Analysing British Politics

Christmas cheer in the polls for Dave

2011-12-21T22:27:00.000-08:00

After a long period in which the polls have been in a 'holding pattern', they have delivered a Christmas present for Dave Cameron in terms of a jump in the ratings: Polls

As the experts at Nottingham University point out, this is undoubtedly related to the exercise of the European 'veto' and probably involves an erosion of UKIP support. However, they also doubt whether the boost will be an enduring one, given the low salience of the EU in British politics and the fact that UKIP voters have other concerns.

Nevertheless, it does once again raise the issue of why the Labour Party is not doing better given the overall economic and political situation. One reason is that the polling evidence suggests that the electorate have no confidence in their economic competence, a reasonable given view given the way in which they spent what would have been a substantial budget surplus after 2001.

The other factor is Ed Miliband who continues to fail to impress. There are situations in which he could made more off. For example, the 'We are the 99 per cent' claim of the Occupy movement does resonate, even though it is ultimately spurious given that it assumes that the 99 per cent have a homogeneous set of interests and values which is clearly not the case. Nevertheless, Miliband could have recognised that they had an emotional case which required some intellectual development.

What instead we get is a lot of dithering and sitting on the fence as he tries to steer a course, for example, between the public sector unions and those who work in the private sector. In the dispute over public sector pensions, the Government has had to make some concessions but has largely got what it wanted in terms of higher contributions, later retirement ages and smaller entitlements.

Labour loyalists seem determined to stick with Ed to the last, however.

Do English cities want elected mayors?

2011-11-24T20:52:00.000-08:00

Next May voters in eleven English cities will be asked if they want elected mayors - which already exist in fourteen locations ranging from the rather special case of London to smaller towns such as Bedford and Mansfield.

The Warwick Commission on Elected Mayors which I am chairing has been set up to provide an evidence base for considering the case for and against elected mayors. We are interested in whether they make a real difference compared with more traditional forms of local government. Some people think that the idea is an important democratic innovation, others that it is just a gimmick.

If voters in one or more cities do choose to have them, we need to think about how they can be effective and this will be one of the Commission's tasks. Read more here: Elected mayors

I have also written a longer post about this topic on the LSE Politics and Policy blog: Elected mayors

Church militant?

2011-11-01T02:19:00.000-07:00

Leamington Parish Church

Not for the first time the Church of England has made a fool of itself over handling the demonstration outside St.Paul's. The Church's response has been weak and inconsistent, revealing once again internal divisions. Given its overall weakness, these events could do it permanent damage.

The Church stands accused of being more concerned with temples of stone than a community of people and failing to preach the social gospel of the Sermon on the Mount. The placard held aloft by one demonstrator, 'What would Jesus have done?' was rather telling.

However, I do have some sympathy with the Church in terms of its positon as a custodian of what are in effect national monuments which cost a great deal of money to run but for which it receives no public money (unlike a number of European countries that have 'church taxes' such as Germany and Finland). No wonder that it relies on 'suggested donations' for admissions and is worried about the income from its gift shops.

St.Paul's is the ultimate cathedral icon because of the pictures of it standing proud among the smoke and devastation of the blitz, a symbol of the country's stand against the Nazis. But the problem is replicated on a smaller scale across the country.

In Leamington we have a Victorian parish church. It is a large building, too large for the congregation in a town that has several Anglican churches. It's pleasant on the eye not particularly outstanding architecturally and it costs a lot of money to maintain. But it's an important and familiar part of the townscape, as important as the town hall with the statue of Queen Victoria outside and if someone suggested knocking it down there would be a furore.

No doubt all these problems will raise the issue of Disestablishment again. Many outside and inside the Church of England would like to see it hapen and the arguments in favour are convincing. Probably the main counter argument is that an Estabished church has to offer its services to all its citizens.

I would be personally sorry to see the Church of England disappear, but large parts of it have failed to move with the times or not quickly enough. It still has too many echoes of the 1950s which was not a glorious age whatever historian Dominic Sandbrook (now writing daft articles in the Daily Mail) might tell us. It recalls an era of a stuffy, repressed and repressing Establishment whose worst sin was to be boring.

As a Londoner born and bred, I have never been in St. Paul's and I must do sowhen these troubles end. Incidentally, as far as the demonstration is concerned, it is become a story about the Church rather than the banks.

Not a game changer

2011-10-14T22:11:00.000-07:00

Valencia: Reuters rang me up yesterday evening to ask for comment on Liam Fox's resignation. My view was and is that it is not a game changer for the Coalition Government.

It is clearly an embarrassing episode, but Dave has handled it as well as he could in the circumstances. It is not indicative of the kind of sleaze which haunted the last years of the Major Government. Indeed, these days to get away with two Cabinet resignations in eighteen months is not bad going given the rapacity of the media pack.

Of course, one potential future problem is that Dr Fox could act as a focus on the backbenches for discontented right-wingers.

The Government would also have preferred stability in the defence ministry given that it has been critical of the turnover of ministers there under Labour. This made it more difficult to get a grip on the cost effectiveness of defence spending.

Phillip Hammond has been an effective transport minister, facing down opposition to the high speed train proposal. He is also on the right of the party so the balance of the Cabinet has not been changed. His replacement, Justine Greening, is also a rising talent.

So there has been some reputational damage, but it is relatively limited, certainly in terms of any lasting effect.

President Dave offers leadership

2011-10-05T08:43:00.000-07:00

Leadership was a central theme of David Cameron's speech to the Conservative Party conference this afternoon: leadership provided by him in difficult times. Apparently even the podium looked presidential.

It's a reasonable enough strategy given that the prime minister is the most popular of the political leaders (well in England anyway), not a very tough barrier to surmount. And he does run ahead of the party.

David Cameron also paraded his own liberal credentials, supporting gay marriage and emphasising the importance of overseas development aid even in tough times, something not many Conservatives - or voters - are keen on.

As I drove up to Yorkshire listening to the speech I passed a pub offering 'credit crunch lunches'. It is not easy to offer a positive message in such perilous times. But the prime minister emphasised the need for a 'can do' spirit to overcome excessive pessimism.

The speech was a bit short on content, but what was needed was to provide as rousing a message as was possible in the circumstances and that was largely achieved.

Ed's conference speech

2011-09-27T07:55:00.000-07:00

I have to say that I am a bit underwhelmed. It often seemed that he was addressing the conference hall rather than the country. The speech went down well in Liverpool, especially the barbs against the Tories and Nick Clegg. But for me it didn't deliver a coherent strategy for government. It had the feeling of a speech that had been worked on a bit too much and hence sometimes came across as pedestrian when it aspired to be inspirational.

There was a theme there: I lost count of how many times values was mentioned. Ed was trying to say: these are my values and I think they are your values and the country's values as well. And Ed tried to sell himself as someone with an outsider's background who could deliver real change. He declared that he was his own man who would do things his way, making a real break with Tony Blair and Gordon Brown.

Much was made of the new bargain. This would create a society in which one got something for something, in which effort would be rewarded. A distinction between good and bad companies had been trailed beforehand, but how does one decide which company is a good one?

Ed thinks the system is flawed, and it may well be, but how does one make the link between this and the everyday concerns that people have, even though Ed tried to give concrete examples in his speech?

Labour's search for credibility

2011-09-26T10:28:00.000-07:00

What Labour really needs out of its conference is the development of a view among voters that it is a credible alternative government. Of course, the first obstacle there is Ed Miliband. Voters do not see him as a credible prime minister in waiting. They think he lacks that indefinable but essential quality, charisma.

The answer of the Labour image makers is to portray Ed Miliband as 'one of us', cue photo opportunities with his children. Apart from the fact that the photos were rather trumped by one of Villa supporting Dave Cameron at the match at Loftus Road with his son, voters do not want prime ministers to be 'one of us'.

They expect them to have an understanding of their problems, but they also expect the prime minister to have qualities that separate him or her from the crowd, a sense of command and authority. Dave Cameron's confidence can shade into the appearance of arrogance and complacency, but he does look as if he is in charge.

When it comes to policy, there is something of a vacuum, reflecting Labour's overly complex policy review. Unfortunately, the first major announcement, capping student fees at £6,000 does not stand up to close scrutinty.

First, it is not clear what its status is. Certainly it is not a manifesto commitment (and what happened to the graduate tax anyway?) Apparently that is still on the agenda.

Second, the cut will only be of benefit to those who earn enough to repay their loans. So better off graduates could find their fees cut. Graduates earning more than £65k a year would have to pay a higher rate of interest on their loans, but in order to raise the required amount, these rates of interest would have to be prohibitively high.

This might seem to be a way of enticing students disllusioned with the Liberal Democrats, but students (and their parents) are going to look at this proposal long and hard.

Black hole in public finances

2011-09-19T11:20:00.000-07:00

Ministers have been sounding a gloomy tone recently and it's not just because of the eurozone crisis. Work by the Financial Times using the Office for Budget Responsibility model suggests that the structural deficit is £12bn higher than previously thought, a slippage of 25 per cent.

It seems that the level of spare capacity in the economy, both in terms of plant and labour (with the right skills mix), is lower than was previously thought. I would add a note of caution here as spare capacity is more difficult to forecast than most economic variables.

What this would imply is yet more spending cuts or tax increases, but politically that is not viable given the sluggish growth in the economy which, according to the Bank of England, would have tipped into recession but for quantitative easing. What the Bank also admits that QE has pushed inflation higher than it would have been by 0.75 to 1.5 per cent. Of course, inflation also reduces the real value of the debt.

In any event we aren't going to see value added tax go up to 22.5 per cent which is what would be required to plug the gap. But it is does show how difficult will be for the Government to meet its structural deficit target and have some good economic news by the time of the next general election.

How to canvass

2011-09-13T08:38:00.000-07:00

A classic film from 1950 made for the Conservatives: Canvassing

Economists disagree shock

2011-09-08T04:54:00.000-07:00

This should come as no great surprise, indeed it could apply to any group of experts. However, I was interested to see that my colleague Mark Harrison (with whom I taught Making of Economic Policy last academic year) was one of the signatories of the letter from 20 economists in the Financial Times yesterday arguing that the 50 per cent tax rate was damaging to the economy. Today there is a reply from Andrew Oswald also in the Economics department at Warwick, although currently based in Bonn and best known as a happiness guru.

Oswald points out that the signatories produce no evidence to support their case and states that what evidence there is points in the opposite direction. The evidence that Oswald cites seems a bit limited as it is based on a case study of a tax hike in New Jersey.

In another letter, Alan Manning of LSE points out that a study of footballers, plausibly the most mobile of professions, did find that tax rates influenced location decisions, but the effect was not large and the research concluded that the revenue-maximising tax rate was well in excess of 50 per cent.

Of course one could argue that the 50 per cent rate sends out a signal about whether Britain is 'open for business'. Its main effect may not be inducing relocation, but dissuading location in the first place.

In any case the tax has not been in place long enough for its effects to be properly studied, although the Treasury is trying to make some calculations. One of the considerations has to be whether it encourages the use of tax avoidance devices.

Of course in many respects what the tax is about is political symbolism. It is a seen as a gesture towards 'fairness', although whether it does promote fairness is another matter. But withdrawing it would be politically costly when median incomes are being squeezed.

If the goal is revenue maximisation, then it is arguable that property taxes are more efficient and less distortive. A 'mansion tax', a 1 per cent levy on the amount by which a property's value exceeds £2m, would generate enough revenue to replace the mansion tax. But it might be politically difficult for many Conservatives.

Do prime ministers and chancellors always fall out?

2011-09-06T10:41:00.000-07:00

In article in the Evening Standard yesterday reviewing Alastair Darling's memoirs the distinguished political commentator Anthony Seldon argued, 'Britain has specialised in bad relationships between prime ministers and chancellors.' If that is the case, the consequences for the conduct of economic policy would be very serious as this relationship is the very fulcrum of government.

Seldon is able to produce a number of examples to support his case: (arguably) Howe and Thatcher; Lawson and Thatcher (although not initially); Lamont and Major; and Brown and Darling.

But one could produce counter examples. Seldon has to concede Clarke and Major. Healey from 1974 to 1979 had an effective working relationship with Wilson and then Callaghan. And the relationship between Osborne and Cameron seems to be harmonious and effective.

But then Cameron allows Osborne to get on with the job. The worst situations arise when the prime minister really wants to be chancellor as well. That was a problem with Macmillan's succession of chancellors and it was with Edward Heath, having seen the untimely death of Iain Macleod in the opening weeks of his administration. Anthony Barber was arguably one of the least impressive of post-war chancellors and lacked the authority and political base to stand up to Heath.

Given the importance of this relationship, it is remarkable how little systematic research there has been on it.

Arundells and Edward Heath

2011-08-23T05:00:00.000-07:00

Yesterday I visited Arundells, the home in Salisbury's Cathedral Close of Edward Heath. Coincidentally, I have just finished reading Dominic Sandbrook's history of the Heath Governnment, State of Emergency.

Thoroughly researched and well written as all of his books are, Sandbrook social conservatism is on display: perhaps even his big C Conservatism as he is now fulfilled the ambition that many academics dream of, giving up his post to write full time. And where has he moved? Chipping Norton.

Sandbrook's basic verdict on Heath is that he did not lack the vision thing, but tried to do too much too quickly against a difficult social and economic bacground (remind you of David Cameron?) Heath was a modernising technocrat who thought you could win through by rational argument but his communication skills were poor (perhaps because he was emotionally stunted).

Arundells is well worth visiting just for the garden (which you can go round if you can't get into the house which you have to book ahead for). It is beautifully designed and ends in a river and some water meadows while walking back to the house gives you a fine view of the spire of Salisbury Cathderal (which has an interesting contemporary sculpture exhibition on at the moment).

For a political enthusiast, the highlights include the collection of photos on the grand piano which includes one of Heath with Fidel Castro, an unlikely pairing. Bill Clinton was hidden in a draw for a while, apparently.

Another highlight is the 'cartoon corridor'. It's interesting how quickly political reputations fade as I had to explain to other visitors who John Davis (of 'lame ducks' fame) was. Indeed, I bumped into our Conservative MP at the station in the morning and he clearly regards Heath as prehistoric which in a way he is.

