The following local authorities have already announced reductions in the number of new houses planned for their areas:
Milton Keynes Central – 13,360 homes
Luton/Central Bedfordshire – 10,650 homes
Horsham District Council – 6,888 homes
Exeter City Council – 3,000 homes
Bristol City Council – 9,560 homes
Torbay Council – 5,000 homes
Cotswold District Council – 900 homes
North Somerset Council – 10,750 homes
North Hertfordshire Council and Stevenage Borough Council – 9,200 homes.
Add to that an 80% cut in funding for affordable housing through government grants that helped Housing Associations build 50,000 houses last year, a cut likely to reduce new affordable home building to a trickle. More than that, these budget cuts will put the construction industry - already battered by the recession - onto its knees and could threaten 40,000 jobs out of the industry. This is butchery and economic stupidity on a grand scale by Osborne. Right now is the time to build, get people into homes, keep people in work and build the infrastructure for the future.

Cllr Lines was negative about the performance of the last government in building new houses. On current showing, while inadequate for the demand, they look to be generous when we compare them with the policies of the current government, which seem to be designed to discourage home building by anybody. The crisis is set to get worse and Cllr Lines has no answers.

Lorely Burt - economics titan

In yesterday's interview on The Politics Show, Lorely Burt, the current Lib Dem MP for Solihull, demonstrated her knowledge of economics by proclaiming that

"We've got more debt than anyone else in the G20"

Except, of course, that we haven't.

Running with the figures from the IMF and their handy reporting tool demonstrates that for 2009, the last year for which actual figures are available, for gross debt measured against GDP, the UK is 9th out of the G20, below the US, France and Germany. It is even below that of Canada, cited by many as an example of how to export your way out of a recession (only achieved in the 1990s because of a surge in global demand, conditions in no way comparable with the present day). The forecasts for this year see Britain rise to 7th in the table, a position broadly analogous with France and Germany, but the top spots remain unchanged. However you cut it, we've got a long way to go to clamber past Japan at the top of the table, although there is a distinct possibility that we might face a similarly stagnant economy thanks to the plans from that idiot boy Chancellor Osborne. (For anoraks, the reason that only 19 countries are listed is that the 20th member is the EU itself and I didn't include that). For those of you still not asleep, Ireland ended 2009 with national debt just below ours on 65%, but is predicted to leap to 94% this year and continue on upwards in the general direction of Italy's performance.
Despite the certainty of her delivery, I'm going to be charitable and put it down to confusion because of the pressure of a live interview to time, but given the persistent dishonesty from the Conservative/Liberal Democrat coalition over statistics and simple historical facts, you never know.

Friday, October 15, 2010

Further reading.

As always, Professor David Blanchflower is worth a read in the New Statesman, making his usual cogent arguments about Tory economic policy. In a similar vein, do take a glance at Robert Skidelsky in the FT, who criticises the Labour party for not being sufficiently Keynsian and slamming the Conservatives and the Liberal Democrats for believing that the state is 'crowding out' the private sector in the middle of a recession, something that is fundamentally illogical and, indeed, counter to the principles of the market.
When an economy is growing to trend with a low level of unemployment, "crowding out” applies, and the budget ought to be balanced at modest level of taxes and spending. But when it has large unemployed resources, the Keynesian theory is best, and the government should not be ashamed of running a deficit. A
properly Keynesian opposition would say that the budget balance should be dictated by economic circumstances, not by some arbitrary timetable: who knows what the situation will be in two, three, four years’ time?


I understand the political problem, but I can't help but feel that Ed Miliband has missed a trick by not appointing either Yvette Cooper or Ed Balls to the Shadow Chancellor's post. Balls in particular has demonstrated a real hunger to get at the Tories and he certainly has the intellectual economic firepower to wither Osborne as the economy teeters on the brink of recession. Alan Johnson has many sterling qualities and his life story is a great narrative to hold against that of the privileged Osborne, but I would feel happier knowing that an economist was at the helm of policy. However, Ed Miliband is a serious economist in his own right and Balls and Cooper aren't far away to support him, so the firepower behind Johnson is quite significant. Mehdi Hasan makes a proposal for the new shadow Chancellor - shift the balance of deficit repayment to 50/50 tax and cut, even more credible when you realise that the savings so far proposed by the government aren't likely to bear any fruit until the 2012/13 tax year at the earliest, whereas tax increases could be in place much sooner, targetting those who are still doing rather well out of the economy, the bankers.
This is the message Labour must promote: cutting spending is not the same as cutting the deficit. The new shadow chancellor, Alan Johnson, has joked that he plans to buy an economics primer to prepare for his new post. I have a better suggestion for him: reread Balls's speech. Or alternatively go online and download a research paper entitled "The Economic Consequences of Mr Osborne", co-authored by Victoria Chick, emeritus professor of economics at University College London, and Ann Pettifor, one of the few British economists who can credibly claim to have predicted the crash. Having studied the data from 1918 to 2009, they conclude: "The empirical evidence runs exactly counter to conventional thinking. Fiscal consolidations have not improved the public finances . . . Consolidation increases, rather than reduces, the level of public debt as a share of GDP and is, in general, associated with adverse macroeconomic conditions."
Hasan points out that there is a precedent for a 50/50 share and it would be hard for the Tories to deny
In his Budget statement, in November 1994, the then Conservative chancellor and current Justice Secretary, Kenneth Clarke, told MPs that a 50:50 ratio would "meet the objective of healthy public finances". Norman Lamont, Clarke's predecessor in No 11, also matched spending cuts with tax rises, as did Sweden (53:47) and, to a lesser extent, Canada (60:40) in the 1990s - two countries routinely held up as models of fiscal consolidation by deficit hawks.
The main push now is to have clear policies in place for the spending review next week, explaining where we would follow and where we would differ. The difference is the key, because if the economy tanks again next year, then if we are just pale shadows of the Tories, we cannot claim to have offered a real alternative - even if the public seem to have forgotten that the Tories would have adhered to our spending plans up to 2008. This would put clear water between us and the coalition, allowing us to argue that we expect the banks to bear their share of the costs of the deficit and would have broad international support into the bargain.

