Sunday, 28 June 2009

The public expenditure debate

Public expenditure looks like being one of the major dividing lines between the political parties at the next election. It is, of course, to some extent an artificial debate. Whoever is in office is going to make substantial cuts, probably the most severe since 1945. However, the preference of the Conservatives would be to cut more and increase taxes less and the cuts would probably be directed differently under Labour.

How much has to be cut depends in part on how quickly the economy recovers, boosting tax revenues and reducing benefit payments. There has been some over optimism about recovery when what has happened is that the economy has stopped declining rapidly and is bumping along the bottom. To some extent there has been an inventory cycle effect as stocks that have been run down have had to be replenished.

It is therefore worth noting the OECD forecast of a 4.3 per cent in GDP this year, followed by a flat 2010. Three per cent of output may have been wiped out for ever in OECD countries and perhaps as much as five per cent in the UK.

The required spending cuts will include savage cuts in capital spending and a reduction in public sector manpower. But where will the cuts fall? If reductions are equally shared. departmental spending would fall by nearly 7 per cent in real term in the three years after 2011. If health and overseas aid are spared, most departments would fall by 10 per cent and if schools escape the axe, the reduction would be a massive 13.5 per cent.

Health, education and social security account for about £2 out of £3 spent in the form of public expenditure in the UK? Can these budgets remain sacrosant? Health is beset by the problems of an ageing population and an ever advancing technological frontier. Touching the NHS budget is regarded as political dynamite. However, perhaps there needs to be a debate about what can be afford or whether there is any scope for charging (although that may not raise much in relation to the controversy it would cause).

Tuesday, 9 June 2009

It's all over for now

The media is going to have to find a new topic to focus on now that Gordon Brown has seen off the leadership challenge - such as it was, because as one commentator remarked, the Labour Party could not conspire its way out of a paper bag. The prime minister simply had to face down the usual suspects like Charles Clarke and promise to mend his ways. However, the media has promised to revive the story in the autumn.

The results in the European elections for Labour were atrocious, even worse than expected. They now face by-elections in the speaker's old seat where the Scottish Nationalists could mount a strong challenge after their good result in the European elections and in Norwich North. There is considerable local resentment at the way the rebel MP Ian Gibson was forced out of other expenses. The Greens are strong in Norfolk and could mount a creditable challenge.

Despite Dave Cameron boasting 'We are now No.1 in Wales' (albeit on 21 per cent of the vote), these results are not quite as good as the Conservatives might have hoped given the unpopularity of the Government. There is still a lack of real enthusiasm for them and some residual doubts about what they might do in office. A year from now we shall be finding out.

Sunday, 7 June 2009

A crucial 48 hours

If Gordon Brown is removed as prime minister, he will arguably be the first holder of the office to be brought down by a media led campaign. The heads of individual ministers have been secured in the past, but this will be a far more significant scalp.

Of course, the media is reflecting a wider public disquiet. It is a long time since I can recall a prime minister being booed in public other than at an organised demonstration which is what happened at the D-Day celebrations yesterday.

So why do so many people dislike Gordon Brown so much? Is it because they see him as responsible for the recession or his policies for dealing with it as fundamentally flawed? Probably not. Brown is certainly a much less effective communicator than Tony Blair, but does this explain the extent and depth of the dislike?

Probably he would not be in the position he is if it had not been for the expenses scandal. Expenses are the collective responsibility of the House of Commons and the political class more generally, but it happened on Gordon Brown's watch.

We now wait the results of the European Parliament elections. They are going to be bad for Labour, but how bad? A share of the popular vote below 20 per cent or coming fourth would renew calls for Brown to go. Labour is likely to come third, but I doubt whether they will come fourth, as the Liberal Democrats have been taking a battering, particularly in areas where they have seats to defend against the Conservatives. This has largely escaped comment, but could be important in the context of a general election result. Whether Labour will get less than 20 per cent of the vote is harder to forecast, but it is certainly possible.

If Brown is forced out it will not be because of the Parliamentary Labour Party. The idea that seventy of them could organise themselves to nominate a credible alternative candidate stretches credulity. Also, the left of the party is rallying behind Brown, as they see the attempt to oust him as Blairite in origin, although they realise that there is little real ideological difference between Brown and Blair.

The blow, if it comes, would be some like Jack Straw, who has no credible ambitions of his own saying to Gordon Brown, 'I have loyally supported you, but we have now reached a point where your continued leadership is damaging beyond repair.' That point has not yet been reached, but we may yet do so. The next 48 hours will be crucial.

Friday, 5 June 2009

Brown soup

This is a fast moving situation and any comments can quickly be overtaken by events. Much depends on how bad the results of the elections, and the first indications is that they are bad - as expected - for Labour. It also looks as if minor parties, but especially UKIP, have done well in the European elections.

Will Gordon Brown be the first ever Labour prime minister to be forced out while in office (Blair weakened his position by announcing that he was going sooner or later anyway)? Here are a few observations:

1. Although there is no conspiracy, the actions of James Purnell and others do look a bit like Blairites getting revenge for what happened to the Great Leader.
2. The backbench revolt route was never going to work because it is too convoluted a procedure.
3. Hence, as with Margaret Thatcher, the real blow would have to come from a number of Cabinet ministers. David Miliband is remaining omniously silent. Much will depend on whether Brown has the authority to carry out an effective reshuffle, now said to be occurring today.
4. Having waited so long to get the job, Brown will not go willingly or quietly.
5. Labour should be careful what they wish for. A new prime minister would be under a strong obligation to hold an early general election which Labour would lose. It is difficult to see any scenario under which Labour could win an election because after twelve years in office this is an exhausted party that has run out of ideas. Alternation of parties in government is a key element of democracy.

Incidentally, I don't favour an early election because in the current ferbile atmosphere we wouldn't get a serious discussion of policy options, not least in relation to the economy which remains far more important than MPs' expenses.

Tuesday, 2 June 2009

Recommened blog

This is one of the more interesting and reflective blogs I have come across on British politics recently: Green