If you want to see Arundells, you might have to go quickly as the trustees are trying to sell it off as they can't afford the upkeep although they are encountering some resistance: Arundells

If this was the States, the house would be part of a presidential library and run as a national monument. Here there might be a case for the National Trust to take over. They would bring some commercial savvy to the operation such as asking visitors to add Gift Aid to the rather modest fee. It would be a shame if the unique collections in the house were dispersed.

Proceed with caution

2011-08-05T07:59:00.000-07:00

Apparently some consideration is being given to replacing the 50 per cent tax rate by increasing the 40 per cent rate to 45 per cent. The 50 per cent rate (63 per cent if one takes account of national insurance) is, of course, loaded with political symbolism in terms of 'punishing the rich' but is totally ineffective in terms of generating any additional net revunue. It just complicates further an already complicated tax system.

However, in political terms one has to be very careful about increasing the 40 per cent rate. It brings within its net a considerable number of people who are potentially Conservative voters. One could, of course, increase the threshhold (which has fallen behind increasing salaries) to reduce the impact but this could minimise the revenue raising effect.

Scenarios for the UK economy

2011-08-01T22:39:00.000-07:00

Blog from the IMF setting out possible scenarios for the UK economy. They think that a gradual recovery is most likely, but call for nimble policy responses if that doesn't happen: Economy

They anticipate a gradual acceleration of growth to 2.5 per cent which would be good if it happened, although I am less sanguine than them about productivity. It's also worth noting that two of their scenarios refer to high inflaton which is what is really squeezing incomes rather than austerity.

0.2 per cent is just good enough

2011-07-26T03:16:00.000-07:00

The latest quarterly figures for GDP growth of 0.2 per cent are just good enough in political terms, especially given that special factors knocked off 0.5 per cent: Growth . They are below expectations and disappointing comparatively, but just enough to prevent Ed Balls creating a political firestorm.

Consumer demand is being hit by the squeeze on incomes. But what is not talked about very much is the underlying structural weakness of an economy that is so dependent on consumer demand, something like two-thirds of the total. Debt fuelled 'privatised Keynesianism' as Colin Crouch has called it is not going to return any time soon.

In terms of short term fixes, a cut in VAT has been recommended. That would stimulate consumer demand and have a positive effect on inflation. However, it would also cut revenues and that would undermine the deficit reduction policy which is already encountering plenty of difficulties.

Statement by the prime minister

2011-07-20T04:29:00.000-07:00

Sometimes I wonder about the parallels between this current crisis and the Westland crisis which was supposed to bring down Margaret Thatcher as prime minister but which is barely remembered today (although it did unleash Michael Heseltine as an unguided missile). Actually Ed Miliband was more effective in the questions that he put to the prime minister today than Neil Kinnock was then.

Dave Cameron said that he had learnt from the experience of employing Andy Coulson and with the benefit of hindsight he would have done things differently. If Andy Coulson was shown to have lied, he would then apologise, but this 'conditional apology' was not good enough for Ed Miliband. I must say that I have never quite understood the fashion for apologies.

Ed Miliband was at his strongest when he pointed out that there were five opportunities for David Cameron to doubt Andy Coulson's suitability and the strongest of these was in relation to a New York Times article last September which led to the re-launch of the police investigation. Miliband suggested that the prime minister was caught in a tragic conflict between personal loyalty and the standards and integrity required in public life.

These are all powerful points, but Labour's relationship to the media has not been squeaky clean. The prime minister was able to castigate them as the 'slumber party' and pointed out that Rupert Murdoch had named Gordon Brown as a personal friend.

Nick Clegg's body language throughout was interesting, one of frozen immobility most of the time. Clearly the Lib Dems seen an advantage in distancing themselves over this issue.

Despite the saturation media coverage, I just wonder how interested those outside the political class are in all this. The crisis in the eurozone threatens to unleash a sovereign debt crisis and a second banking crisis which would be far more serious than what Ed Miliband described as a 'a catatsrophic error of judgment'. Which of us has not made poor personnel choices?

David Cameron faces media storm

2011-07-17T23:50:00.000-07:00

All my hopes of a quiet Sunday at home were shattered after first Rebekah Brooks was arrested and then the Commissioner of Metropolitian Police resigned. A classic media storm quickly developed with one reporter suggesting to me that 'the dominoes are falling' and David Cameron himself might be in danger.

Apparently, Dave did not hear of the news of the Commissoner's resignation until he was 1 hour 10 mins. into his flight to South Africa when he had a satellite phone conversation with Home Secretary Theresa May.

There is no doubt that David Cameron has made errors of judgment in relation to Andy Coulson, not least in failing to heed advice that he was given, although some of that advice appears not to have reached him. David Cameron also said last week in the House of Commons that some of the assurances he was given by Andy Coulson may not have been well founded.

Ed Miliband has made good use of the situation and has been able to take his L-plates off and for once look authoritative. Tom Montgomerie suggests mischievously in The Times today that this is bad news for Labour as he is now well entrenched. His poll numbers have certainly not improved all that much (yet) but he now may look less like the head boy asked at short notice to make a speech.

Yvette Cooper has probably been an even more effective performer and has insisted that David Cameron has questions to answer. As it so happens, the Prime Minister is in South Africa and will not return until after Parliament goes into recess (he is about to give a press conference), although some Labour MPs are calling for the House of Commons to be recalled. David Cameron said in his press conference this morning that it would be appropriate for the House to be recalled on Wednesday for a statement and questions.

What is really serious about this crisis is that it further erodes trust in institutions, not just the media, but even more important the Metropolitan Police. The Met has had problems in the past with corruption and institutionalized racism and these have been tackled to good effect. Crime in London has been falling. However, it is evident that some members of the force have had a closer relationship with the media than is desirable.

It is now becoming apparent that the Mayor of London had lost confidence in the Commissioner and in effect he went before he was pushed (Theresa May would have probably implied that he should go in the Commons statement scheduled for todday). Bozza and Dave had a number of conversations over the matter over the weekend which must have been interesting given their political rivalry.

The Liberal Democrats have come out of this quite well because they were not having informal meetings with News International but in part this because they were not regarded as serious players before the last election. Nevertheless, Nick Clegg has managed to sound sensible and authoritative.

It should be remembered that there is a serious crisis in the eurozone and a potential debt default in the US, either of which could trigger a second recessionary wave at a time when governments have no shots left in their locker. Voters will make their decision at the next election in terms of the economy and public services, not the phone hacking scandal.

Nevertheless, David Cameron's image has been dented. He is good at the big picture but the flip side of that is that he does not always master crucial details and up to now has been able to breeze through on the basis of self-confidence. Clearly he now faces a more difficult phase as this story will rumble on for months and years.

But George Osborne is not going to be moving into No.10.

The effects of an ageing population

2011-07-15T11:49:00.000-07:00

The Office of Budget Responsibility has published the results of analysis of the long-term effects of an ageing opulagtion: Ageing

The headline conclusion is that further public spending cuts or tax rises will be needed after 2016-17. The pressures are estimated to be so great that a tax rise of 1.5 per cent of national income would be needed in 2016 to put public sector debt on a path to return to 40 per cent of national income by 2060. Such a rise would be equivalent to increasing value added tax to 24 per cent.

Ageing has little effect on taxation but would raise public spending by 5.3 per cent of national income. These rises would start in the 2020s and are driven by a sharp increase in the costs of health care, state pensions and long-term care. However, it should be noted that Britain's likely burden from ageing was no worse than in the US and better than in many European countries.

However, the OBR does assume relatively modest rises in health spending which seems somewhat unrealistic given the pressures that arise from advances in medicine. If the rate of growth of health spending was closer to the historical average, it would take up another 5 per cent of national income by 2060.

There are real intergenerational justice issues here, but people have a strong sense of entitlement to benefits in old age. Moreover, older voters have a much higher propensity to vote that younger voters, approaching 70 per cent.

Public sector pensions

2011-07-05T07:29:00.000-07:00

Last Friday The Times carried an interview with a teacher from my old primary school, St.Margaret's Plumstead Common. This 59-year old complained, 'I'd like Michael Gove to come and spend a week doing my job .. When he does that he can come and tell me about cutting my pension.' Given that she is near retirement age, her pension is unlikely to be affected much.

Even if the Government's proposed changes go through in full, those in the public sector will still be much better off than those most of those in the private sector, many of whom do not have a pension worth speaking of or have to make their own provision in schemes which are vulnerable to stock market fluctuations. If vox pop and radio show texts are anything to go by, many in the private sector resent what they see as the privileged treatment of the public sector.

There are two answers to that view. One is that relatively good pensions form part of an overall renumeration package which public sector workers signed up to as part of their contracts. But that is an argument for phasing in the changes not abandoning them which is what is proposed anyway. And if the grass is greener on the other side ...

A second argument is that poor private sector pensions need to be tackled rather than reducing those in the public sector. Employers should be 'required' to provide them. In other words labour costs in the UK should be substantially increased which wouldn't do much for competitiveness.

Career average pensions could actually benefit the less well off and the unions seemed to be prepared to concede that point. As for working longer before pensions become available, trade unionists complain that they are being made to pay for the banking crisis.

But the banking crisis didn't lead to people living longer. It's one thing to pay a pension for seven years after someone has worked for forty years and another thing to pay it for thirty years.

Where the unions do have grounds for complaint is the increase in contribution costs at a time when the pay of their members is frozen for all except the lowest paid. In other words this means a further cut in take home pay.

It is actually not as much as the figures suggest because of the generous tax treatment of pensions - something that is never really discussed. Even so, it is substantial and it is here that the Government may need to give way, although by doing so they place at risk their deficit reduction strategy. But a hot autumn could damage the Government's standing. In other words, there might be a political price to pay for failing to give concessions.

It's a tricky tightrope and while David Cameron is good at tactics, he may be less good at strategy. Given the recent proposals on paying for care, one thing that does need to be thought about is whether those of pensionable age should continue to be exempt from National Insurance contributions.

Coalition Government 'shows emotional intelligence'

2011-06-15T23:59:00.000-07:00

The Constitution Unit at UCL has been carrying out an intensive interview-based study of the Coalition Government. They report that 'In Whitehall officials report that both parties have developed a lot of emotional intelligence and worked hard to develop effective relationships, in a welcome contrast from the Blair/Brown years.'

In Parliament, the Coalition 'has behaved no differently from any other majority government, taking Parliament for granted ... The coalition may have less flexibility to accommodate Parliament because its legislative proposals are already a carefully constructed coalition compromise which they dare not unpick.'

The Unit finds that 'The Lib Dems have had a lot of influence on coalition policy, but struggle to demonstrate it.' This finding is confirmed by another piece of research which has just been published which I hope to comment on subsequently.

A mid-term review of the coalition agreement is due to start this summer and finish in September 2012. This will be an opportunity for discontented backbenchers in both coalition parties to express their views. Conservative backbenchers have been upset recently by what they see as Lib Dem triumphalism over changes to the NHS reforms.

Many Conservative backbenchers on the right of the party think that cuts in the defence and law and order budgets have gone too far and would be prepared to cut the NHS budget (and/or introduce an element of charging).

Will no one rid me of this pestilent priest?

2011-06-10T06:03:00.000-07:00

Dissident divines have been a problem for rulers in England for centuries. I haven't read what the Archbishop of Canterbury has said in the The New Statesman in detail but from the extracts I have seen it seems a bit pious, other worldly and cerebal which is exactly what I would expect from the current incumbent.

It is, of course, all reminiscent of the 1980s when the Church of England and the House of Lords constituted Mrs Thatcher's most effective opponents. This culminated in the publication of Faith in the City in 1985 which was denounced by one of her ministers as 'Marxist theology'.

One of my recollections of this period is going to a dinner at Cambridge University where there were a number of Japanese guests. A junior minister was the speaker and tore up his speech and launched into an attack on the Church of England. A puzzled Japanese guest asked me why the minister was attacking the bishops at a conference on government-industry relations.

The current fuss is all a bit awkward for David Cameron after a rather tricky week which has been characterised as a 'wobble'. David Cameron is, of course, a communicant member of the Church of England. But he gave as good as he got to the Archbishop.

For some Conservatives it will affect the debate about the future of bishops in the House of Lords, although that is a rather narrow take on things. As an Erastian, I have no objection to the Archbishop pronouncing on public issues, but I would be more impressed if the hand wringing was accompanied by a constructive alternative.

The Dave and Nick show

2011-05-24T06:07:00.000-07:00

Despite the revival of formal Cabinet Government, it is interesting how much the Coalition Government depends on informal arrangements and in particular the personal relationship between David Cameron and Nick Clegg. This emerged from a presentation to the Magna Carta Institute seminar last week by Professor Robert Hazell of the Constitution Unit at UCL.

Cabinet committees are being taken more seriously and there is a right to refer issues up to the Coalition Commitee, but this ultimate star chamber has met only twice. The Coalition Operation and Strategic Planning Group was intended to meet weekly, but has been replaced by informal processes. Cabinet Committees resolve interdepartmental issues, not coalition issues.

Much depends on the bilaterals between Dave and Nick. They usually chat on the phone on Sunday evening and have a regular meeting each Monday morning. The Quad is made up of the PM and Deputy PM, plus the Chancellor and the Chief Secretary to the Treasury. Sometimes it functions as 'Quad plus' when other ministers are brought in. There are slo bilaterals between Oliver Letwin and Danny Alexander, as well as Letwin's 'policy catch ups'.

Why we should take debt seriously

2011-05-21T22:37:00.000-07:00

There are those who argue that Britain's debt problem is not serious and simply a cover for David Cameron to slash the public sector. Two interesting posts by economist Mark Harrison argue the contrary case: Debt

Quite apart from anything else, having a large debt means that a great deal of money is spent servicing it. Britain has the lowest costs of any major country in terms of servicing its debt, but even so it cost a mouth watering £44 billion last year. Think of the opportunity cost of that.

Britain has been living beyond its means in terms of personal and public consumption for some time. How that burden is shared out between public expenduiture cuts and reduction in personal income is a matter for political judgement. However, 'rebalancing' the economy certainly involves a squeeze on personal incomes so that there is an export led recovery.