So come on Ed, be bold. Be brave.

You know when you've been quangoed

And so the flames rise up around the quangocracy, but hardly a raging conflagration, more of a sputtering camp fire, because it has become apparent to the ministers now taking a hard look at the hated quangos that many of them actually perform useful functions. These will be redeployed into other organisations or subsumed back into government and some of the changes actually make sense - the idea of a three year review period isn't a bad one either, as it is clear that a number of the function performed by some of these bodies have actually fallen away or are no longer required.

The peculiar thing is that this is apparently being done to save money and to make accountable these unelected and apparently wildly out of control bodies. The first principle there seems distinctly dubious, as none of these supposed savings will be realised until 2012/13 at the earliest and it looks unlikely that there will be an awful lot of extra cash to drop back into the coffers. As we know, scrapping the RDAs has revealed liabilities of something north of £2 billion and there is plenty more iceberg there to be found, as will be revealed.

The HFEA is to be scrapped, even though only a small amount of the annual budget is actually paid by the government and that will be dwarfed by the costs of bringing the statutory regulatory activities back into government, with no real savings at the end of the process - restructuring between 2005 and 2009 cost £750 million. The Institute for Government has prepared an interesting report, Read Before Burning, which explains some of the issues at stake here. The vast majority of the non-departmental public bodies are tiny, with budgets of only a few thousand for secretariat duties - 80% of the quango spending is concentrated in just 15 of the 800 or so bodies and much of that tends to be grants funnelled through the organisations to others. Pieman Pickles gleefully scrapped the Audit Commission, but councils will still need auditors and the experienced personnel at that body are simply going to take their business into the private sector and increase their day rates to match the big players there, which will end up costing us taxpayers more.

If accountability is a key driver, then why are some bodies - like British Waterways - being outsourced to charity, beyond government and accountable only to the Charity Commission and their trustees? The FT rightly questions why ministers should have direct influence over the curriculum rather than leaving it to the QCA or whether bringing NHS appointments back in house will merely ensure a return to the days of outright political appointments. Sometimes, having an arms-length approach is actually the best way and it doesn't remove the accountability, hence the term 'quasi-autonomous' - they give the impression of being independent, but aren't completely on their own.

One of the worst decisions of the quango review is the imminent scrapping of Consumer Focus and Consumer Direct, plus the withdrawal of the consumer protection functions of the Office of Fair Trading. One of the key roles of the state has to be in evening up the relationship between the individual consumer and the big corporations who can ensure that the marketplace is a very inequitable playing field. I don't believe that local Trading Standards departments - which have already had cuts made , at least in part because of the existence of the advice functions of Consumer Direct - will have the capacity or the ability to provide the same weight as something like Consumer Focus. Birmingham's team have scored some great successes, not least with their imaginative use of the law to tackle cowboy clampers, which has seen one company boss sent down for two years for fraud, but even they have suffered cuts.

For example, understanding utility tariffs is a complex matter and a single utility can, when you account for different payment methods, have thirty or more tariffs available to the consumer. That level of knowledge is simply not present within the local authorities - even ones as large as Birmingham. Many will also lack the time and funding to go after the big players, so big wins like last week's £70 million victory for customers and Consumer Focus over an overcharging nPower will become things of the past.

We need to see what the government will be offering to Citizen's Advice to allow them to operate the Consumer Direct service, but it will need to be generous to ensure that there is no drop in service. The local CABs across the country make valiant attempts to offer a quality service, but there is no doubt that it is highly variable and dependent entirely on funding and the goodwill of a small number of dedicated volunteers. Without support from government, the CAB will not be able to maintain availability and quality of the advice currently available, which will disadvantage consumers as they try to access their rights. Some major cities have CABs which are nothing more than a couple of volunteers around the kitchen table.

