Are single author blogs finished?

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?

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

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

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

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

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

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?

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?

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

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 ?

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

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

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

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

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

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?

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

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

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

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

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

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

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

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

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?

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

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

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?

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

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

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

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

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

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

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!

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?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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?

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?

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

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

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

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

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?

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

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?

The AV referendum

As expected, this has been scheduled to coincide with the local and devolved elections next May in the hope of boosting turnout. One of the problems with PR as an issue is that although it excites the political class it doesn't feature in the most important isues selected by the electorate in the polls.

In many ways it will be a watershed for the coalition. If the Liberal Democrats win the referendum, then they will have got one of their most sought after lasting gains from the Coalition - although in practice AV is just a modified version of first-past-the post and isn't going to make a massive difference to outcomes. It certainly may not offset the loss of left-leaning votes the Lib Dems are likely to suffer. But, of course, it could be the start of a slippery PR slope.

If the referendum fails, which is the less likely outcome, then Liberal Democrats will be asking what they have got out of the coalition given the sacrifices they have had to make on other policies. Either way, tensions within the coalition will increase at the time that public expenditure cuts start to bite. Already the Lib Dem MP for Cheltenham is complaining about the closure of the Commission for Rural Communities quango in his constitency with the loss of 60 jobs.

My guess is that the Coalition Government will not be able to eliminate the structural deficit in the lifetime of the Parliament because the political costs will be too high. It's an ambitious target, but certainly preferable to Labour's unambitious one which would not have reassured the financial markets. However, I think there may be some trimming as the electoral cycle progresss and if the strictural deficit is reduced by, say, three-quarters, that will be a result.

Fiscal drag is back

It has been a favourite weapon of governments over the years: fiscal drag. In other words, don't fully compensate taxpayers for inflation or earnings growth in terms of tax allowance. I don't blame the Coalition Government for using it, but quire a few people are going to be surprised to find that they are paying a marginal tax rate of 40 per cent.

Before Labour came into office in 1997 there were only 2.1m higher rate taxpayers in Britain. This rose to 3.87m just before the recession struck and has fallen back to 3.1m now.

Quite reasonably, the Government is seeking to make sure that increases in the starting tax rate intended to benefit the least well off do not also benefit the most prosperous. Quite how many people will fall in the higher rate tax band by the end of the Parliament is open to question:

1. Grant Thornton estimate the number will go up to 6.1m, i.e., almost double.
2. The Institute for Fiscal Studies estimates 5.7m by 2014-15: that's still nearly a doubling.
3. It is possible to interpret Government figures in a way that gives a figure of 6.25m.

Anway, it's clearly going to more or less double. Given that commuters into London are going to face (yet again) above inflation increases in rail fares, some voters in marginal seats in the south-east may not be happy bunnies.

James Brown at IFS argues that this increase is not contrary to past principles: that there is a very long basic rate tax band and only a few high earners should pay more.'

There is also now a higher band of 50 per cent which is not going to go any time soon so introducing, say, a 30 per cent band for the first 5k above the basic rate band would make the system even more complex when ideally one wants greater simplicity to reduce transactions costs for the tax authorities and taxpayers.

Ring fencing the NHS

The British Medical Association, the doctors' trade union, has complained that 'haphazard' cuts are harming the National Health Service: Cuts This announcement comes on the eve of their conference, but also when Conservative backbenchers are starting to complain about 'ring fencing' the NHS in the Comprehensive Spending Review.

If one does that, and also tries to keep cuts in defence and education down to ten per cent, that means that some departments could have to cut expenditure by a third in real terms which is very dificult to achieve without, for example, drastically cutting environmental protection services.

Some cuts could hit the NHS directly, for example cutting back on social care for the elderly could make it more difficult to get them out of hospital, leading to bed blocking. Warwickshire County Council is already proposing increases of fees for some services delivered to the home of 1,000 per cent, admittedly from a very low and hopelessly uneconomic base level.

The NHS does face the problems of an ageing population, an expanding medical technology frontier that drives up costs and rising patient expectations. Howver, here are a few suggestions:

1. Mrs Thatcher famously said 'we have dealt with the opticians' (or words to that effect, I don't have the transcript in front of me). I went my first eye test last week and it was free. Should that be the case for someone who is not poor? I was also interested to read on the back of the form that I was given that I could get a voucher towards my spectacles if I was a prisoner on leave.

2. Should prescriptions for free for everyone who is elderly? Or should the better off be at least asked to pay for a season ticket of £100 or so a year?

3. Anyone who was talked to GPs infornally will know that patients make considerable differential use of the service regardless of their state of health. Should charging be introduced, again with exemptions? Of course, that would really hit at the idea of a NHS free at the point of use and need and would probably be too politically controversial.