Of course, there is a political cost to that. But even if confidence in the Coalition's economic competence is declining, as polls suggest it is, voters evidently many reservations about Ed Miliband.

It may provide an opportunity for parties of the populist right like UKIP who have an alternative narrative about globalisation and Europeanisation. However, such parties are often not well led and it is difficult for them to succeed under a first past the post system.

The one leader and party that is riding high in Britain at the moment is Alex Salmond and the SNP. The Scottish question could potentially become the equivalent of the Quebec question in Canada: never resolved, but always a key factor in national politics.

Quebec has, of course, achieved considerable autonomy and even has a ministry of foreign affairs. The future for Scotland might not be separation, but it could come close to what was mooted in Quebec at one time: sovereignty-association.

Walking the tightrope

2011-05-20T03:24:00.001-07:00

Both the Government and the Bank of England are walking a tightrope in terms of economic policy at the present time. The Bank is (quite properly) a relatively secretive institution, even if much more transparent than it was in the past and I am not claiming to have any special inside knowledge.

However, there are concerns by observers of the Old Lady that inflation has got baked into the cake. Electricity prices are expected to go up by 10 per cent in the summer and gas prices by 15 per cent, the latter driven by liquified natural gas demand from Japan.

It could be argued that increasing interest rates would actually do very little to drive down inflation and would impact on consumers by pushing up mortgage rates. The Bank does consider, however, that inflation will eventually diminish because there will be no further VAT rise; no further fall in sterling; and (hopefully) no big rise in energy prices.

Exports have been largely driven by sterling depreciation. It is particularly a matter of concern that imports by businesses resoponding to Bank surveys have not been affected at all despite a 20 per cent rise in their cost. Imports are predominantly intermediate ones suggesting that no domestic substitution is occurring. However, it is possible that the rate of growth in imports may have been slowed down.

The consequences of an unprecedented fiscal contraction in the UK economy have yet to be seen. However, big corporates do have tons of cash they could spend. Employment intentions are picking up, but a lot of it is part-time and self-employed.

There have been substantial differences on the Monetary Policy Committee (MPC), although these will diminish with the departure of ultra inflation hawk Andrew Sentance who even seemed to question the Bank's forecasts. Sentance's argument is in essence that it is really all about global imbalances rather than UK domestic conditions and the former will persist.

More generally, the differences on the MPC reflect considerable uncertainty about risks. Some members of the MPC are concerned about the credibility gap in terms of constant overshooting of the inflation target. People are arguably more concerned about growth and employment than inflation.

At the moment there is an unprecedented monetary expansion and at some point this will have to stop. However, there is believed to be some concern in Bank circles about the fragility of the economy and downside risks.

The Bank has in effect admitted that the output gap (slack in the economy) is smaller than thought and this means that any expansion may see limited productivity gains and create inflationary pressures. It is unfortunate that the output gap is one area in which data is less reliable, but it is evident that some physical capacity has been destroyed for ever. There are also some signs of skill shortages appearing, especially in engineering.

One uncertainty is the sterling exchange rate. Bank thinking is to prefer the current rate, but a mild appreciation seems likely. In any event it cannot be managed.

Growth has been driven by larger firms, but business has never been better at the company owned by one of my children and her husband. New workers have been taken on and the order book is full. However, they were not receptive to the idea of a chat with the Bank's regional agent.

The economic outlook

2011-05-18T21:56:00.000-07:00

The Magna Carta institute at Brunel University run by Justin Fisher held an interesting event on 'The Coalition - one year on' at the British Academy earlier this week. I plan to talk about some of the other presentations later, but here is a summary of what I had to say (my statistics generally come from the National Institute for Economic and Social Research).

The 'privatised Keynesianism' model identified by Colin Crouch in which the economy is driven by consumer debt linked to the housing market is no longer viable in the medium term, if at all. Consumer spending is forecast to fall by 0.6 per cent in 2011 (it still accounts for two-thirds of aggregate demand).

Consumers are being squeezed by inflation at 4.5 per cent with real disposable incomes falling. Indeed, I think that the Bank of England has de facto abandoned the inflation target. That may not be a bad thing, but they won't admit it is what they have done. Given fiscal consolidation, the economy needs a monetary stimulus and inflation also erodes the debt burden.

Real house prices are forecast to fall by 4.5 per cent in 2011, although the London market is still relatively buoyant, especially at the higher end where it is driven by foreign buyers. There is a fear of unemployment, particularly in the public sector. The Government's austerity rhetoric may have dented consumer confidence.

Export led manufacturing growth is forecast to be 6.9 per cent this year and 4.3 per cent in 2012. This is mainly driven by the weakness of the pound. All three political parties support rebalancing the economy and this is one of Nick Clegg's little known strategic objectives. However, much of manufacuturing is now essentially assembly operations and much of the value chain in industry has been wiped out. It should be noted that past government industrial policy interventions have not been conspicuoulsy successful.

The OBR's growth forecast for 2011 is now seen as rather optimistic and many commentators anticipate 1 to 1.5 per cent. It is unlikely that the economy will grow faster than the trend rate of 2.1 per cent until 2013. The higher growth rates recorded recently have little to do with government policy but reflect the fact that they have been hit less hard by the banking crisis (so far, but they are exposed to a Greek default). The German economy also has strength in high quality, high valued added manufacturing.

The output gap is probably larger than we thought whuich means that the sustainable output of the economy is lower than thought. Productivity growth is likely to be low and the economy will not grow as fast as it did without generating inflation.

It should be noted that the Coalition Government does not aim to eliminate the cyclical deficit (the cyclically-adjusted current budget) so in fact Conservative and Labour positions on the budget are less far apart than the rhetoric would suggest. There will be public spending increases in real terms over the Parliament, although as a share of GDP public expenditure will fall back to 40-41 per cent.

Given that the weakness of the recovery will depress tax revenue, even if (a big if) spending targets are met, net borrowing will fall to 3.6 per cent of GDP in 2015-16 rather than the projected 1.5 per cent. The current budget will run a deficit of 2.2 per cent of GDP compared with the 0.2 per cent forecast.

The Government has been criticised for the lack of a growth strategy, but there are limits to what governments can do to stimulate growth. The most useful measures such as skill formation only bear fruit in the medium term.

A good night for Dave

2011-05-06T00:14:00.000-07:00

Dave Cameron has reason to be pleased with the local election results so far. BBC projections put the Conservatives on 35 per cent as against 37 per cent for Labour and 15 per cent for the Lib Dems. This is not a bad outcome for a party implementing unpopular policies. The Conservatives are also likely to be able to celebrate a big majority in the AV referendum.

In Scotland the presidential style campaign run by the canny Alex Salmond has paid off with a clear majority for the SNP. Labour may be able to take sole charge of the Welsh Assembly, but even there the result is on a knife edge. The results hardly show that voters think that they have a convincing alternative narrative or that they see Ed Miliband as a future prime minister.

Once again it is the Lib Dems who are the whipping boys for the Coalition Government. As expected, they have lost heavily in the council elections, especially in the north. There will now be increased party pressure on Nick Clegg to differntiate himself from the Conservatives.

Some of the things said in the AV referendum have left a sour taste in the mouth. It may never be glad, confident morning again, but it is not the end of the coalition. The two parties are inextricably bound together.

AV and PR

2011-04-22T09:15:00.000-07:00

The Elections, Parties and Opinion Polls (EPOP) group organised a panel on the AV referendum at the Political Studies Assocciation (PSA) conference this week. Although it occupied the graveyard slot in the conference it attracted a good attendance and provoked some lively discussion. But perhaps that says something about the geekiness of political scientists as one can hardly imagine that outside on a warm afternoon in West London people were discussing AV as they sipped a coffee or enjoyed an early pint before the holiday weekend.

It was agreed that the debate had often been simplistic, misleading and irrelevant, but then, as someone remarked, that is true of many political debates. It looks likely that the referendum will be defeated on a low turnout (especially in London where there are no other elections).

British people are relatively conservative and tend to favour the status quo. They have been told that AV would be complicated and expensive, although, of course, any form of democracy costs money. The poll evidence suggests that older voters are more opposed and they are more likely to turn out and vote.

Given that AV is really a modified form of first-past-the post, what would be the consequences of either a win or a defeat for PR? Some think that a win would not be what some have called a slippery slope to PR, but would end the debate. Voters would be coralled into two voting camps, leading to less representation of the diversity of the electorate. What seems more likely is that a defeat would end the PR debate as a live item for some time to come. But it has always been a debate among the political class anyway.

What seems certain is that variants of PR will remain where they are embedded in 'secondary elections' for the devolved assemblies, the European Parliament and the London assembly and mayoral elections. The defeat of the referedum might give an impetus to Lords reform as a sop to Nick Clegg. A largely elected upper house would use some form of PR, although when this prospect was mentioned a life peer in the audience went slighty green around the gills.

Inflation

2011-04-13T00:50:00.000-07:00

The slowing in the inflation rate was unexpected and good news. It means that the pressure is off the Bank of England to raise interest rates for now. Given that most households now have variable interest rate mortgages this will at least delay a further squeeze on household incomes.

What seems to have happened is that consumer resistance to higher prices persuaded retailers to reduce some prices. However, other cost pressures remain. The oil price goes relentlessly upwards. A 10-15 per cent in electricity and gas prices is likely in early summer.

Also most consumers don't perceive that inflation is not rising so quickly. This is not surprising when the cost of so many items is still going up. However, against the background of high unemployment this may not translate into significant upward pressure on wages.

The NHS dilemma

2011-04-13T00:44:00.000-07:00

Two generalisations can be made about the NHS. All governments seem to think that organisational restructuring is the answer to its problems. And at the first whiff of the word 'reform' the medical profession is up in arms.

Andrew Lansley has come up with a technocratic reform of the NHS which is so complex that it is said that you can see it from outer space. Of course, the slogan 'Defend the Primary Care Trusts' is unlikely to get many people excited. But concerns that local hospitals might be made unviable by transferring business to the private sector is a more potent fear.

The underlying problems that the NHS faces are an ageing population; ever more costly medical technology and treatments; and an increase in the numbers of chronically ill. The Government is expanding NHS spending in real terms but at a much slower rate than before. This will make it difficult for the NHS to keep up with these challenges.

It is unlikely that the Lansley reform will fix these fundamental problems and there will be substantial transition costs. David Cameron is clearly concerned and he has reason to be.

The big numbers

2011-03-28T00:57:00.000-07:00

Presentationally the budget focused on the relief on fuel duty, an asprin for consumer pain. This subsequently provoked a backlash from the North Sea oil and gas industry, threatening reduced investment and higher prices.

The gas industry may have had a point and there has been some rowing back there. But the oil industry has been receiving windfall profits and the UK tax regime does not take as big a slice of these as comparable regimes elsewhere.

Interestingly when I was doing the budget programme on BBC Coventry & Warwickshire we received more calls about the census than the budget. This trend seems to have continued with texts to Radio 5 this morning.

However, the real concern about the budget is in relation to the big numbers. The Labour Party has focused on scaled back growth numbers but inflation is in many ways a bigger worry.

In particular it impacts on the Coalition Government's major target, scaling back the budget deficit. Departments are given allocations in cash terms and they will feel the pinch even more. Even more worrying, on the expenditure side benefits are uprated in line with inflation.

If the Bank of England does put it up interest rates, it will squeeze consumer budgets even more given that most people are now on variable rate mortgages. Consumer confidence, already fragile, will be hit even more. That in turn will impact on growth.

However, it is possible if the Libyan crisis is resolved, and there are no serious disturbances in other oil producing countries, that the oil price will ease back a little. Howeve, experience suggests that this takes a time to have an effect at the pumps.

No longer Boy George

2011-03-20T00:43:00.001-07:00

It should be no surprise that in the weekend before the budget both the Financial Times and The Economist have published profiles of the Chancellor of the Exchequer, George Osborne. The one in the FT magazine is particularly long and favourable and looks as if it could have been 'placed' by the Chancellor's political advisers.

However, the message of the two pieces is essentially the same: the Chancellor is no longer Boy George. Before the election there were concerns that he would not be up to the role. He was seen as too preoccupied with scoring political points. But he has grown into the role well. Although not a workaholic, civil servants think that he has mastered the technical aspects of his brief well. He has an appetite for reforming taxes, rather than just cutting them.

He also has a good working relationship with the prime minister, symbolised by the fact that he works most of the time out of No.11 Downing Street rather than the Treasury. The door to No.10 is kept pinned open and the Chancellor takes a leading role in regular strategy discussions. The relationship between the Prime Minister and the Chancellor is the fulcrum of government and when it breaks down (Lawson and Thatcher) or is tense (the Blair-Brown 'dual monarchy'), the reverberations are felt throughout Whitehall.

David Cameron has a long way to go as Prime Minister and is currently enjoying a good war. However, Osborne is now seen as a potential successor in a way that he wasn't before. The Tory right see him as more attuned to their way of thinking than the Prime Minister.

One problem is Osborne's public image. He doesn't expected to be liked, but he does hope to earn the respect of the people. However, an Economist poll shows that William Hague is seen as the most likely successor, followed by Nick Clegg! Osborne only gets 9 per cent.

In part this reflects the way in which Nick Clegg is the public No.2 in the government and has acted as a lightning conductor for its policies. What is also interesting about the Economist poll is that although the electorate have taken on board Labour's message that the government is cutting too far, too fast and that the poor will suffer most, they also largely blame the existence of the deficit on Labour. That effect may, of course, fade over time and a big responsibility rests on Osborne for restoring the economy to better health.

Labour still lacks new growth model

2011-03-13T05:50:00.000-07:00

Labour still lacked a new growth model argued Professor Colin Hay at an End of New Labour? workshop at the University of Warwick last Friday. This would involve the channelling of credit out of the housing market to targeted export oriented sectors of the economy. An alternative account to the crisis of debt in terms of a crisis of growth could just about be detected.

It was difficult to see how a model of privatised Keynesianism (reliant on debt to fuel growth) could be resuscitated. High levels of private debt had increased the sensitivity of demand in the economy to interest rate variations.

There was a large interest rate spread between the LIBOR wholesale rate and mortgage and commercial lending. This functioned as a form of bank recapitalisation and was a drain on consumer demand and investment.