As the increasingly-sceptical Financial Times put it,
Yet there is a sense that in our testosterone-fuelled political culture, ministers are out to shake everything up in the shortest possible time. Britain must be the only country in the world where we reorganise our institutions so often. It is a pity the coalition did not move a little more slowly and thoughtfully on the quango front.

Thursday, October 14, 2010

What the Alliance costs the Tax Payer - and the cost of lazy journalism

The taxpayers are funding a whole industry dedicated to digging up embarrassing information and often using it out of context to create cheap stories about the public sector. The national press are particularly fine exponents of the art, generating stories about the waste within local councils, checking up on when and where they fly flags or if they let their employees watch the World Cup.

The TaxPayers Alliance are doughty, self-appointed fighters on behalf of us taxpayers, hiding their libertarian, Conservative-bias under the thinnest of covers. They have established themselves as the go-to guys for comment on anything regarding waste in the public sector, not least because they keep up a regular stream of press releases berating local authorities and other parts of the public sector for spending money on things that don't match the TPA's narrow agenda.

All of this ties into the new agenda of the small state, supported by lower taxes and providing fewer services. It has provided a climate for the sweeping change led by the Conservative and Liberal Democrat parties.

But ironically, the fuel for these stories does not come from an army of diligent journalists or TPA researchers, it comes courtesy of the taxpayer through the Freedom of Information Act as a handful of journalists or researchers send round robin emails to local authorities across the country.

I asked Birmingham City Council about the impact of these requests and I was shocked at how widespread they are. A fifth of all FoIA requests last year came from national newspapers and it looks like there will be even more this year in a fivefold increase since 2006. Even more shocking is the cost, calculated on an average costing in line with that set down in the FoIA 2000. Servicing the requests from the national media last year cost the Birmingham tax payer £55,250 and effectively required almost 1.3 full time staff. One reporter on a national broadsheet alone cost us £6000 and the overall cost of newspaper requests will top £61,000 this year for Birmingham alone.

When you spread this out across the country's 433 local authorities, the costs become staggering. Most of these requests go out to all of them and we can reasonably assume similar costs, which provide an indicative cost for 2009 of almost £24 million and which is expected to increase to almost £27 million this year. That same reporter looks to have cost the public sector some £2.5 million to answer his requests over the past year.

Each request sent out to all our local authorities sets back the public purse some £108,250, essentially free research for the journalist or the pressure group and which they then use to abuse those who supply it.

In these difficult times, is it right that a pressure group demanding lower taxes keeps spending our money on their own cause? Is it right that journalists use the FoIA act for meaningless research solely to dig up knocking copy at our expense? I don't think that the FoIA was designed for this purpose.

Tuesday, October 12, 2010

Quote of the day

"Tell Cameron that if he screws up my beloved NHS I'll come back and bloody haunt him"

Claire Rayner, agony aunt and campaigner, 1931-2010



Monday, October 11, 2010

Joined up government?

On the one hand, you have Philip Green reporting that scale has not been used to make Government purchasing efficient.

On the other hand, the government are scrapping a new agency that focusses on best practice for large purchases and helping the police service work across organisations.

Brilliant.

LEP changing spots already?

It is a sign of the quiet conflict going on between Eric Pickles and Vince Cable that the ground rules on the Local Enterprise Partnerships is shifting rapidly. Partly, that may be because they started with only the vaguest idea of what a LEP might be and have used the various bids submitted to firm that up and develop some concept of a common framework, or it might be a sign of a genuine tension between the localism of Pickles and the regionalism of Cable.

Pickles let slip to a fringe meeting which LEPs looked to be greenlighted (although if anyone believes that this was anything other than intentional, you are spectacularly naiive) and Cable's BIS then backtracked, saying that nothing was set in stone - perhaps because Cable had mentioned a few days earlier that only a handful of bids were viable. David Bailey from Coventry University has been keeping a close eye on things and adds his take and report here.

Pieman Pickles then decided that if the LEPs want it, they can also have control of inward investment, business support and skills funding - items previously held by the RDAs, but slated to return up the chain to some sort of 'regional hub' under the Cable project. This 'regional hub' looks an awful lot like a mini-RDA in exile, waiting for the right moment to leap back into action, but Pickles seems determined to throttle it out of existence right now.

We've also been told that the LEPs will not be funnels for the Regional Growth Fund, which is to be distributed straight to deserving businesses, but Pickles said
there is a misunderstanding that LEPs will just receive money from the regional growth fund. We would not be setting up such an elaborate structure just to distribute £1bn. Without wishing to paraphrase Ronald Reagan, £1bn is neither here nor there... Their function is to push money and sovereignty to local authorities and get some enterprise cracking.

