Are tax credits cost effective?

Theresa May, whom I have met, may be best known for her choice of shoes, but is actually one of the smarter members of Dave Cameron's team who tries to do some original thinking about important issues.

In a speech last week she made it clear that any government elected next year would struggle to prevent unemployment rising and that it was unlikely to return to pre-recession levels before 2016. She pointed out that unemployment had cost the British taxpayer £340bn in benefits since 1997.

The difficulties of dealing with the long-term unemployed have been emphasised in a series currently being screened on Channel 4 which looks at private contractors trying to get them back into work. But the jobs aren't there and most of them are ill equipped to deal with them because of the way in which long-term unemployment has affected their morale and ability to work, quite apart from any skill deficiencies.

The most interesting part of Ms May's speech was when she hinted that the Conservatives would re-examine tax credits for the less well off. Gordon Brown regarded this as one of his greatest achievements as chancellor, a redistribution by stealth in favour of working people with families.

Dave Cameron has already signalled that tax credits could be scrapped for middle income earners and Ms May said, 'Tax credits do not help people get better jobs; in fact they can create poverty traps that actually disincentivise people from working more hours or finding a better job.'

Certainly getting rid of them or reducing them substantially would save a lot of public money. However, one member of my family is a beneficiary. With two young children, tax credits have effectively covered the nursery fees for the younger child which means she is able to continue working (she earns more than her husband). It would be difficult for her to work more hours because of child care issues.

These issues are never straightforward, but they need to be debated.

The stakes are quite large

Henry Kissinger aptly said that academic debates are so vicious because the stakes are so small, but there are some substantive issues being raised by this spat behind all the name calling: The economy

On the subject of ultra Keynesianism, my former colleague Robert Skidelsky has brought out a new book on Keynes which according to Sam Brittan's review in the Financial Times is very good (as I would expect).

Keynes wrote and said so much that one can put whatever content one wants into his views. As he said (I haven't checked the exact wording), 'If the facts change, I change my opinion.'

When I read Robert's three volume biography of Keynes, I must say that it seemed to me at times as if Keynes was being presented as a closet monetarist. But it was a formidable achievement and when Bill Clinton came to Warwick to make his last official speech as president, he picked Robert out of the crowd to congratulate him.

A military funeral

Yesterday afternoon I went to sit in the park in which the Lutheran church in Vaasa, Finland is situated. I wanted to do some reading. I then became aware that a funeral was taking place in the church some distance away.

Then out of the church came a large honour party carrying wreaths. The coffin was then preceded by the Finnish flag, including the special version for Vaasa which includes a central device to record its valour against the Russians in the 19th century.

Even from some distance away, it was evident that the widow, embraced by the senior military officer present, was relatively young and accompanied by a boy about ten or twelve years old.

I had to check that Finland is fighting in Afghanistan, but it is. Of course, Finnish troops distinguished themselves fighting against the Russians in the Second World War. The funeral could, of course, be for someone killed in an accident.

When I came back to Britain, I saw another set of funerals being held in Wootton Bassett with the accompanying outpouring of grief. Each of these events represents a personal tragedy for a family.

It's not a conscript army and those who join it should be aware of the risks they are taking, but probably hope it won't be them. I was of a generation that escaped military service, but I am conscious of the sacrifices of those that do join up.

Majority public opinion would probably be in favour of the army leaving Afghanistan. It is difficult to see how a 'troops out' movement would effectively mobilise politically, as the Conservatives have criticised what they see as deficiencies in the equipment provided for the troops and the strategy followed without actually saying that they would pull out British troops.

Labour appoint Twitter Tsar

Vaasa, Finland: Labour have appointed a 'Twitter Tsar' to help them use the social networking medium in their election campaign: Tsar

The NHS

An off message MEP has caused a few problems for Dave Cameron, although I thought Andrew Lansley retrieved the situation well on Radio 5 this morning by emphasising that the Conservatives wanted an equitable health service (always difficult to achieve in practice whoever forms the government) but also one that was more responsive to its clients.

The MEP who started the storm has set out his views here: NHS

Whatever the merits of Singapore style health accounts, they would represent a fundamental change in the current NHS. How 'centralised' or 'statist' it is is a matter for debate, but I don't think it is helpful to Conservatives to have questions raised about their commitment to the NHS which, for all its shortcomings, has broad popular support.

Obama's efforts to provide health care for 47 million Americans has provoked a visceral debate in the US. This is really not about socialism or a Soviet model but trying to fix a situation where the US spends twice as much as a share of GDP on health than then UK does, but without achieving significantly better outcomes.

But Fox news is keen to get any Brit to contribute to their narrative of the situation. Don't let evidence stand in the way of an ideological claim.

MPs pay and expenses

Alan Duncan's remarks about MPs pay and expenses have apparently not pleased Dave Cameron and the Daily Mail has already commented that MPs still do not 'get it'.