A manufacturing rebalancing of the economy would be very difficult to achieve. There was a need for downward pressure on the actual cost of borrowing. One could politicise the spread of credit, shaming banks. The Bank of England should be made responsible not only for base rate but for monetary policy more generally. Mortgage holders were likely to respond positively to such a strategy, but it was not sufficient.

Andrew Gamble asked how, given the extent of financialisation and individualisation, could this be reversed politically? How could the state change the supply of credit, what capacity would it need?

Peter Burnham raised the question of whether government needed a growth model. Jim Bulpott would have argued that it need it politically, but not economically. As far as manufacturing was concerned, the value chain was broken and three-quarters of what was left was in workshops employing small numbers of workers. One could not impose rates on any bank.

In summary the discussion suggested that there was no easy route out of the current crisis.

The competence theme

2011-03-09T10:20:00.000-08:00

Ed Miliband made the competence of the Government his organising theme at PMQ's today. However, he is going to have a bit of an uphill struggle according to the results of a new Populus poll.

44 per cent of those interviewed said that they trust the coalition's key economic figures to manage the economy as against 33 per cent for Labour. 41 per cent agreed that the Conservatives have 'a good team of leaders' as against 34 per cent for Labour.

However, Labour's lead on 'shares my values' has gone up from 1 per cent to 9 per cent, while the number agreeing that Labour is 'for ordinary people, not just the best off' has also gone up.

The Liberal Democrats have taken a big hit on whether they are 'honest and principled' down from 40 per cent in September to 24 per cent now. No longer can they claim to be above or beyond politics.

Living standards may never recover

2011-03-02T01:46:00.000-08:00

Mervyn King has warned that living standards may never recover from the current economic crisis: Crisis

He is surprised that people are not angrier, but they may just be despairing. The global economic balance is shifting against countries like the UK and the hope of each generation's living standard being better than the last one may no longer be achievable.

Each day I drive past a petrol station and each day the price seems to have gone up by a penny a litre. Of course this is partly a consequence of an overreaction by the markets to events in Libya which only accounts for 2 per cent of world oil production.

It's difficult for families to cut down their use of petrol in the short run as most journeys are more or less essential, particularly at this time of year. As a consequence, budgets can stretched and even low end retailers like Primark are now feeling the pinch.

On economic and political grounds the Government would probably be advised to suspend the increase in fuel duty planned for April even though it will cost them £500m. The notion of an automatic stabiliser is more problematic as it could punch a big hole in the public finances.

No depoliticisation strategy

2011-02-23T00:55:00.000-08:00

Yesterday I went to the inaugural lecture of Professor Peter Burnham at Birmingham University. He is one of the main exponents of the depoliticisation thesis: in summary, the argument that governments place difficult decisions at one remove to avoid turning an economic crisis into a political crisis.

Sometimes they do this by adopting an external decision rule that can take the strain and the blame: examples include the Gold Standard, the Bretton Woods system and British membership of the ERM. Another option is a domestic rule of some kind such as the Thatcher Government's Medium Term Financial Strategy or possibly Gordon Brown's fiscal rules.

Pete Burnham's observation about the Coalition Government was that they have neither of these stratgies, domestic or external.

A note of caution

2011-01-27T07:42:00.000-08:00

A welcome note of caution here about reading too much into one quarter's GDP figures, particularly when they have been distorted by bad weather: GDP

This article rightly stresses concern about inflation, although talk of stagflation in the City is a bit overdone, particularly for those of us who remember annual rates of 25%+ in the 1970s.

The pound dipped against the dollar after the figures came out because of fears that interest rate rises would be delayed, which seems likely, although two members voted for a rise at the last MPC meeting.

If the Government abandoned its austerity package, sterling would fall and inflation, which is being driven largely by world commodity price increases, would go even higher.

Inflation rate

2011-01-18T07:36:00.000-08:00

There are some useful historical figures on inflation here: Inflation

Talking of a 'whopping' 3.7 per cent inflation rise seems a bit over the top when some of us experienced annual rises of over 25 per cent. But part of the problem at the moment is that public sector salaries are frozen and they are not going up that much in the private sector.

It's also worth noting that the inflation rate looks much lower when one excludes indirect taxation. In November the CPI was 3.3 per cent, but the CPIY rate, i.e., excluding indirect taxes was 1.6 per cent, under half as much.

From government's point of view some inflation is not a bad thing as it erodes the mountain of public debt.

Quangocide

2011-01-13T01:50:00.000-08:00

The Public Administration Committee of the House of Commons has published a critical report on the Government's cull on quangos which looks unlikely to realise the hoped for savings: Quangos

As I observed in earlier commentary on this subject what you need to do is first decide whether a particular function needs to be performed by government and, if so, whether it is better done by a central government department or an agency.

The Government seems to believe that quangos are less accountable and I think there are senses and circumstances when this is the case. However, the committee makes an interesting point when they state 'Stakeholders and civil society play an important part in providing challenge and criticism of public bodies on a day-to-day basis, and it is easier for them to perform this role when they have a clearly identified body to engage with, not a homogeneous central department.'

One of my concerns in the past has been that some quangos have become (or have been set up as) advocacy bodies and in general I do not think this is a proper role for publicly funded bodies. I do see them as being of value in performing regulatory tasks where ministerial intervention should be confined to clearly defined and limited grounds.

The Coalition Government was hoping to save £1bn from its bonfire of quangos, but Cabinet Office minister Francis Maude had to admit that the savings were 'hard to quantify'.

Contradictory expectations

2011-01-07T00:27:00.000-08:00

In the latest issue of British Politics Peter Dorey shows that the electorate was opposed to every conceivable tax increase at the time of the general election by a large majority. Equally they tend to be opposed to specific cuts in public expenditure that affects them.

Listening to the vox pop from Oldham East and Saddleworth this morning, one interviewee was against the rise in university tuition fees but also against the rise in VAT. Another respondent wanted more spent on the NHS.

Unfortunately, every government that comes into office wants to reorganise the NHS, imposing big transition and disruption costs without necessarily improving the standard of patient care. What the Government has unfortunately been unwilling to tackle is a different model for delivering public health care: for example, competitive insurance provision as happens elsewhere in Europe.

What never seems to be mentioned in these discussions is the changing economic and political balance of power in the world. This is not the 19th century or even the early 20th century when Britain was top dog. Transitions to a new balance when there is no undisputed hegemon are not easy to manage.

As for the by-election, I think there will be a low turnout and Labour will hold the seat with an increased majority. This will encourage those in Labour who do not want to compromise with the electorate.

Are single author blogs finished?

2010-12-31T01:35:00.000-08:00

That is the contention of Chris Gibson and Patrick Dunleavy writing in the latest edition of PSA News. They argue, 'The truth is that the single-author blog model has already gone out of fashion. Without consistently strong posts, and an easy way of finding them, there is no readership. All the effort made in writing and posting will typically be wasted.'

They argue that 'the vast majority of popular political blogs are now multi-author blogs; that is, themed and coherent blogs run by a proper editorial team and calling on the services of multiple authors to ensure that the blog remains topical, can cumulate a great deal of content and can ensure a good 'churn' of high quality posts.'

This approach is represented by LSE's own blog which is found here: LSE

I note that they have a managing editor which means that resources have been found from somewhere whereas most bloggers are working on their own, some very successfully (Guido Fawkes). An editorial team also means some form of control which may not encourage thinking outside the box.

Not that I pretend to be thinking outside the box. One review of this blog states, that it 'fails to really excite or even raise the temperature of its reader.' Well, of course, I am not trying to raise anyone's temperature. Anger rarely produces good policy, and this is a blog which is interested in analysis not polemic as the title implies.

It is the least successful blog I write as the numbers for this year in terms of hits show:

Political Economy of Football 325,022
Addick's Diary (Charlton) 173,229
Common Agricultural Policy 18,433
Analysing British Politics 12,291

Numbers for this blog are up year on year and as to some extent it is simply a way of sorting out my own thoughts, I will be carrying on in 2011.

A re-run of the poll tax protests?

2010-12-30T00:02:00.000-08:00

The general secretary of the TUC, Brendan Barber, has said that 2011 may be the year in which country says no to government just as in the case of poll tax. The plan seems to be to stage a wave of strikes in the run up to the royal wedding to cause maximum embarrassment to the Government.

Something of a particular reading of history seems to have occurred in the case of the poll tax. There were riots in Trafalgar Square and other acts of defiance, particularly in Scotland. However, what really scared the Government was that they were losing electoral support on the issue and that contributed to the fall of Margaret Thatcher.

They also lost the intellectual case on the poll tax which violated a fundamental principle of taxation originally set out by Adam Smith: there should be some relationship between a tax and ability to pay. I am not sure that the Government has lost the intellectual case on the deficit. Many voters think the country has been living beyond its means.

However, voters think that protests can be effective. In a recent Populus poll, seven out of ten of those polled said public protests 'can be effective ... and played a big part in getting the last Conservative Government to scrap the poll tax.'

One in five could see themselves being involved in protests against spending cuts, while two in five think 'a degree of disobedience and public disorder' is sometimes necessary to make governments take notice of issues.

The rising misery index

2010-12-28T09:58:00.000-08:00

The misery index in the economy is likely to rise next year. Unemployment is almost certain to go up, although there is some dispute about how much it will increase by. However, it is unlikely that all the lost public sector jobs can be replaced in the private sector. Indeed, private sector bosses may be unwilling to hire displaced public sector workers whom they suspect of having led a cushy life. Women will be particularly affected as they are disproportionately employed in the public sector.

Inflation shows no signs of easing. There is pressure on commodity prices, particularly food, gas, oil and cotton. At some point the Bank of England will start to increase interest rates, although by how much and when remains a matter of argument. The CBI says 2.5% by year end: I think 1.75% is more likely.

Even so, one of the things that has helped many people through the recession is that mortgage interest repayments have, depending on the deal a person has, have been kept low. If they rose, real disposable income would be reduced even further. As it is, it will be hit by fact that wages are not generally keeping pace with inflation, by the rise in VAT and by the 1p per £ increase in national insurance contributions from April which is in effect a 1 per cent rise in income tax.

Not surprisingly, retailers are worried about consumer demand. Of course, an objective of current policy is to shift the economy from one driven by private consumption to one in which exports play a greater role.

Meanwhile, the Government is suffering a series of defeats at the hands of fiscal nimbyism. The unfortunate Michael Gove has had to retreat on school sports and free books for young children. In the latter case the sum involved is small, but one way in which retrenchment tends to happen is by cutting smaller programmes completely. Now the Government is under pressure on the forensic science service, the privatisation of which strikes me as not a good idea.

Campaigns may achieve victories on particular issues. An alliance of nimbys may well defeat the proposed HST from London to Birmingham, the start of a larger network. My local MP Chris White has come out against it, reflecting the views of his constituents. The opponents of the scheme say that the business and environmental case is flawed, but if that is so, how have countries such as China, France, Japan, Korea and Spain been able to make high speed trains viable whereas we just have a stretch of line in Kent?

What is clear is that there is choppy political water ahead in 2011 and it may not be possible to deflect the opprobium on to the Liberal Democrats.

Condensing gas central heating boiler failures

2010-12-22T00:07:00.000-08:00

A big enough news story to get on BBC TV last night and on Radio 5 this morning. They are a modern, sophisticated, supposedly energy efficient form of boiler that have been in use for about three years now. When in use they send out a cloud of steam so goodness knows what they do for global warming.

Ours has failed twice so here are a few tips on what to do:

1. Contact a registered gas fitter: Gas safety
2. My gas fitter said to me on the phone 'The whole country's going down.'
3. If you can't get a gas fitter, read the manual for your boiler.
4. Very often the problem is that the external condensing outlet pipe has frozen. You should get this lagged, but the lagging used in the UK cannot cope with the very low temperatures we have been having.
5. At your own risk, apply hot water to the outlet pipe (it should not be boiling or it will crack the pipe). Make sure you are standing on a non-slip surface and that there is no risk of scalding yourself.
6. Make sure that no other connected pipes are frozen: our system was shut down yesteday by our washing machine outlet pipe.
7. Check that the boiler is dry before re-starting it (then take cover).
8. In very cold weather keep the central heating overnight although at a lower thermostat setting (depending on your control system).
9. If you do not have an annual overhaul by a registered gas fitter, make sure you arrange one.

My experience is limited to my own boiler and what you do is at your own risk. Ideally, this work should be done by a registered professional.

From hero to zero

2010-12-21T21:56:00.001-08:00

When I appeared on Rory Bremner's panel in his pre-election show at the Warwick Arts Centre, a questioner from the audience asked us to name a politician who seemed to better than the rest or words to that effect. I named Vince Cable and got a ripple of applause from the audience.

As Enoch Powell remarked, all political careers end in failure and, for all his skills on the dance floor, Vince Cable's reputation has taken a nose dive. He shouldn't have made such remarks to strangers, particularly when he was taking decisions in a quasi-judicial capacity.

If he wanted a war on Murdoch, he has lost. It will now be very difficult to stop the BSkyB takeover. News Corp are even thinking of challenging the reference to Ofcom through judicial review.

Nevertheless, Vince has got off relatively lightly. The Conservative right would have liked Ken Clarke moved into the business portfolio to stop him being 'soft' on criminals. As it is, David Hunt who is a through-and-through Cameroony has got additional powers.

One of the paradoxical consequences of these events (including similar stings carried out on lesser Liberal lights) may be to give a boost to the morale of Lib Dem activists who thought the party was abandoning its principles. They can now be reassured that there is some evidence that ministers are fighting their corner in government.

It should also be remembered that when there is a one party government personality clashes and differences over policy arise between ministers. There is, nevertheless, something in the argument that a party that has been out of office for a generation was ill prepared for the responsibilities of government.

Cable at bay

2010-12-21T08:35:00.001-08:00

One of the many unedifying aspects of current British politics is the way in which the media regularly demonstrate their power by entrapping and then driving from office a particular minister. The latest target is Vince Cable after he fell foul of a 'sting' operation conducted by the Daily Telegraph.

Cable now appears to have gone to ground among demands for his resignation, but he may just be having another ballroom dancing lesson. His statement that he declared war on Rupert Murdoch and his organisation has attracted particular attention with a statement of shock being put out by the Murdoch interests.