The danger here is that the LEPs were designed to be business-led, not to act as funding generators for local authority economic development teams. If they are perceived as merely an extension of local government, then I'm afraid that businesses aren't going to want to be involved, especially given the glacial movement of most local authorities over actually doing anything - a genuine frustration for anyone used to fast-moving business environments. If the businesses pull out or just pay lip service to the LEPs, turning up for the occasional lunch meeting, then the whole structure will prove completely worthless.

Aside from all this, it is fascinating to watch the dance between the Department for Communities and Local Government and the Department for Business, Innovation and Skills. I suspect that there is a broader agenda here on the part of Eric Pickles and it is to render BIS nothing more than a shell. Many are tipping Vince Cable to be the first Lib Dem to walk out from the Cabinet, but he might yet find that his seat disappears from beneath him.

Another political figure in for a surprise is Boris Johnson, who thought that he had secured the London RDA responsibilities for the GLA and Mayor's Office, but BIS and CLG have asked the London boroughs to put together LEP bids, although Allister Hayman reports that they will have a particularly high bar to reach to show that they add value. The Local Government Chronicle also reports that Alderman Pickles isn't having it all his own way. He is believed to have strongarmed Kent and Essex into submitting a joint LEP, against their own plans, and now all bar one of the 14 backbench Conservative MPs in Kent have agreed that this proposal is a bad one and may actually cost jobs within the county.

Sunday, October 10, 2010

Another Lib Dem principle ditched

The Lib Dems enjoyed electoral success in many constituencies with a large student population in 2005, with young voters attracted by the party's opposition to tuition fees...

Labour and Tories will leave students with £44,000 debts. The Liberal Democrats
are different. Not only will we oppose any raising of the cap, we will scrap
tuition fees for good, including for part-time students.

A coalition government agreement to abolish tuition fees in England and replace them with a system closer to a graduate tax is near and simply needs edging “over the line”, Simon Hughes, the Liberal Democrats’ deputy leader, has said.... His “belief, hope and conviction” was that fees would be scrapped whatever Lord Browne of Madingley’s review of fees and funding proposes when it reports in three weeks. Mr Hughes told a fringe event at the party’s Liverpool conference last night that Vince Cable, the business secretary, had been doing “sterling work” convincing civil servants that abolition of fees was necessary to meet the Lib Dem’s pre-election commitment to scrap them.

Vince Cable.... has accepted the case for higher tuition fees. Cable – like all Lib Dem MPs – signed a pledge at the recent Lib Dem conference to oppose any increase in fees.

The Guardian, 9 October 2010
I'm sure that there will be some form of words to allow the Liberal Democrats to comfort themselves that they aren't reversing policy on yet another iconic issue, but the reality is that the personal pledge signed by Nick Clegg (pictured above with Cambridge Lib Dem MP Julian Huppert, who must be worrying about the next election) and Vince Cable against any increase in tuition fees is worthless, even though the wording is quite specific:
I pledge to vote against any increase in fees in the next parliament and to pressure the government to introduce a fairer alternative
The coalition agreement committed them only to abstention, thus already forcing them to break that pledge, which was ultimately signed by 400 Lib Dem candidates and every Lib Dem MP, along with 200 Labour candidates. Ming Campbell has already signalled that he would consider voting against his party whip in this event. It has been suggested in the past that Clegg has wanted to get out of this policy for some time time, but has been rebuffed by his party, as this is regarded as one of their sacred cows and a votewinner amongst the young.
Given the rate at which the Liberal Democrats are abandoning their principles and their key policies, it can only be a matter of weeks before Clegg confirms that in retrospect, the Iraq war was an excellent idea and that the Liberal Democrats were in full support all along.

Saturday, October 09, 2010

Scumbags out

Birmingham City Council has announced that it when the contract for housing asylum seekers dispersed by the UK Border Agency expires next June, it will not seek to renew it. Fewer than 200 flats in some of the less-popular parts of the council's 65,000 unit housing stock have been used to house these people and you can't help but feel that this has been done for political expediency rather than any burning need to house people - those flats will not make a dent in the 30,000-strong waiting list. This is hardly a surprise, when Cllr Lines signed the new agreement in 2006, he halved the number of flats made available.

Cllr Lines was quoted on Radio 4's PM programme this evening as saying that he no longer 'had the stomach' to house asylum seekers while other Birmingham residents were homeless and living in temporary accommodation. Charmingly, the UKBA were informed of Birmingham's decision when the BBC asked them for a comment.

Cllr 'Slugger' Lines has previous with regards to asylum seekers - he is known to be somewhat to the right of centre - and back in 2008, he gave an interview to Defence Management, where he a was a little too revealing of his own views.
...some scallywag, some scumbag can jump on the back of a lorry, come over under the tunnel and never expect to work a day in his [expletive] life. And if he's been here for a time waiting for a decision, we give him automatic British citizenship. The world's gone [expletive] mad...