Duncan has apologised, but does he have a point? 64k a year is a lot for a person on the average wage, or even more so someone out of work. But it is way behind most professional and managerial salaries.

Consider dentists, for example. I have to have a crown done and it is costing me £640. It is difficult to believe that the dentist is impoverished. Indeed, apparently even 400 NHS dentists are earning more than £300,000 a year and have an average salary of £89,000 and private dentists surely earn a lot more (indeed I know this as I once had responsibility for approving a postgraduate programme in cosmetic dentistry). As someone said to me 'Dentists: pain in the mouth, pain in the wallet.'

Now it is true that there are still plenty of people who want to become MPs and many of them are making considerable personal sacrifices in the process (I have one particular example in mind). Whether they are power crazed or have a real sense of public duty is a matter for debate. My view is that most of them do at least start out wanting to make things better.

It is an awful job, particularly given the demands that constituents make these days where the MP is supposed to function as a portmanteau social worker, albeit that does keep him/her in touch with the problems constituents face in their everyday lives. It is difficult to see how it is compatible with raising a family - unless you base yourself in London.

Dave had drink while student - revelation

Apparently shortly before the general election a documentary will be screened about the Bullingdon Club at Oxford. It will show that Dave Cameron and George (Gideon) Osborne were members of this club and that its members had a few too many drinks and caused some mayhem.

This is a revelation on a par with the story that formed the lead item on the local Fox when I was teaching at Washington University. Shock horror, students at frat houses were having parties over the weekend at which kegs of beer were brought in and consumed. It was almost on a par with their story about two escaped Rottweilers on some island which showed two obese cops spraying the bush with bullets.

I think one might go to one of the lowest ranked universities in the country and find students having too many drinks. Indeed, there were occasions when I did when I was a student.

Of course the sub-text here is that this is some kind of elitist conspiracy comparable to the Skull and Crossbones club Dubya was in at Yale. Now that probably was more like an elitist conspiracy whereas the Bullingdon Club is a bunch of amatures by comparison. Admittedly, they probably drunk champagne rather than Stella Artois. Or perhaps both? No doubt the programme will tell us.

I'm not sure that the background of many Labour MPs as professional members of the political class, lawyers or teachers qualifies them any more to be in touch with so-called 'ordinary people' than Dave.

My serious point is that what should be happening is a through scrutiny of Conservative policies. This is important even for committed Conservative supporters. There is a view going around that once the Conservatives are in they will be there for at least ten years and admittedly that is the pattern of recent British governments.

However, if they get it wrong, they could pay a heavy price. And it's actually bad news for all of us.

Mandy's in charge (almost)

Seems there was a bit of hiatus between Harriet Harman letting go the reins of power and Peter Mandelson taking over. Harriet jetted off on holiday on Thursday to some surprise (The Times cruelly suggested that this was the only date when there were enough seats available business class to Pisa).

Meanwhile, Peter Mandelson was still sunning himself at the Rothschild villa in Corfu, although not this year in the company of George (formerly Gideon) Osborne. So the country was left without anyone running it, but no visible harm has yet occurred. Indeed it is a relief to get away from Harriet Harman's relentless, almost aggressive, pursuit of her agenda. Whether it has done Labour is any good is a moot point.

The Conservatives are intending to block the legislation that would allow Mandy to resign his peerage and stand again for the House of Commons. I find this a bit odd as I would say that Alan Johnson is more of a threat to them. However, one can never be sure. I was on a train in London yesterday and there was a group of young lads talking and one of them said, 'That Peter Mandelson seems a nice bloke' (although one of them was surprised to learn that he was gay).

As for Gordon his holiday is apparently going to include some volunteering on a worthy community project so no lightening up there. The shadow of the manse is a long one.

Conservative Intelligence

This is a new web site: Intelligence . It is run by the backers of Conservative Home, but doesn't make it any less important as we begin the countdown to a Conservative Government.

Scroll down to the right of the page: there is an interesting poll on the attitudes of Conservative PPCs. This was featured by The Economist this week who suggested that it showed they were to the right of David Cameron on a range of issues.

Harman: men do find me difficult

In an interview with the Evening Standard Harriet Harman admitted that her strident attitude made some men uncomfortable. She commented, 'I do think that I want to see change for the better - and change is sometimes difficult for people if they don't want to see change.' Asked which of her traits were disliked by men, she said 'Perhaps not taking no for an answer.'

According to the report, Ms Harman seemed hurt by her nickname 'Hattie Harperson' invented by enemies to lampoon her feminism.

Ms Harman insisted that she was only 'coordinating the team' and that Gordon Brown was in charge. However, her remarks since she became 'coordinator' have been something of an own goal. Edwina Currie described her as representative of a particular type of affluent, over educated woman.