There are those of us who think that the significant position of the Murdoch organisation in broadcast and print media deserves closer scrutiny, particularly in terms of the political leverage it gives them. That is not to deny that Sky News and Sky Sports News have been innovative in their approach to television.

The Coalition Government finds itself attacked from the left by a nascent alliance of workers and students (shades of 1968) that thinks it can defeat the government on the streets and a grateful electorate would then give Ed Miliband a working majority to fill in his blank sheet of paper.

It is possible that the Conservatives could win an early election. That is why some of those on the right would like to undermine the Government so that they can have red in tooth and claw Conservatism.

I think the country needs some stability: a general election in 2011 would not really be in anyone's interests. Cable may weather the storm or David Laws could be brought into replace him and we could all enjoy Vince's Christmas performance on Strictly Come Dancing (it reminds me of when Dennis Healey as chancellor appeared on the leading comedy show of the day, Morecambe and Wise).

At least it makes a change from reading about 'My Snow Hell'.

Anthony Howard

2010-12-20T12:14:00.000-08:00

The death of Anthony Howard robs us of a distinguished political journalist and commentator. He had an encyclopaedic knowledge of politicians which he was able to deploy in the last stage of his full-time career as obituaries editor of The Times. He was a polite but incisive television and radio interviewer. He wrote three biographies: I particularly liked that about Richard Crossman which was a model of its kind.

I never knew him, but one day I passed him on the path outside my office. He was on his way to Warwick University's Modern Record Centre which houses the Crossman collection. He researched his subjects seriously.

I learnt a few things from his obituary which I did not know before. I did not know that his father was a vicar in places like Highgate and Epsom, but I should have done. I did not know that his career started on Reynolds News a long disappeared worthy Sunday organ of the Cooperative Movement. I remember that my uncle's newsagents carried a few copies which no one every seemed to buy, even when it was re-launched as the Sunday Citizen. Howard moved on to better things, but never to the editorship of a major newspaper which many felt he deserved.

Howard remained an Anglican, but one sceptical of the Church: perhaps he was an Erastian. They, too, are a dying breed. Howard was one of a generation of knowledgeable, well-read, sophisticated political journalists who weren't able to construct their stories off the internet. We really shan't see his like again.

Is Labour making an impact?

2010-12-19T01:39:00.000-08:00

The latest YouGov poll puts the Conservatives on 42 per cent, Labour on 40 per cent and the Lib Dems on 8 per cent. I would agree that polls at this stage of a Parliament are largely irrelevant, but one might think that Labour would be making a greater impact.

I have not been impressed by Ed Miliband at Prime Minister's Question Time. He does land the occasional punch, but it is often stilted or over prepared. David Cameron is usually able to out point him, often with a spontaneous put down like the Basil Brush comment on Wednesday (after Ed had tried to claim that the PM was 'air brushed').

It looks like in its haste to get away from New Labour (which did win three elections in a row) the Labour Party has reverted to its old principle: never compromise with the electorate.

Of course, it's possible that the Government will be overwhelmed by a tidal wave of revulsion against the effect of the cuts. No doubt that is what the Labour Party hopes. But they have to have a credible alternative economic plan and as yet they don't. Admittedly, they do have time to fill in the famous blank sheet of paper, but they can't take too long.

Meanwhile, David Cameron has followed Nick Clegg in getting in some populist shots at bankers' bonuses. They are an easy target and they haven't showed much political skill. Whether it's good policy is another matter.

Who is to blame for the weather?

2010-12-19T01:25:00.000-08:00

It is sometimes said that British voters expect American levels of taxation and Scandinavian levels of public service. Now transport secretary Phillip Hammond, who wasn't able to take the job he prepared for as chief secretary of the treasurer, is getting blamed for the bad weather. As Rachel on Radio 5 commented this morning, he can hardly ring up God and ask him to change it.

More seriously, he is getting blamed for the failure to prepare for the bad weather. People ask why, say, Zurich or Stockholm airports are able to keep open in similar weather. It's because they can expect such weather two or three months of the year and can invest in expensive capital equipment to deal with it.

Sensibly enough, Mr Hammond has asked the chief scientist to give a view on whether the bad weather of the last three winters represents a change in the pattern. This is not an easy thing to give a view on as climate and weather are affected by so many variables. We could easily have a mild winter next year and then any new equipment could stand idle.

If we do invest more in winter transport infrastructure, it will have to come from cuts elsewhere in the depleted transport budget.

What I would argue is that some public transport services give up too easily. I live on an A road and there is a bus service in the day time every eight minutes or so. Within an hour or so of the snow starting to fall yesterday, the bus service was withdrawn.

The road was still open, albeit that traffic was having to move more slowly than usual. It would not have been possible to operate the normal timetable. But would it have been possble to improvise a reduced skeleton service? One would think so. But at the first sign of bad weather the service is withdrawn, no doubt on health and safety grounds.

DC comes close to backing Lib Dem candidate

2010-12-18T01:33:00.000-08:00

David Cameron has come close to backing the Liberal Democrat candidate in the Oldham East and Saddleworth by-election, wishing him well. 'Obviously in a coalition you always wish your coalition partners well,' the prime minister commented. Actually, I am not sure you do. Meanwhile the Conservative candidate has been damned with faint praise by senior Conservatives, being described as 'a very good candidate'.

It is likely that Labour will hold the seat, but what is of more interest is relations between Conservatives and Lib Dems in the Coalition Government. Right-wing Conservatives are increasingly suspicious that David Cameron likes being in coalition with the Liberal Democrats because it reinforces his liberal Conservatism.

Tabloid fury has been directed at Ken Clarke for daring to suggest that it may not be a good idea to incarcerate more people for a longer period of time, particularly in a fiscal crisis. That's undoubtedly what the public want, but whether it is good penal policy is another matter. California went down the road of an incarceration state, creating a powerful lobby in the form of the prisons industrial complex until federal judges recently told them to free large numbers of prisoners.

Back in the 1950s and 1960s the Liberals and the Conservatives did electoral deals in towns with two seats like Bolton and Huddersfield. They gave the other party a free run in one of the seats, shutting out Labour. They could do such deals again in the future, but they would offend the social democratic wing of the Lib Dems and the right wing of the Conservatives.

In which case it would be open to the free market wing of the Liberal Party to break away and run without Conservative opposition. It happened after 1931 and for a long time the National Liberals (at first labelled as Liberal Nationals) had their own whips in Parliament although they supported the Conservatives. In 1947 the two parties merged at constituency level and after the 1966 general election they were so few in number that they had give up their room in the Commons to the Liberals.

Do we need a Plan B ?

2010-12-15T00:09:00.000-08:00

There has been a certain amount of excitement in the media about a 'Plan B' drawn up by Cabinet Secretary Gus O'Donnell to stimulate the economy should it run into renewed difficulties. There has even been talk once again of a 'double dip recession'.

Barring a cataclysmic crisis in the eurozone I do not think that negative growth is likely. Indeed, the risks of a massive crisis may have been reduced by hints from the United States that it might intervene if things got really bad.

Nevertheless, there is a dismal prospect of relatively low growth (below current forecasts of a little over 2 per cent), rising unemployment as public sector job cuts take effect and continuing inflation well above target. In different circumstances the Bank of England would have already taken action to curb inflation.

Disposal income is being squeezed. Many people are not getting any salary or wage increases or ones below the rate of inflation. The cost of everyday items such as petrol and utilities is going up and petrol in particular will rise further once VAT increases. Because of trends in world commodity markets, the cost of food and clothing has been rising (the depreciation of sterling has also not helped, although that has now come to an end and the pound has been rising against the dollar and the euro recently).

The civil service has always prepared contingency plans for economic difficulty. 'Brutus' and 'Cranmer' were two famous ones in the past and no doubt there are more in the National Archives at Kew. It's sensible to have contingency plans, but it doesn't mean you have to implement them.

David Cameron is understandably very sensitive about the subject because it implies that the Government's deficit reduction plan could be more economically damaging than he admits. My view has always been that the Coalition Government will not manage to eliminate the structural budget deficit over the lifetime of a Parliament, but if you don't start with a tough target, you will fall way short.

No doubt all this will come up at PMQs today.

Bad weather leads to minister's resignation

2010-12-12T00:06:00.001-08:00

Stewart Stevenson as depicted by The Sun

Is Scotland's transport minister, Stewart Stevenson, the first cabinet member to be forced out of office by bad weather? Wily Scottish first minister Alex Salmond seemed to think so and quoted from Burns to make his point.

But he knew that the minister could not survive a no confidence vote in the Scottish Parliament this week. He had been targeted in a tabloid campaign which included unflattering photographs and cartoon versions of his less than prepossessing appearance.

The minister wasn't critcised because the weather was bad, but because information was not released quickly enough about how bad conditions were leading lorry drivers and motorists to be trapped overnight in their cars. It is fortunate that no one died as a result. The minister then compounded his errors by going on television and declaring that there had been a 'first class response'.

There is a Scottish Parliament election next May and the gloves are starting to come off. The transport minister had to be sacrificed for his party. It all reminds us of Harold Macmillan's warning of the importance in politics of 'Events, dear boy, events.'

University funding

2010-12-09T05:44:00.000-08:00

An interesting and measured analysis by the President of the British Academy: British Academy . As he points out, research funding has emerged relatively unscathed. It is also interesting that he thinks that taking a 'pragmatic' stance on the widely derided notion of impact helped with the Treasury.

University fees

2010-12-04T04:01:00.000-08:00

Taking my oldest granddaughter to a show with her mum last night brought home to me that in seven years' time she will be applying to University and will face very high fees (unless current policy proposals are reversed or modified substantially).

On Tuesday when I accepted a lifetime achievement award, I noted in my acceptance remarks that my father had been a manual worker and that the 1944 Education Act and state grants had made it possible to be the first person on either side of my family to go to university (Lord Kinnock was in the audience and made similar comments many years ago).

My uncle, an intelligent and cultivated man, had started a course at Woolwich Polytechnic (now Greenwich University) but was called back to the family business which was his parents' livelihood. As he told me towards the end of his life, he had spent it 'chained to the shop counter'.

It should be noted, however, that when I went to university the percentage of the age cohort attending was much smaller and hence the costs to the public purse were proportionately lower. I am sometimes asked what percentage of the population should go to university. I don't think that there is any methodology which could give a definitive answer in terms of labour market needs. Saying 'anyone who is capable' just deflects the question on to a definition of capability.

We are making a very sudden switch to an essentially American system of higher education in terms of funding arrangements. Having a taught in an American university, my impression is that arrangements for the less well off are quite robust. Otherwise you have to start saving, as American friends have done, when a child is born.

Clearly higher education brings benefit to an individual and they should make a contribution. But there is also benefit to society as a whole, even from the humanities and social studies which have been hit particularly hard by the removal of their publicly funded teaching grants.

Quite what the split of benefits is cannot be easily quantified. I have seen attempts to do this, but I am not that impressed and I don't think a minister would be. At the end of the day it is a political judgement.

The Coalition Government's proposals will hit 'middle England', those who are not rich but earn somewhat more than the median income. They are also taking hits through the tax and benefit system. They are quite an important group of voters who are capable of switching their vote.

The Lib Dems have clearly suffered considerable damage to their credibility. They must surely have realised that a pledge not to increase fees at all and to try and abolish them was not credible in the current fiscal context. Really it was an opportunistic ploy to win votes by a party that had not had the responsibility of governing for a long time. Now they are paying a political price.

I would not expect the Government to be defeated in the Commons, although they might encounter more trouble in the Lords. Street protests won't deflect them: the analogy with the poll tax is wrong in all sorts of ways, not least that opinion on this issue is more divided and not everyone is affected adversely.

It is often argued that higher education should be free but that means that taxpayers who do not directly benefit have to contribute towards those who do. I heard a NUS spokesman arguing that corporation tax should be put up and the rich taxed more heavily. That would do wonders for the economy, particularly the former, as both firms and rich individuals are mobile. Some firms have already move office operations to Ireland where corporation tax is 12.5 per cent.

These proposals will place a heavy burden on the already over stretched bank of mum and dad. Those who go on to earn incomes above the pay back minimum of £21,000 a year, but not that much more (e.g., teachers, health service auxillary professions), will be hit hard and will find it even more difficult to eventually buy their own home. Those in financial services should be able to pay back loans without too much pain. There is also a great risk that much of the money will not be recovered.

What one could credibly argue for is (i) that the new arrangements should be phased in rather than being introduced in one fell swoop which is already affecting next year's admissions and (ii) one could question whether such a large increase is necessary if there is some social benefit (which would be met by retaining more of the teaching grant). But then the issue would be where the teaching grant that was not cut would come from.

However, given the fiscal context, I doubt whether the Coalition Government will give too much ground. They know the measures are not popular, but they want to get the bad news out of the way quickly, although the effects will continue to be felt.

The big freeze

2010-12-03T00:37:00.000-08:00

Sky News announced last night that the country was 'at a halt'. Given that there has been relatively little snow in the West Midlands and traffic was flowing freely, I was a bit puzzled about this until I realised that Kent and Sussex were at a halt (plus the north-east and most of Scotland but they don't count).

Labour has tried to make political capital out of the weather which is a bit rich given the problems they encountered when they were in office. Of course, all oppositions have the irritating habit of jumping on any bandwagon that comes along. The Conservatives were doing it all the time and the Lib Dems were even more opportunist as events have shown.

Even so, Mr Milibean (as Private Eye have named him) ought to think before he or his shadow ministers speak out, notwithstanding their success on sport partnerships.

There have been the usual chorus of complaints about our inability to cope although it has been a very heavy snow dump in many parts of the country. Even the Isles of Scilly have been hit.

The big problem has not been lack of grit or gritters, but snow ploughs. One could spend more money on snow ploughs but they are an expensive capital asset will stand idle for much of the time (admittedly one can improvise a snow plough as many farmers do). One could have more snow ploughs but the price would be a cut elsewhere in already depleted local authority budgets.

Where there are legitimate grounds for criticism is the lack of inadequate contingency plans and the failure to provide information to stranded travellers, in particular by updating internet sites. Information can be disseminated very quickly by sites and text messages.