He later apologised for the words used - if not the sentiments - and escaped censure.

Cllr Lines had some problems with the terminology when he was interviewed by Richard Lutz for The Stirrer, back in April, demonstrating that he didn't understand what an asylum-seeker actually was and also showing a very rose-tinted view of Margaret Thatcher's council house sell off. He also makes an interesting statement that "the contract with NASS [the UKBA's predecessor] goes back well before he was head of housing," which is slightly misleading, as he signed a renewed contract in 2006, using the opportunity to make political capital by promising a 'no frills' service for those lucky asylum seekers. This is, after all, the man who was blocked from being Lord Mayor because some - including Liberal Democrats - felt that he was too right-wing.

Friday, October 08, 2010

"Greenest government ever" tarnishes as green shoots of recovery wilt

Statements made by ministers after elections are always hostages to fortune. Labour's ethical foreign policy, promised by Robin Cook ended in Iraq and rumours of British knowledge of torture. Blair's promise of being whiter than white, following on from the cash for questions and sleaze of the Major era, foundered with dodgy donations and the expenses scandals.

Thus it will be with David Cameron's promise that the coalition government will be the 'greenest government ever.' Partly, this will be because of the same shortsightedness that led to the abandoning of the ForgeMasters loan, which would have given the Sheffield firm a share of a global niche market. It will now lead to the scrapping of plans to upgrade port facilities in the north-east - an area likely to be badly hit by the forthcoming cuts - to support new factories planned to build wind turbines. Siemens, GE and Mitsubishi all want to build factories in the UK, but need the ports upgraded and it now looks unlikely that the government will fund this, a decision that will slam the brakes on the creation of up to 60,000 jobs in an area that needs every one.

Cameron may find that his promise will become a rotting albatross around his neck.

Hyatt society

Curious story from the Evening Mail yesterday about the soon-to-be Mayor Whitby, who was apparently booked into the Hyatt Hotel for the duration of the conference, so that he could be close to the action. This £200 plus per night booking is all the more surprising because he has a council-provided chauffeured car and lives just 4 miles down the road from the venue. Security was cited as an issue, but I've never found it to be that much of a bind and only really awkward when you queue to get into the secure zone.

The need to be close to the action didn't prevent him missing his moment in the spotlight at local government question time, when he was called to speak, but failed to appear.

The whole thing is all the more peculiar because of the report on Political Scrapbook that public authorities were supposed to be banned from lobbying other public authorities. As Commissar Pickles put it in July,
We are calling time on the scandalous practice of government lobbying government. It is an outrageous waste of taxpayers’ cash and contributed towards the corrosive culture of spin that Labour cultivated

So you have to ask why Birmingham felt the need to book a suite of rooms at the conference for 'meetings.' If the rumours are true, Birmingham also paid £1 million to the Conservative Party for the privilege of hosting the conference. I've got no particular problem with investing money to bring 14,000 people to Birmingham to spend their money in our hotels, bars and restaurants and putting the city at the centre of the political universe for a few days, but I'm not quite sure how it squares with the Pickles agenda.

Either way, with 26,000 staff at Birmingham City Council on notice to have their terms and conditions changed again and with huge pressure on budgets, you have to ask if this was a good way of spending money and whether it set the best example to the hard pressed front line.

Thursday, October 07, 2010

Your country needs you

While I thought the delivery of Cameron's speech was broadly good and shows that he is in fine form as a performer, the substance was distinctly lacking. He drew upon Kennedy and Churchill, even Kitchener got a mention, but the last time the country was implored to join a crusade in that way, we buried young men in industrial numbers across Europe, so perhaps it is not the most appropriate of rallying cries.


Certainly, there were chunks of raw meat thrown to the baying faithful - all party leaders should be able to recite a list of their achievements and their opponents' failings - but that is a characteristic of any end-of-conference speech. These used to be the preserve of the party chair, who would send the activists back to their constituencies fired up for the battles ahead. I'm surprised to see Cameron given this slot, although it doesn't expose him to post-game analysis by the delegates in the bars, as they are all straining at the leash to get home on the next train. His response was enthusiastic, as befits the first Conservative Prime Minister this century, but not as rapturous as he might have hoped. Partly, I think that this is because he is not - and may never be - a winner, dependent as he is on Liberal Democrat support to retain his job. While Labour adores our valiant losers - Foot and Kinnock, for example - the Tories only lionise their winners, with Thatcher being at the top of the tree.


With that in mind, Cameron was savvy enough to announce that the Blessed Margaret would be returning to No 10 to celebrate her 85th birthday next week, which will be good news for exorcists in the Westminster area. Cameron even found time to insult Neil Kinnock (a much finer orator than he), so with Heseltine prowling around again, Ken Clarke in the Cabinet, defence cuts and disgraced 1970s economics back on the agenda, we must be back in 1980, although I'm not sure that a decade of fine music will be compensation for the damage to be inflicted on our public services. I remember it the first time round...