Some electoral research does show that there is an anti-feminist dimension in the electorate. If equality of opportunity arguments are presented in the wrong way, the result can be counter productive.

There is also a much broader problem about the under achievement of younger males in comparison to women. This is a big topic, but they do need positive role models and a recognition that they are worthwhile members of society.

Who is in charge?

When Lord Mandelson became First Secretary of State (a title once held by the late George Brown) we were told that in effect he was deputy prime minister. But as Gordon Brown goes on holiday in the Lake District we are told that Harriet Harman is running the country.

She has taken the opportunity to demand that one of the Labour leaders in future must always be a woman. This did not get a sympathetic hearing in the media with ITV (a woman reporter) using the politically incorrect 'Harriet Harperson' joke. No doubt the aristocrat from Dulwich would see this as further evidence of sexism in British politics.

Meanwhile, rumours persist that Mandy will take advantage of new legislation to resign as a peer so that he can become Labour leader. The Labour Finance and Industry Group, made up of wealthy donors, has threatened to cut off funding to Labour unless Gordon Brown goes.

This is objectionable on a number of fronts. Wealthy individuals should not deciding who leads a political party. For me it reaffirms my view that the business class and the political class should be kept apart. The rapid disappearance of the business 'goats' from Gordon Brown's government confirms this view.

We first heard in the 1960s that the country should be run as a company, Great Britain Ltd., with business persons bringing their gift for efficiency to the table. Most of them quickly learn that the problems in politics are far more complex and intractable. Moreover, your instructions are not carried out to the extent that they would be in a business.

The Labour Finance and Industry Group also called for Mandy to replace Gordon. This again shows their lack of judgment. Mandy is a very smart political operator, probably the smartest we have around at the moment. But that does not qualify him to lead the country. His grandfather, Herbert Morrison, had many of the same qualities, but he was out smarted by Attlee in his attempts to become prime minister.

Gordon Brown is now as unpopular as John Major was when he left office, but in many ways he is a more tragic figure. People thought that Major was a weak prime minister, but they generally regarded him as a likeable person. Today he makes occasional pronouncements as an elder statesmen whilst enjoying his cricket.

So who will succeed Gordon Brown when he leaves the back door of Downing Street and Dave Cameron comes through the front? I doubt whether it will be Mandy. Harriet Harman has a coalition of support and could come through a crowded field. Perhaps it will be man on the make Andy Burnham? Or Labour could go for the equivalent of Pope Benedict and choose the Home Secretary Alan Johnson.

For some observations on Harriet Harman's remarks by John Prescott go here: Prezza

New think tank

Located in Carlton House Gardens, the new Institute of Government is clearly not short of money. Is this the British Brookings that many people have called for:
Think Tank

It's a cross-party body concerned with evidence-based work on the effectiveness of government. Transitions of government is one interest. The executive durector is former top mandarin, Sir Michael Bichard.

An early report has some interesting and relevant things to say on the core executive. Despite the popular belief that British government is highly centralised, the three departments at the centre - Number 10, the Treasury and the Cabinet Office 'actually have less power over people and budgets, and fewer sanctions to apply than many of their international counterparts.'

This is an issue that is known to concern Dave Cameron and the Conservatives have signalled that they intend to create a 'power house' at the centre of government. Unfortunately, we have heard this before, not least from Harold Wilson. Margaret Thatcher did exert a grip on government through force of personality rather than new structures, but she lost that grip as she surrounded herself with courtiers who would not challenge her.

Sir Michael commented that a small centre had some advantages: 'It avoids bureaucracy and second-guessing. But there are questions to be asked about whether the UK's centre of government has the power and authority to set a clear strategic direction for government as a whole.' These are, indeed, important questions that need to be asked and pursued.

Is Gordon to blame for the weather?

Someone pointed out in one of the London free papers that we have had bad summers ever since he became prime minister. I don't think that the jet stream has been drawn south by his doleful visage. However, the wet weather does not nothing to create a 'feel good' factor.

It may seem to be a trivial matter that the Met Office got its 'barbecue summer' forecast badly wrong even if they are now claiming that they only forecast it as 65 per cent likely (but then why put the 'barbecue summer' heading on the press release?) Some families, also influenced by the state of the pound against the euro, may have planned a 'staycation' as two of my children did. Now there is a last minute surge of bookings for Southern Europe.

I had better weather in Chile where it was winter than I have had in Britain. Although it was chilly (excuse the pun) at night it was warm enough to eat outside at lunchtime. And there was no rain.

I do recall some political science literature on the effect of the weather on elections, mainly in terms of whether there was any effect on turnout. I do remember trying to get voters out in a Glasgow ward in 1969 where there was a tight three-way contest. It started to pour with rain in the evening, but fortunately a ride in a car was enough of a novelty to entice some voters to the polling station.