The UK and the Irish bailout

2010-11-29T01:24:00.000-08:00

Ireland has not got a bad deal out of the EU/IMF bailout. They have retained their low corporation tax rate which, to be fair, is necessary if they are grow out of the crisis (although most analysts think the projected figures are optimistic). The interest rate is higher than Greece was charged at a mean of 5.83 per cent, but lower than some forecasts.

Irish citizens are blaming bad government for the mess they are in, but let's not forget that some of them were willing to take the cheap money when it was available and ruin the Irish countryside with completely out of character houses in prominent positions.

Britain is putting in a package of help as are two other non-eurzone countries, Denmark and Sweden. A texter to 'Wake up to Money' this morning asked 'How can we lend money to Ireland when we are skint?'

Simples. First, we are lending money to Ireland at a higher interest rate than we have to pay for it so we should make a profit. Admittedly, the Irish could default and they will be paying 20 per cent of their taxes to meet the interest. However, I think the odds are now against a default.

In any case, Ireland takes 7 per cent of our exports and British banks are heavily exposed in Ireland. The national interest is an over used phrase but George Osborne is right to use it in this case.

However, right-wing Conservative backbenchers are not happy and may be less so if it was proposed that Britain should help out Portugal or Spain who are the next likely targets for the financial markets. Spain is over 10 per cent of the eurozone economy, but it should be noted that the 'peripheral' countries only account for 20 per cent of the eurozone as a whole.

The eurozone could move towards a fiscal and political union but that is very unlikely. In the longer run we may see a smaller eurozone which is what many people wanted in Germany in the first place, but the actual mechanisms of exit for, say, Greece, would be difficult to set up.

How can broke countries pay other broke countries?

2010-11-25T23:56:00.001-08:00

An amusing video on the eurozone crisis: Eurozone

Apparently 99 per cent of readers of the Daily Express want to take Britain out of Europe. It's going to take some tug to tow it into mid-Atlantic.

The privatisation story

2010-11-25T01:24:00.001-08:00

The Institute of Government held a 'policy reunion' last night for ministers, civil servants and others involved in the Thatcher privatisations. Talking to Andrew Gamble beforehand, we agreed that it all now seemed very long time ago. It was very difficult to convey to contemporary students just how nationalised industries had dominated the economic and political landscape.

Privatisation had been selected because it was a policy success selected in a survey of PSA members. The story told last night was a familar one: privatisation had not been a significant part of the Government's original plans, but had developed into a political and administrative programme. There were a variety of motivations: raising money; reducing the role of the state in the economy; curbing the trade unions; widening share ownership (although this did not really succeed in the longer run); building political support etc.

The general tone of those involved was rather self-congratulatory and they explained the failure of the programme to do enough to boost competition in terms at the pace at which decisions had to be taken and the influence exerted by the existing managements of the industry who did not want competition at any price. Breaking up an industry would have extended the time line for a privatisation from two to five years and would have meant that the key BT sale, which really started the process, would have not gone ahead.

While I did not obtain any major new insights, there were some interesting points of detail which I may deal with in a subsequent posting.

The thinning blue line

2010-11-16T03:31:00.000-08:00

There was quite an acrimonious exchange between police minister Nick Herbert and a Radio 5 Drive Time presenter yesterday. This was provoked by the announcement by the Chief Constable of Manchester police that nearly a quarter of his staff would have to be let go over the next four years.

Nick Hebert insisted that this would not make any difference to front line policing in Manchester, but it is difficult to see how he reached his conclusion, even if a greater percentage of staff was deployed on the streets.

Herbert's argument was the problem was that only 11 per cent of the police were out on the streets at any one time. This sounds quite shocking until one realises that most of them will not be on shift at any one time and others will be in the station interviewing suspects or supervising custody.

Herbert argued that there was too much red tape in the police and while this may be the case, a lot of it is generated by the need to present evidence in a form that will stand up in court. This is where backroom staff play an important role and if one cuts back their numbers some of the work will have to be done by frontline staff.

As a vox pop on BBC showed, voters in Manchester were not happy about these developments. I think that the policing issue is one where the Coalition Government could be in some trouble, particularly with traditional Conservative supporters.

Doubts about public expediture plans

2010-11-07T01:49:00.000-07:00

The Institute of Government has pointed out that although by 2014-15 public spending as a share of national income would be back to the same level as it was in 2006-7, the composition of that spending would be very different. Expansions in the share of national income spent on pensioner benefits, the NHS and overseas aid would be funded through reduced spend on education, law and order and defence.

At Fathom Consulting's quarterly Monetary Policy Forum, the former Home Office permanent secretary Sir John Grieve said 'it seems most improbable' that the government would hold fast to its plans. Rachel Lomax, a former permanent secretary of three government departments, said the public might not accept large cuts in police and prisons that had not been flagged before the election.

The Public Accounts Committee has expressed doubts over the Government's ability to make genuine efficiency savings. Whitehall failed to make the mere 3 per cent savings set out in the 2007 comprehensive spending review. Two years into the three year programme to release £35bn in cash from efficiency, only £15bn of savings were reported. Of those, the National Audit Office, it judged only 38 per cent, or less than £6bn, to be value for money savings.

The committee is concerned that in order to reduce costs, departments will rely soley on cutting frontline services. The committee says it was concerned at the implications of evidence from the Treasury 'that it will simply reduce departments' budgets and then walk away from the responsibility for the delivery of the level of savings required across government.'

Of course, cutting back office services can have its impact. There are two EU committees working in a technical area which have been highly dependent on the UK and the Netherlands for their work, although with general political support from other North European countries. The UK may now not be able to afford to be involved. Up to now UK interests have been very well looked after because of its involvement.

The Treasury story

2010-11-04T01:54:00.001-07:00

In this article I take a look at the Treasury under George Osborne in contrast with its role under Gordon Brown: Treasury

Growth higher than expected

2010-10-26T03:28:00.000-07:00

Growth was at the upper range of expected outcomes in the third quarter at 0.8 per cent: Growth

This does not fit well with the forecasts of those who have been predicting a double dip recession. However, I always thought this was largely a question of semantics. There isn't that much difference between a negative growth rate and a positive one if the latter is not robust enough to generate enough private sector jobs to replace those lost in the public sector.

Consumer confidence as revealed by retail sales is not strong and one test for policy will be when the 20 per cent VAT rate is introduced in the new year. The public sector job cuts will, of course, not happen all at once and some of them will take the form of retirement from the labour force. But when they start to cut in, policy will be tested.

The economic context of the CSR

2010-10-21T04:11:00.000-07:00

The consequences of the CSR, particularly in terms of employment, depend to quite a considerable extent on how far the private sector can generate new jobs to offset the nearly 500,000 to be lost in the public sector. Of course, it will not be necessary to provide that number as some of those leaving will retire.

That in turn will depend to some extent on the condition of the global economy and I will return to that later. Let's first consider the domestic situation.

The downturn resulting from the global financial crisis saw a 6 per cent drop in output as against 3 per cent in the early 1990s. However, fewer companies have become insolvent. Employment was down 1 to 2 per cent at peak compared with 5 per cent in earlier recessions. Jobs have increased by 300,000 in the last six months, although it is doubtful whether that rate can be sustained.

Nevertheless, given the amount of emphasis that has been replaced on the dependence of private companies, it is as well to remember that Britain is not a Soviet style economy. It is still a private sector led economy. After the 1990s recession the private sector created 2 million jobs.

One concern is that the type of labour found in the public sector is not necessarily the type of labour that the private sector requires. Hence, the natural rate of unemployment could go up.

There are some concerns about the global economy which could impact on the growth rate in the UK. The Chinese economy may not be growing as fast as it has been. There is a risk of 'currency wars' in which countries engage in competitive devaluations of their currencies. This in turn could lead to a resurgence of protectionism.

It is also evident that G-20 is working less well than it did at the onset of the crisis. There is not an adequate mechanism for generating properly coordinated policies at a global level. Even the central bankers who meet every two months do so to share information rather than to coordinate.

The future is therefore very uncertain and the unemployment risks of the CSR could be substantial.

Difficult politics

2010-10-20T00:06:00.001-07:00

Responses to the defence review show how difficult the politics of cutting public expenditure is going to be for the Coalition Government. In my view with a cut in real terms of 8 per cent defence got off lightly. This was particularly true of the defence industries.

A spokesman for the UK Defence Association (an organisation I had never heard of before) was given a lot of air time on the BBC. Apparently a formal naval commander, he argued that as defence was the nation's first priority, it should not be cut at all. A prime example of fiscal nimbyism.

It is true that some parts of the defence budget have been cut more severely. In particular, the Navy has taken a 18 per cent hit. But this reflects what we need in a post-Cold War context when state versus state conflicts are rated as a relatively low threat.

There was also understandable concern from communities where bases look likely to be closed, particularly in Scotland. Local campaigns of this kind are, however, unlikely to affect the Government's stance.

Some Conservative backbenchers were also clearly unhappy at what they saw as too big a concession to the Liberal Democrats on Trident. Welcome to the give-and-take of coalition politics.

Today's cuts simply attempt to take back public expenditure back to where it was in 2006-7 in real terms. But even that is politically very difficult.

Liam Fox wins

2010-10-15T23:52:00.000-07:00

Cuts in the defence budget will be less than 10 per cent after the personal intervention of the prime minister. It's a considerable victory for Liam Fox after what Michael Heseltine described 'as the letter designed to be leaked'. Even Hilary Clinton weighed in on his side.

There will be some painful cuts for the Navy and RAF, but the two aircraft carriers are safe. Cutting them would have hit jobs in what remains of the shipbuilding industry hard. There will be some unspecified savings on Trident as a concession to the Lib Dems.

The schools budget is also to be protected, at least in the sense tha Nick Clegg's 'pupil premium' for disadvantaged pupils will offset cuts elsewhere. This could mean that some schools with better off pupils could lose out.

All this means bigger cuts elsewhere. Higher education will take a big hit with 79 per cent of the teaching budget cut and £1bn off the research budget. Higher education is effectively being marketised and there will be big structural changes as a result with some universities merging or disappearing.

Although the Government is doing what it can to protect the less well off, some of these cuts, such as those in education, could hit median income families hard. However, the Government is going to give £1.5bn to Equitable Life policy holders from 'middle England', although their spokeswomen was not pleased and argued that taxpayers should have provided nearly £5bn.

And the Scottish Government has somehow found the money to abolish prescription charges.

A bonfire of quangos?

2010-10-15T08:12:00.000-07:00

As has been noted before on this blog, the key questions to be asked about quangos are: (i) one should the function be performed by government and (ii) should it then be performed by a central department?

As it turns out ministers have discovered that many of the functions performed by quangos are required. Many of them will disappear into central government departments. But whether they will be performed in a more transparent or accountable way there is a genuinely open question.

Many of the quangos that have been retained in their present form have been justified on the grounds that they are 'performing a technical function which should remain independent of government'. Quite.

Others have been re-constituted as departmental expert committees. Consider the Pesticide Residues Committee of which some fun was made on Radio 5 yesterday. It exists because consumers are concerned about toxic pesticide residues on food. These are monitored and the committee supervises this system. So the task is a necessary one and making it an expert committee is hardly going to save any money.

The 1970 general election

2010-10-11T02:10:00.001-07:00

From time to time, BBC Parliament re-runs the coverage of a general election, although this is not always well publicised. On Saturday they featured the 1970 general election.

In such unedited material it is the little points one noticed. One regional correspondent had a cigarette smoking in an ashtray. A new Conservative woman MP who was interviewed, Janet Fookes (later to become a deputy speaker and now in the Lords) was described as a 'gorgeous redhead' for the benefit of viewers watching on black-and-white sets.

This hardly fitted well with her declared intention to pursue issues relating to the legal status of women. Robin Day also tried to talk up some romantic interest in Edward Heath, but she insisted that she was not interested in sailing.

'Mad Mitch' who have defeated Laura Grimond in Aberdeenshire West had a rather acerbic interview. He gained his nickname after re-taking the Crater district of Aden from nationalist insurgents on his own initiative. This was described as 'the last battle of the British Empire'. Mitch stood down in 1974 to pursue what turned out to be a failed business venture. The maverick right-winger later described this as his biggest mistake, but all his attempts to return were unsuccessful.

A very posh lady interviewer attempted to talk to racegoers at Ascot but either they didn't want to talk her or they had little understanding of politics despite being declared Conservatives.

Alan Johnson is shadow chancellor

2010-10-08T07:19:00.000-07:00

Ed Miliband has found an interesting solution to the Ed Balls/Yvette Cooper dilemma by appointing Alan Johnson as shadow chancellor. Balls and Cooper both get senior posts, Balls as shadow home secretary and Cooper as shadow foreign secretary.

What is interesting about this appointment is that both Balls and Cooper were 'deficit deniers' in the sense that they thought that even halving the structural deficit over the lifetime of a Parliament was too stringent a target. Johnson is believed to have been aligned to the halving target, but it will be interesting to see what stance he takes now.

Yvette or Ed?

2010-10-07T23:56:00.001-07:00

Husband-and-wife team Yvette Cooper and Ed Balls came first and third in the poll for the shadow cabinet yesterday. But which of them will take the key role of Shadow Chancellor?

Ed Balls is a heavyweight political bruiser and has long experience in the Treasury as Gordon Brown's Deputy Chancellor. But I think Yvettte Cooper, has the forensic skills required to tackle the detail of Coalition Government spending plans and has better presentational skills. I would choose her, but I suspect that Ed Miliband will choose the other Ed, although he could make him shadow foreign secretary.

Jack Straw said yesterday that half a dozen of those elected would not be up to serving in the real Cabinet. Who could he mean? Perhaps the Eagle twins who have both been successful?

The big society

2010-10-06T08:17:00.000-07:00

This was the unifying theme of David Cameron's speech to the Conservative Party conference. The implication was that this was the way forward which would enable the country to withstand the cuts in public expenditure necessitated by the budget deficit and take us to the sunlit uplands beyond.

The 'Big Society spirit' was mentioned more than once, as was the notion that 'your country needs you'. The prime minister used the example of the 100,000 people who had volunteered for the Olympic Games as evidence that additional volunteers were available. He attacked the notion that 'if government takes care of this, we won't have to'.