The speech was very light on actual policy and, when he wasn't blaming Labour for everything, ever, Cameron focussed on the Big Society, a policy proposal that is so nebulous that even the most die hard Tory activist would have to admit that it was a very hard sell on the electorate's doorsteps in the recent election. It was quite clear from the response in the hall that the members didn't get it either, but they let Cameron bang on about it for what seemed like weeks.


There were a few jokes, but the story about the six year old who sent in the money from the tooth fairy to help bring down the deficit was badly handled as Cameron theatrically handed the money to Osborne - the actual donation was returned to the child in question. Thatcher came for the milk money, now Cameron is returning for the milk teeth.


Also falling flat in hindsight was his attack on Ed Balls for being critical of a government policy because it would create winners, allowing Cameron to riff about Labour being opposed to winners.

"Ed Balls, the man who used to be in charge of education in our country, he said one of the dangers of our schools policy was that it would create 'winners.
(laughter)

"Winners? I mean we can't possibly have winners. I mean the danger that your child might go to school and turn out to be a winner.

Anti-aspiration. Anti-success. Anti-parents who just want the best for
their children.

What an unbelievable attitude from this Labour generation, and we're gonna fight it all the way."


Like many who heard that, I said that the full quote would end with "...and losers" and so it came to pass. It actually came from a Newsnight exchange in May and the full quote is
"The danger is that there will be winners in this policy, but it is dishonest not to say that there will be losers as well."

Toby Young was there and he, depressingly, defends the shortening of the quote. Quelle surprise.

In the end, it was a speech that promised much, but failed to deliver.

LEP Update

With a tip of the hat to Allister Hayman at the Local Government Chronicle, it seems that virtually all the West Midlands LEPs will be approved by Vince Cable and Eric Pickles.

The odd ones out are the Staffordshire and Stoke on Trent bid, which suffered from disagreements amongst the district councils, with East Staffs, Tamworth and Lichfield throwing their lots in with the Birmingham and Solihull bid - although there is nothing to stop them joining more than one LEP If they so wish. There may be further tweaks coming up, as The Pieman is believed to favour a joint Black Country and Birmingham bid, for once showing wisdom beyond that available to our local authorities. There seems to have been tension between Pickles and Cable over this, as Vince is known to favour more regional models, but Eric prefers them smaller, the merest suggestion of regionalism bringing him out in hives. The other local bid to not make it to the starting grid is the abortive regional bid, which has foundered because of a lack of support.

Wednesday, October 06, 2010

Very smart or stupid

The level of backlash from their natural supporters must have come as a surprise to the Conservatives. They thought that they had laid a clever trap for the Labour party by undermining the universality of Child Benefit in taking it away from the higher earners. They thought that Labour would launch a full-on attack and would appear to be defending the wealthy. Shrewdly, Labour has been remarkably quiet. Ed Miliband hasn't been all over the media and there has only really been a little comment from Yvette Cooper.

In part, the gamble appears to have worked - a YouGov poll shows 83% support for the Child Benefit restriction - and the Tories have calculated that the annoyance of those on the higher tax rates will have subsided by the election and won't actually affect their votes, particularly if the economy has turned around by 2015. The change can be held up as an example of a government unafraid to make cuts that will affect its own supporters, evidence that we really are all in this together. Only 15% of people pay the higher rate of tax in any case, so that level of support from everyone else is hardly surprising, but rather more will aspire to that level of earning and will feel demotivated by the thought that a few pounds more in pay could set them back thousands in benefit. They will be fuelled by the Tory-supporting press, with the Daily Mail being particularly vitriolic in classifying this as an attack on the middle class - although they seem to consider that the middle class starts with an income of over £80k. Given that Cameron suggested that he and Sam Cam were middle class - with personal wealth into eight figures, that is rather hard to sustain as an argument - it is no wonder that there is a disconnect with reality at all levels on the right.

This doesn't mean that the government isn't open to attack on the change - it goes against explicit pre-election promises from George Osborne and Philip Hammond. It has some glaring anomalies - the most obvious being the fact that a household with two earners both on £40k and a joint income of £80k will continue to receive Child Benefit, while the stay at home parent next door with a partner on £45k receives nothing. Osborne is using a very blunt tool to make a political point. Justifying retaining Child Benefit for higher earners in these tough economic times is very difficult - arguments about the cost-effectiveness of universality or the need to maintain broad support for the welfare state are hard to make, still less can we campaign on the fact that means testing ensures that a good number of those entitled to claim do not do so. Even the process story that this policy shift seems to have come out of nowhere, such has been the surprise amongst Tory ministerial ranks, fails to have ignited much.

Sharing the pain isn't a bad policy from the government by itself but a degree of consistency is required and today's back of an envelope policy shift, hinting at a new married couples allowance, shows an alarming, if unsurprising weakness and incoherence. The main argument that the change would help reduce the deficit has proved specious, as the Conservatives have been forced into promising a married couple's tax allowance that may well consume more than the £1 billion saved by the change in Child Benefit. The apology from Cameron is showing weakness - he would have had more credibility if he had stuck to his original line, rather than whimpering that they forgot to put it into the manifesto (or tell most of the Cabinet).

What must have seemed a good, brave political idea at the time is fast becoming an albatross around the party's neck.

Tuesday, October 05, 2010

Conference Report

Rumours drift out from the ICC that the Birmingham, Solihull and bits of Staffordshire Local Enterprise Partnership is set to get a greenlight to move forwards.

In a demonstration of how this government listens to local people, the government will impose a mayor on Birmingham, something for which there is precisely no significant local demand. Ironically, it is being suggested that the great Tory opponent of an elected mayor, Mike Whitby, will find himself in possession of that office. I understand also that the rumours are correct that the imposition will be subject to a confirmatory referendum after the event.

So much for democracy and local choice.

Read my lips...

"We will preserve child benefit, winter fuel payments and free TV licenses. They are valued by millions"

George Osborne, Conservative Conference 2009

One promise down, two to go.

The courage of George Osborne

Students of that documentary study of 1970s/80s politics, Yes Minister, will recall that there was no greater criticism of a minsterial decision than for Sir Humphrey Appleby to describe it as 'courageous.' Such decisions would inevitably end in the minister being reshuffled to somewhere less salubrious than the Department of Administrative Affairs. The steadying hand of Sir Humphrey has been missing in recent months, as the Tory/Liberal Democrat coalition have systematically been alienating their friends and enemies alike - the influence of Toby Young knows no bounds.


There have been the usual suspects for Tory approbation - the arts sector is up in arms as the British Film Council is scrapped and other cultural icons start to feel a chill. The universities - always hotbeds of lefty radicalism - are worried about money again, the quangos feel the heat of the fires stoked up around them and the unions are looking anxiously at legislative threats and the loss of development funding.

So far, that is business as usual, but then the Tories got overconfident and decided that there were other groups worth riling. The GPs - all private contractors to the NHS - are unhappy at the proposals for a wholesale and destructive reorganisation of the NHS. The military are just realising that the Strategic Defence Review has precious little to do with Strategy or Defence and much more to do with cutting costs, so they are heading to the barricades. Even the police - the ones that Maggie made sure to keep on side - are revolting at the plans to merge CEOP and SOCA, resulting in the resignation last night of the highly respected chief executive, Jim Gamble. The police are also facing the imposition of elected commissioners, despite the public opposition of the Chief Constables, a pay review and budget cuts that they have characterised as promising a great Christmas for burglars.

But George Osborne's brave attack on the middle income families with a stay at home parent is by far the most courageous, for it is apparent that if one parent is just over the limit for higher rate tax and earning £44,000 a year with a non-earning partner, then the child benefit - worth £1000 a year for the first child - is removed in what amounts to a 5% cut. If, however, both parents each earn £40,000 a year, then this joint household income of £80,000 will continue to be boosted by child benefit - a policy that creates an instant and obvious injustice. This is an attack on aspiration - parents may be better off asking for lower pay than taking a job paying just over the limit, simultaneously reducing their tax offering to the state. It is also an attack on women, as they tend to be the chief providers of stay at home care and their pension credits are attached to the payment of child benefit.

You also have to wonder where this idea came from, as it seems to be yet another of those concoctions cooked up in the Osborne/Alexander laboratory in a post-election haze. For was it not Philip Hammond, then shadow chief secretary to the treasury, who told Newsnight viewers that
Talking to people, one of the things they appreciate about child benefit that it is universal and easily understood. To start to means test it would erode it ... It reassures them about the availability of the benefit. If you start means testing it, if you start slicing away at that universality, then people are going to ask where you are going to stop
Or there is Nick Clegg, being interviewed by Paxman after Vince Cable had run a change to child benefit up the flagpole and found his policy being shredded by his own party
  • JP: Can we just clear up something on child benefit: in September last year, you said you wanted to get rid of child benefit for high earners. At the start of ...
  • NC: No I didn't say get rid of it. I didn't say; I've never said that.
  • JP: You've never wanted to get rid of it for high earners.
  • NC: No, I've never said that.
  • JP: But Vince Cable said in the Chancellor's debate,only a matter of two or three weeks ago, that he did want to get rid of it.
  • NC: No, he made quite clear, within minutes I think of the debate , that he misspoke, and that what he meant was the child component of the child tax credit system.We are not putting child benefit into question. I never have and he hasn't either.
Or Steve Webb, a renowned specialist in this field, who added after the Cable comments hit the fan,
'We've been able to conduct the review speedily over the last 24 hours - and I am pleased to say that the policy won't be changing", said Webb. Webb acknowledged the importance of universalism for maintaining support for tackling poverty.