Citizenship was more than a transaction - although citizens have been increasingly encouraged over the years to define themselves as consumers of public services with certain entitlements, not least by New Labour. In other words, this idea has become quite embedded. This is not to say that it should not be challenged, but it's a perception that will be hard to dislodge.

It was noticeable that the attacks on Labour got the loudest applause in the hall. He managed to define Labour, in terms of the views of Ed Balls, as opposed to aspiration and there was a neat dig of Neil 'we've got our party back' Kinnock. Ed Miliband was more or less a non person, which is probably the way to play it for now. The prime minister's defence of the union also went down well with the audience.

The comment that we were geared up to fight old wars did not sound like good news for the Navy or the RAF. It seemed to me that there was a clear endorsement of Ken Clarke's refreshing approach to criminal justice issues.

It was interesting that two references were made to football, the last World Cup and the hope of holding the 2018 one in England.

I didn't think there was much that was new in the speech, but probably there didn't have to be. It was an attempt to define Cameron's distinctive approach and brand. There is such a thing as society, but it's different from the state (Sam Cam's idea originally) and it needs to be an active and engaged society. I don't think it is just cover for the cuts, but I'm not fully convinced either.

Interesting how much the cameras focused on Sam Cam during the warm up video and at other times. But she was looking very glamorous.

The child benefit row

2010-10-06T00:28:00.000-07:00

Denying child benefit to higher rate taxpayers has caused a media storm and disquiet among Conservative activists and backbenchers, despite the fact that relatively few people are 'unfairly' affected, mainly stay-at-home mums although they are a group close to the heart of some Conservatives.

However, it seems that 83 per cent of voters approve, although that is not that surprising given that around that percentage do not lose out from the proposals: Poll

I think David Cameron made something of an error by appearing to offer a married couples tax allowance as a sop. Admittedly, it is in the coalition agreement, but it was supposed to only apply to basic rate taxpayers and the Liberal Democrats might not like it being extended to higher rate taxpayers.

What this particular disproportionate row does illustrate is the difficult politics of reducing the deficit. Given that this particular measure saves only about £1bn, it appears that stopping child benefit at 16 is still on the cards, as is restricting the availability of bus passes. More generally, we are shifting from a universal welfare state to one provided as a safety net for those in need.

Child benefit concerns

2010-10-05T00:52:00.001-07:00

Some concerns are starting to surface among Tory activists about the decision to deprive higher rate taxpayers of child benefit. For example, it is being pointed out that households with a stay at home mum with the husband in the higher rate tax bracket could lose out. Next door a working mother with both parents in the basic rate bracket could be earning more and would keep their child benefit. However, tax returns are made by individuals, not by households and changing this would be a much bigger blow to better off households, apart from being open to criticism as sexist.

The real problem here is that the higher rate of tax in Britain cuts in at a relatively low level. Nothing can be down about that at the moment, but it might be possible to increase the threshhold by 2013 when the child benefit changes come in.

Some tweaking of the proposal may be politically necessary, but the underlying principle is that those on low incomes should not be taxed to make a transfer payment to those on higher incomes.

Lib Dems shut out at Defra

2010-10-04T01:34:00.000-07:00

Defra is just one of three government departments that does not include a Lib Dem minister. Moreover, all the ministers in the department have strong farming links, inclining them towards a productionist agenda.

Lib Dem farm spokesman Andrew George, the MP for West Cornwall and the Isles of Scilly, has criticised the Conservative stranglehold on posts. Differences have emerged on the proposed badger cull and the decision to abolish the Agricultural Wages Board.

Mr George has been trying to work with the Secretary of State, Caroline Spelman, to have some say about how budget cuts are made. However, he has admitted that he was 'not yet in the inner circle of Defra ministers'.

Most disagreements are likely to be over matters of domestic policy such as the two that arisen already, rather than attitudes towards the CAP where both parties share a relatively liberal, market oriented stance. However, the Lib Dems are particularly attuned to the concerns of smaller farmers from whom they receive electoral support.

There was speculation that Defra would be abolished or at least re-named, but this seems to be off the agenda for now.

Higher rate taxpayers to lose child benefit

2010-10-04T00:34:00.001-07:00

George Osborne has announced that child benefit will be withdrawn from higher rate taxpayers from 2013: Child benefit . (Incidentally, one would think the Telegraph would know the difference between 'principal' and 'principle').

Universal benefits of this kind cost a huge amount of money, although they also underpin support for the welfare state from the better off part of the population.

Of the various options that have been discussed so far, this is a more equitable move than stopping child benefit at 16 or restricting it to the first two children (the latter would particularly hit poorer families).

It will be interesting to see whether there will now be restrictions on the winter fuel payment or bus passes. One has to remember that a lot of older votes are Conservatives and they have a high rate of turnout.

Chris Mullin's diaries

2010-09-30T01:46:00.000-07:00

I had been meaning to read Chris Mullin's diaries for some time after he gave a sparkling after dinner speech at the PSA conference at Manchester. The publication of the second volume encouraged me to buy the first and a great read it was, full of insights and informative anecdotes.

Mullin paints a bleak picture of the life of a junior minister, giving speeches badly written by civil servants. He reckons that he had more influence as a select committee chair or a campaigning backbencher.

For many politicians being a 'Pussy' or at most a minister of state is as far as their career goes. Mullin discusses the case of Anna Eagle who had done a perfectly competent job as a junior minister but was then dismissed. It appears that this was simply because space had to be created for new faces and no one was willing to speak up for her. Tony Blair told her, 'You've had a good run.'

Mullin faced many challenges with embedded social deprivation in Sunderland. Voter turnout was notoriously low. He recalls visiting an estate where considerable investment had been made on refurbishing the houses and providing other amenities, only to be told by a voter 'You do nothing for us.'

For those who are cynical about politicians, Mullin comes across as a person of decency and integrity, motivated by a desire to make a positive difference. He was also a thorn in the side of the powerful.

But I was surprised that Sunderland Football Club was not mentioned until late in the volume.

Red Ed? Come off it!

2010-09-28T07:25:00.000-07:00

That was Ed Miliband's message as he gave a heartfelt (and apart from the odd stumble) polished performance to the Labour Party conference this afternoon. Sometimes it did feel as if the Revd. Blair had been replaced as vicar by his curate who combined youthfulness, earnestness and a commitment to optimism, the theme on which he ended.

Ed Miliband tried to differentiate himself from Old and New Labour, while acknowledging the latter's achievements, by presenting himself as part of a new generation which wanted a new politics. How many times have we heard politicians say before that they want to change politics?

He presented his back story quite well, with a self-deprecatory remark about his father, Ralph (Adolph) Miliband. There were also references to the future in terms of his 16 month old son.

One of the clear themes came through to me was that he was not going to vacate the centre ground of politics, although he also argued that the centre ground can be re-shaped. He endorsed the central premise of the New Labour argument: one can deliver both economic efficiency and social justice. He also tried to make a strong ethical appeal, emphasising that 'my values are my anchor'.

He also made clear that the party 'wouldn't always like what I have to say ... but lead I will.' Militant trade unionists got a slap on the wrist with a reference to 'overblown rhetoric about waves of irresponsible strikes'.

On the deficit, he said that the need to reduce it would have meant painful cuts under Labour. Even if Labour regained office, it would not be possible to reverse all the cuts. Fiscal credibility had been hard won by New Labour and it must be won back. What this all came down to at the end, however, was a rather lame endorsement of the approach of halving the deficit.

One of the most potentially important statements was the announcement that he would vote in favour of AV in referendum, a move away from the opportunistic opposition Labour had been pursuing. It should increase the chances of the measure passing.

So a good start, but the real tests lie ahead. How will he match up against David Cameron at question time?

What will David do?

2010-09-28T00:52:00.000-07:00

David Miliband has to decide within the next 24 hours to carry on in front-line politics, if he has not decided already. His acclaimed speech to the Labour Party conference yesterday could be his last from the front bench.

One can understand why he might not wish to continue. He has been pipped to the leadership of the party by his own brother. Even if Labour regain office, he would never be prime minister.

Moreover, if he did carry on as a front bench spokesman, the media would constantly be looking to expose differences between him and Red Ed - and they do exist.

On the other hand, if he does stand down, Ed Balls is likely to be the Shadow Chancellor. Balls is a leading deficit denier. Or to put it more generously, he believes that a lot of the gap can be closed by clamping down on tax evasion and avoidance. If it was that easy, it would have been done years ago.

The UK economy is on the mend

2010-09-27T10:16:00.000-07:00

That is the verdict of the International Monetary Fund in a positive report on the UK economy: Fund .

The report praises the Coalition Government's 'strong and credible' deficit reduction plan. While fiscal tightening could dampen short-term growth, it will not stop it, one in the eye for the double dip recession school of thought. CPI inflation should be back on target by 2012.

There are some araes of concern in relation to the banks and the report emphasises the need for the momentum of financial sector reform to continue. Backing for Vince, then. BTW, it was interesting to see my local Conservative MP Chris White writing an 'I'm with Vince' piece in the local paper.

Quite how 'Red Ed' will respond to this remains to be seen. It is his first test on the economic front.

Ed edges it

2010-09-25T11:14:00.000-07:00

Gilmanton, NH: So Ed Miliband has just pipped his brother to his leadership of the Labour Party through vote transfers and support among members and trade unions.

Both the Milibands are policy wonks, but there is a view that Ed is better at relating to people on a human level.

Whether Ed's left leaning posture was a ploy to win the leadership election remains to be seen. However, if Labour thinks its future is mobilising its core vote rather than winning back aspirational voters, it may have made a mistake.

Nick strikes the right note

2010-09-21T01:18:00.000-07:00

Nick Clegg and the Lib Dem leadership came away relatively unscathed from the conference at Liverpool. Delegates staged a symbolic revolt over the controversial 'free schools' issue but the real test will come at Birmingham next year when the cuts have started to bite and the AV referendum may well have been lost.

Clegg's speech was short, sober and restrained and was designed to reassure anxious delegates. It largely achieved that objective. Many of them are councillors who have experienced coalition arrangements in local government and hence are familiar with the constraints and opportunities they offer.

If the Lib Dems had not entered a coalition and forced a second election they would have suffered at the polls. As it is, they have shown they are prepared to accept the responsibilities of government. Whether they will be given any electoral credit for that is another matter.

To those who believe the Lib Dems should have entered a coalition with Labour, Clegg said that Labour had ordered the invasion of Iraq, run roughshod over Britain's civil liberties and brought the country to the bank of bankruptcy.

Clegg had one decent joke about New Labour authors: 'Never in the field of political memoirs has so much been written by so few about so little.'

A Crooked Sixpence

2010-09-20T10:25:00.000-07:00

I greatly enjoyed a novel written by investigative journalist Murray Sayle called A Crooked Sixpence. which was published in 1960. I still have my copy on my shelves. It was an often amusing exposé of Sunday tabloid journalism, probably with a slight period flavour today.

Reading his obituary in The Times today, I learnt that the editor of The People where Sayle had worked had taken exception to the novel. Sayle was sued for libel and all copies were pulped.

As I recall I was given mine by a media contact who wanted to warn me about the seamier side of journalism and dissuade me from it as a career.

Asking the right questions

2010-09-16T02:48:00.000-07:00

A Populus poll in The Times earlier this week read like bad news for the Coalition Government's deficit reduction strategy, but legitimate doubts have now been raised about the appropriateness of the questions: Poll

One thing that needs to be borne in mind is that setting a target for deficit reduction is one thing and achieving it is another. So Labour's halving target could have turned out to be a 30 per cent reduction in practice and the Coalition's target may well fall short at around 80 per cent over the lifetime of a Parliament.

The era of cheap undies is over

2010-09-14T23:38:00.000-07:00

So proclaimed The Sun this morning and they are right. Cotton prices have gone up by 45 per cent and this is likely to feed into a price rise of 5 to 8 per cent in the shops next year according to Next.

The latest CPI figures show inflation at a stubborn 3.1 per cent, down from its April peak, but well above the Bank of England 2 per cent target. Food prices in particular have risen, as well as clothes. With supply and demand pressures on food staples, some are predicting a double digit rise in food prices by the end of the year.

This has a number of implications for government policy. There is likely to be more resistance to a public sector pay freeze if real incomes are being eroded by inflation, particularly on basic items like food and clothes. It would also affect the cost of providing the state pension.

The conference season is under way

2010-09-13T03:05:00.000-07:00

The pace of politics is quickening in the run up to the vitally important Comprehensive Spending Review. This week we have the TUC Congress and this will be followed by the Liberal Democrats, suddenly a more significant event on the political calendar.

On the radio this morning one public sector trade union leader said that not one public sector job should go. This shows a complete disconnect with reality. Even under a Labour Government there would have been public sector job cuts.

According to the June budget, we are already spending £44 billion on debt interest. This is more than we spend on defence (£40bn) or public order (£35bn). It represents a substantial opportunity cost. If the deficit was not cut, interest rates would go up, the UK's credit rating would decline and we would be spending even more on interest.

The BBC's Nick Robinson made a journey down the A1 last week in which he talked to members of the public about spending cuts. People found it far easier to say what they wouldn't cut than what they would. Overseas aid was mentioned, but this is a small proportion of the total budget.

Another popular candidate was 'welfare' and this is certainly a big ticket item. Child benefit may be stopped at 16 and the age at which people become eligible for the winter fuel allowance may be raised. In this way some dent may be made in the £194bn spent on 'social protection'.

The Biden-Clegg relationship

2010-09-03T07:02:00.000-07:00

Washington DC: One of the interesting by-products of the Coalition Government is the relationship that has developed between Deputy PM Nick Clegg and US Vice-President Joe Biden.

Within minutes of Clegg's appointment, Biden was on the phone to deliver his congratulations. They have been video conferencing and when Nick Clegg comes to the UN later in the month he will spend two hours in Washington with his opposite number.

The vice-presidency in the US has come a long way since it was described by one incumbent as worth a 'pitcher of warm spit'. Vice-President Mondale described the role as 'You die, I fly' in reference to his role as an attendee at state funerals.

The role of deputy prime minister has no constitutional foundation and does not always exist but it has had some distinguished incumbents such as Rab Butler and Michael Heseltine.