Or as he said
I read…we were going to look at ‘middle class child benefit’. I have looked at it – and I have rejected it.

Only a year ago, George himself promised to support it, but as with so much policy, that was then, this is now.

There are a couple of articles worth reading on this. Firstly, there's an excellent piece by Declan Gaffney and a similarly fine piece from The Wandering Hedghog. If this local difficulty cannot be resolved, it is starting to look as though the partial withdrawal of child benefit will become the Tories' very own ten pence tax, especially when combined with the removal of the child tax credit from the higher end of the earning spectrum. Channel 4 News' Cathy Newman was taking the political temperature:
One minister told me just now he had four emails from constituents complaining about it within an hour of the chancellor leaving the stage. He said: “We’re p***ing off our core vote. We’re supposed to be the party of the hard-working family.” He went on to protest that the chancellor had sprung the decision on ministers, and that it appeared to have been hurriedly put together. A cabinet minister has just told me the cut was a “complete bombshell” – he hadn’t been given any advance warning either.

So there you go - the Tories are now at war with middle England as well, a position quite at odds with a promise to be the party for the family.

Gove - scrapping non-existent rules to grab a headline

Read.

Despair at the fact that he remains in charge of education.

Sunday, October 03, 2010

Whoops Whitby

Embarrassingly, the current leader of Birmingham City Council was a no-show this afternoon in the conference hall. Despite being called to speak, Cllr Whitby failed to make it to the podium and was replaced by a stream of minor local government figures who all sung the praises of the coalition and chucked some softball questions at a panel of Tory ministers. Was he ignoring the call of his master's voice, in the form of the chummy Eric Pickles? Or was he more concerned at the direction that the panel was taking with regard to devolution - a sore subject at the moment across the City Council. You see, the government wants to pass power down to the local community, but Birmingham City Council is bent upon doing exactly the opposite by reversing the devolution started by the last Labour admininstration - and stalled in a morass of departmental disagreements ever since by the Regressive Partnership.

Furthermore, Cllr Whitby can't be too impressed by the news that Eric Pickles still seems intent upon enforcing elected mayors upon Birmingham without an advance referendum, leaving Whitby with the enticing prospect of a Labour mayor lording it over a lame duck Tory/Liberal coalition until Labour retakes control by 2014 at the latest - and there are those predicting that it could be as soon as 2012.

Was Whitless showing his unhappiness with the direction from above by snubbing their call or had he just forgotten that he had been asked to speak to the assembled masses of the Tory faithful live on TV.

LEP confusion

In response to a question from the floor, Greg Clark said that these were opportunities for businesses and local authorities to tell government what they wanted to do and to be given permission to do it. This clashes with Vince Cable's statement a couple of weeks earlier that only 10-15% of bids submitted were fit for purpose - all these bids were created by local groups to offer a way forward through the embers of the Regional Development Agencies. They have been written with the barest minimum of advice from central government and with no promise of any significant funding to deliver on those plans. Now it seems that government can't make up its mind on the way forward.

There is a theory that part of the LEP approval process is meant to use the applications to identify good ideas that can then be applied to all, a sort of crowd sourced brainstorming session.

Really, is this any way to run a railroad? Still less a way to run regional regeneration.

Tory Conference 2010

"Right here in Brum, there are two notorious gang families who cost the taxpayer £37 million"
says Eric Pickles. So what has the Tory council done about this in the past six years?

And are those figures accurate?

Pickles has challenged local authority chief executives to take a pay cut. He suggests that those on £200k plus should volunteer a 10% cut. Over to you Steven Hughes at Birmingham. Look your workers in the eye and tell you that you share their pain. Naturally, you won't be sharing in their upcoming job losses and contract changes, but a pay cut would be a start.

Friday, October 01, 2010

FT v IMF

The Tories and Liberal Democrats have been shouting about how the report from the IMF vindicates their cuts strategy, even though the same organisation in February was supporting Labour's plans to cut later, once the economy is back on track to sustained growth. But that isn't all the IMF report says. Their economist David Leigh is quoted in the FT as saying,
We should not kid ourselves. In the short term, tax hikes and spending cuts will reduce growth and raise the unemployment rate.
In a blow to the oft-cited example of Canada, the report adds
"Our findings suggest that in today’s environment, fiscal consolidation is likely to have more negative short-term effects than usual... If many countries adjust simultaneously, the output costs are likely to be greater – since not all countries can reduce the value of their currency and increase net exports at the same time"
Canada drastically slashed the state services and exported its way out of trouble, an option not available in today's depressed global economy. Further criticism of the Canada example comes from the then Canadian Finance Minister, Paul Martin, who has told a conference in Seoul
"We sent down one of the most austere budgets ever, but we did so during a rising economy... The issue is not whether you cut spending but whether you cut the deficit – in some cases that will mean doing the opposite with spending."
It isn't as rosy as the Tory/Lib Dem spin would have you believe. But is it ever?