Discuss with Facebook friends

2010-09-01T01:47:00.000-07:00

Washington DC: This is a British politics blog, but occasionally it is interesting to make comments on the politics of other countries when visiting them. Yesterday evening I watched President Obama give a presidential address, ostensibly on the departure of combat troops from Iraq in what he called 'an age without surrender ceremonies'. Watching it just a couple of miles from where it was given in the Oval Office made it seem different.

It was a little to odd to see, while the President was in full flow, a message flash across the bottom of the screen 'Discuss with Facebook Friends' at the website of the station concerned. The address was preceded by an advert for carpets and then some commentary which said that the speech could not have been made without the efforts of President George W. Bush, said apparently without irony. The President was actually quite generous to his predecessor whilst pointing out his disagreements with him.

In many ways the speech sounded like an election broadcast before the mid-terms to me. There was quite a lot on the economy and the need to 'strengthen our middle class', a phrase that would be taboo in Britain. There were also quite a few rhetorical clichés such as describing Iraq as 'the cradle of civilisation'.

It is sobering to think that this has been one of America's longest wars and also one of its more controversial as the President admitted. The entanglement in Afganistgan may be even be more difficult to pull out of whilst being able to make any kind of claim to success.

Prime ministerial broadcasts were very much in vogue in the 1970s when Ted Heath was always declaring states of emergency and lecturing the nation in gloomy and wooden tones, much good that it did him.

IFS claims cause storm

2010-08-26T01:29:00.000-07:00

A report by the respected Institute for Fiscal Studies casts doubt on the Coalition Government's claim that the Budget was progressive rather than regressive: Budget

Of course, the IFS is trying to look at a longer time period than the Government, up to 2014 rather than 2012. They attempt to allocate changes to housing benefit, Disability Living Allowance and tax credits to households.

Their conclusion is that low-income households of working age lose the most because of the cuts to welfare spending. Those who lose the least are households of working age without children in the upper half of the income distribution. This is because they do not lose out from cuts in welfare spending and are the biggest beneficiaries from the increase in the income tax personal allowance.

The biggest change to welfare policy in the 2010 budget was linking benefits with the CPI rather than the RPI. This is very likely to mean less generous benefits in the years ahead. The savings from linking to a lower index will compound over time, rising to £5.8bn in 2014-15.

Nick Clegg's initial and rather lame response was that the IFS did not take account of the efforts of the Government to get people off benefits and into work. These efforts are laudable, but previous Governments have tried to do this with mixed success.

The 2010 general election

2010-08-23T06:24:00.001-07:00

These graphs of poll data relating to the 2010 general election from the British Election Study based at the University of Essex summarise some interesting data on what happened: Election

The First 100 Days

2010-08-18T02:56:00.000-07:00

This week Britain's Coalition Government marked 100 days in office. Why are we so preoccupied with a time span of 100 days when President Kennedy said that 1000 days was too little to achieve anything? The original Hundred Days was the period between the arrival of Napoleon in Paris after his escape from Elba to his removal after the Battle of Waterloo. The term gained political currency when President Roosevelt got the New Deal off to a good start in his first hundred days in office. As prime minister in the 1960s Harold Wilson promised 100 days of dynamic action, but the reality was more disappointing.

One test of success for the Coalition Government is that it has survived for 100 days without any major rifts appearing. Indeed, there have been fewer tensions between ministers than in many single party governments. There has been grumbling about their lack of influence from MPs the right of the Conservative Party and from Liberal Democrat backbenchers, but it has had little real effect.

The real tests for the Coalition Government are still to come. One will be when the Comprehensive Spending Review is published in October. Some cuts in public spending have already been announced, but then their full extent will hit home. Another will be getting the referendum of the alternative vote through Parliament and then, as far as the Liberal Democrats are concerned, winning it. 100 days is not a real test of five years.

Milk snatching

2010-08-08T23:34:00.000-07:00

There is no evidence that free milk for under 5s makes any significant impact on their diet and nutrition and in any case it is a blanket subsidy that is not targeted on those in most need. Given the current fiscal climate, it would be a good way of saving £150m a year.

However, David Cameron quickly knocked down his health minister when she suggested getting rid of the free milk. No doubt he remembered the 'Thatcher the milk snatcher' that attached to Margaret Thatcher for so long. That was in part because it rhymed and someone actually made a song of it. I was reading a compilation of remniniscences the other day and it was pointed out that the milk was often in poor condition when it reached the children. Its original introduction in the 1930s reflected the power of the dairy lobby.

What this episode shows is the risk that relatively ineffective programmes will survive the cuts and more effective ones may take the hit.

Salami slicing

2010-08-04T02:26:00.000-07:00

An increasing concern is being expressed, particularly on the right of the Conservative Party, that the Comprehensive Spending Review is taken the form of salami slicing. Quite big slices, yes, but rather than starting from a zero base and asking whether government needs to be undertaking a particular activity, good programmes are being cut as much as bad ones.

In this context the presentation by Andrew Gamble on the 2010 spending review at a British Academy forum last week was of particular interest. Gamble looked at different conceptions of the state such as the mimimal state (Nozick), the frugal state (Bentham) and the active state (Keynes). He set out three models of government spending (each relating to a share of public expenditure in GDP):
1) 44 per cent, the social investment model
2) 38 per cent, the Anglo-Saxon model
3) 25 per cent model, the free market model with the 1920s and 1930s in Britain as the historical precedent.

He argued that after periodic forest fires public spending tends to grow back. The consensus in the discussion was that Britain was likely to revert to a 38 per cent model and indeed there were some indications that that was George Osborne's conscious intention.

Of course, it is possibly to become too preoccupied with the arithmetic (which in any case is substantially influenced by how fast GDP is growing) and the size of the state rather than its shape. What can the state do and how can it do it effectively?

The big society and the third sector

2010-07-31T03:58:00.000-07:00

While I was on the way to a policy forum at British Academy yesterday, Reuters rang me and asked me for my views on the Big Society. I should have waited until I got to the policy forum when Sam Brittan described it as the grandchild of the third way, another semi-populist idea. He didn't mind as long as he was not asked to lead a troop of boy scouts round Notting Hill!

The big society will depend on third sector organisations recruiting, mobilising and organising volunteeers. To do that they will need some money. The other question is where these volunteers are going to come from. People in work and with families are time poor. Decades ago women who did not go to work provided a ready made supply of volunteers for charitable work, but social changes have led to their disappearance. That leaves the active elderly and many of them are already committed to organisations like the National Trust or charity shops.

As it so happens, I was talking to a third sector organisation earlier in the week and the Government had stated that they would be taken on responsibilities it was dropping which was fine in principle except that there had been no prior discussion about this.

The literature shows that third sector organisations are often particularly good at serving client groups with heterogeneous needs. They are more flexible than traditional state bureaucracies and often more dynamic. So there could certainly be an extended role for them, but it will require some money and a little more forethought and discussion. It is certainly not going to bring quick results.

Forming the Coalition Government

2010-07-29T23:38:00.000-07:00

There were two key revelations in last night's BBC2 programme. First that the Conservatives had clearly thought through before the election what they would do in the event of a hung Parliament and had an eleven point offer to put on the table to the Liberal Democrats. Labour had no game plan. This confirms my view that the Conservatives have a greater appetite for power.

Second David Cameron and Nick Clegg had a 45 minute conversation at the opening of the Supreme Court in October 2009. This led them to believe that they were on the same wavelength and had been motivated to enter politics for similar reasons.

What happens to former prime ministers?

2010-07-25T00:31:00.001-07:00

I have been reading a very interesting book by Kevin Theakston After Number 10. In the States, the notion of an effective post-presidency was really invented by Jimmy Carter who seems to have made a more positive impact once he left office. There are analogies in Britain, Balfour being a prime example.

Some of the least successful prime ministers have enjoyed life much more after leaving office, examples including Sir Alec Douglas-Home, who returned to office as Foreign Secretary, and Sir John Major who has developed a series of business roles and enjoyed his cricket. Hinterland seems to be important. For those for whom politics was the centre of their lives, such as Harold Wilson and Margaret Thatcher, the adjustment has been much more difficult.

What is certainly the case is that prime ministers no longer have financial problems once they leave office. Asquith had to be helped out by his friends, as did Churchill (who admittedly was a big spender) and Attlee left very little money. These days not only is there the autobiography, but also the chance to make big bucks on the American lecture circuit.

Gordon Brown is not, of course, in the book. But he said that he intends to devote himself to his constituents and to international development work, particularly in Africa where he has been this weekend.

A special relationship?

2010-07-23T09:40:00.000-07:00

David Cameron’s visit to the United States for talks with President Obama has once again highlighted the so-called ‘special’ relationship between Britain and the United States. There are those who doubt that there is a special relationship at all and in these talks it was re-christened a ‘special’ relationship. It had a particular character during the Cold War when Britain was an important base for the United States, sometimes referred to as a static aircraft carrier.

However, anyone who doubts that the relationship is an enduring one in the context of the fight against terrorism should look at the recent book on electronic eavesdropping by GCHQ written by my colleague Richard Aldrich and obtain favourable reviews in the quality press. The intelligence partnership has always been central to the relationship and in that sense it is special.

On this visit David Cameron has been under pressure on the subject of BP, both on the oil spill in the Gulf and unproven allegations that the release of the Lockerbie bomber was in some way linked with an oil deal with Libya. The fact that Cameron opposed the prisoner release in opposition helped him to navigate this tricky issue. However, one of his central objectives on this visit was to attract US investment to boost the UK economy which is why he went to New York and was seen eating a hot dog with the mayor.

Nick blots his copy book

2010-07-22T00:36:00.000-07:00

I watched Nick Clegg answer Prime Minister's Questions yesterday. Apparently this was a historic occasion as no Liberal leader had been in this position since Lloyd George, except that LG was not leader of the Liberals at the time. In any case PMQs did not start until 1961.

It seemed a polished enough performance, although Jack Straw's interrogation was persistent and long winded but hardly unnerving. Nevertheless, George Osborne kept giving him words of advice.

However, it appears that Nick made two serious errors. He said that the invasion of Iraq wsas illegal which is not the Coalition Government's position and he said that Yarl's Wood detention centure will close which again is not policy.

Perhaps his lack of experience showed, indeed at one point he referred to his old role across the chamber.

Act of Settlement row

2010-07-13T08:56:00.000-07:00

Edinburgh: It may not be a big news story south of the border, but the Catholic Church in Scotland is furious that the Coalition Government is not going to repeal the Act of Settlement: Settlement

The Act prohibits a member of the Royal Family marrying a Catholic or converting to Catholicism (as Charles the Second did on his death bed). It was a piece of modernisation that New Labour favoured but David Cameron may think it's not worth the trouble, particularly given the current travails of the Church of England.

Bigging up Mandy

2010-07-12T03:31:00.000-07:00

The Times is bigging up Peter Mandelson's memoirs, no doubt hope to attract paid traffic to its new website. As a subscriber to the paper, I was offered 'exclusive' video access on Saturday. I didn't bother.

No doubt Mandy's memoirs will be essential reading for those interested in the toxic conflicts at the top of New Labour. The Brown-Blair struggle had a damaging effect on the conduct of public policy and the effectiveness of the Government. Mandy says that he has rushed his memoirs out in order to inform candidates in the titanic struggle for the Labour leadership, but some commentators think he has been motivated by getting his account ahead of the Reverend Blair who is none too pleased according to some accounts.

There is a sense in which the dysfunctional struggles at the top of New Labour are yesterday's story. We now have a new Government which appears to be functioning well, the odd slip by particular ministers aside. George Osborne's ratings have shot up and William Hague is getting deservedly favourable coverage for his pragmatic yet still strategic conduct of foreign policy.

Mandy has revealed that Nick Clegg wanted Gordon Brown to go as the price of any coalition with Labour and that Gordon, reasonably enough, thought he had been humiliated enough. But most people had worked that out for themselves.

The forty per cent row

2010-07-04T23:55:00.001-07:00

The Coalition Government has been accused of 'scare tactics' for asking departments to model 40 per cent cuts. A more sophisticated critique is that this is expectations management: when the cuts turn out to be less than 40 per cent, everyone would be relieved.

The Government's position, as explained by Phil Hammond (who would have been chief secretary to the Treasury if there wasn't a coalition) is as follows: two budgets (NHS and overseas development) have been ring fenced. Education and defence have been limited to cuts of 10 per cent and 20 per cent. That means that some departments will have to experience cuts of more than 25 per cent. The exercise of asking them to model 40 per cent cuts is a way of finding out what departments think is really essential.

A survey referred to on Radio 5 this morning found that those interviewed favoured cuts in overseas development and 'quangos'. Overseas development is only 0.7 per cent of the total budget and as for the 'charity begins at home' argument it would be interesting to see how some British people would cope with living on one dollar or two dollars a day.

The 'quangos' argument is a bit of a red herring. There is no evidence that quangos are any more or less efficient than central government departments. Indeed, they can be cheaper to run as many of them (probably most) are located outside London. What one does need to ask is whether the tasks they perform are essential or desirable and it is probably the case that quangos tend to do more tasks in the 'desirable' category. For example, it is apparent that some of them have advocacy roles and it is open to question whether that is a role of government at all.

Do they still agree with Nick?

2010-07-03T01:37:00.000-07:00

The Hon. Member for East Dunbartonshire

Lib Dem MP Jo Swinson tweeted this article which defends the role of the Lib Dems in the Coalition Government: Nick

Judging from her tweets, Swinson spends much of her time on an endless tour of events in her East Dunbartonshire constituency or raising issues like the security fencing round the Milngavie (Mull-guy) Reservoir. Makes sense given that her majority was down in May.

However, her many followers were puzzled by a tweet sent out around midnight last Saturday: Yes. What can she have meant?

Sam Cam unveils waxwork of Dave

2010-07-02T01:12:00.000-07:00

I was very disappointed when I took my oldest granddaughter to Madame Tussaud's recently to find no waxwork model of David Cameron. But all has now been put right and Sam Cam has unveiled what she rates as a very lifelike model of her husband:
Wax

When we will see a model of Nick Clegg? I don't suppose his wife would turn up to unveil it?