The Conservative pledge on the NHS was politically expedient. But does it make for good policy? Vince Cable didn't think it made economic and political sense and the former Labour health minister doesn't think it makes sense now.

Grasping the retirement nettle

It looks as if the Government is going to tackle the state pensions timebomb by bringing forward the increase of the retirement age to 66 to 2016. After that it seems that the plan is to increase the retirement age every five years on through a link with life expectancy on the Swedish model.

So far we have dealt with the increase in the pensionable population by holding the pension down at a level below most comparable countries. No one could live on it and it has to be topped up by means tested benefits for some but those are not always claimed.

The unions have objected that it is not possible for people to carry on undertaking strenuous manual work beyond their mid-sixties and that a lot of people will be effectively transferred to the unemployment register. What one needs, however, is a labour market that will make other sorts of jobs available, particularly part-time work. We need to move byeond the 'falling off a cliff' fixed retirement age.

As it is, a lot of people cease being economically active, or at least stop working full-time, before the state retirement age, although economic activity rates in the pre-retirement group have been increasing. Raising the retirement age means that some of these early retirements would take place somewhat later.

As for the argument that extending working life denies younger people jobs, that is to subscribe to the 'lump of labour' fallacy. For many younger people there are still problems with skill deficiencies and attitudes to work.

Some grumbles about raising the retirement age have come from the holiday industry as apparently the early retired are important customers for the 'shoulder' season. Certainly travelling the world is a preoccupation for many of the early retired. I am looking forward to spend less time in airports and on lomg-distance flights.

Peter Walker

The death of Peter Walker announced yesterday reminded me of a couple of incidents that happened round about 1980. I happened to get in the lift at the Department of Trade and Industry building in Victoria Street at the same time as the 'mad monk' Sir Keith Joseph. As we ascended to the top floor, Sir Keith stared at me all the time as I was something that the cat had brought in.

In the old MAFF building in Whitehall Place, I got in the lift with Peter Walker. 'How are you. How's everything going?' he asked. He didn't know me, but clearly thought I was a relatively junior civil servant.

Peter Walker came from a skilled working class background in London (something we share). By the age of 30 he was self-made millionaire. As chairman of the Young Conservatives, he bagged what was then a safe seat at Worcester (Worcester Woman delivered it to New Labour in 1997 and it has only just returned to the Cameroonies).

Walker got over his antipathy to the common market and hitched himself to Ted Heath's bandwagon, running his successful leadership election campaign in 1965. His managerial approach fitted in with Heath's modernising style and he headed up the new Environment department in 1970 before going to Trade and Industry.

However, he lacked that extra something that singled out a future party leader and in any case his brand of Conservatism was going out of favour. He could certainly spot an emerging issue as in the case of the 1972 Deposit of Poisonous Wastes Act which presaged later environmental legislation (and about which I wrote a case study in our book on the CBI). However, it is arguable that he botched the reform of local government and also took a 'courageous' decision to invest heavily in the steel industry just when it was going into decline.

Mrs Thatcher, whom he had turned down as a minister of state, put him into the relative backwater of the Ministry of Agriculture. Here he bought into the productivist agenda, producing a white paper called 'Food From Our Own Resources'. He wasn't too pleased to be shifted to Energy but was then in charge of defeating the miners' strike, as well as privatising British Gas and laying the groundwork for electricity privatisation (arguably not well done).

Before the 1987 election he was so much on the edge of the platform that he was in danger of falling off at an election launch event involving the Cabinet. However, he outlived all the other 'wets' in the Cabinet like Sir Ian Gilmour and Jim Prior. This was exemplified in the title of his memoir 'Staying Power'.

Mrs Thatcher made him Secretary of State for Wales and gave him a free hand to pursue interventionist policies in the principality where he went down well. 'Just look at what Peter Walker is doing in Wales,' Ian Gilmour once said to me.

Peter Walker had a happy family life. He stayed married to Tessa and had five children. He had few interests outside business and politics, but he pursued those interests to the full.

Boosting the competition

This new British politics blog from LSE looks very interesting and authoritative:
LSE

Vince lays it on the line

One of the news channels commented that Vince Cable looked 'hemmed in' as he sat on the Treasury bench during the Chancellor's speech yesterday. In truth there isn't much room on the front bench, although there was a certain irony in Vince being placed next to Iain Duncan-Smith.

In this article, Vince does not trip the light fantastic, but lays it on the line about why there was no alternative to a tough budget and why he has channged his mind on some issues: Vince

In ambushing the university vice-chancellors over their pay hikes, Vince showed that he can be a grizzly bear as well as a cuddly one. He can play hard ball, which is as it should be.

One of the constitutional ironies of yesterday's performance was that it was preceded by questions to the Church Commissioners, their spokesman on earth now being Tom Baldry, the member for Banbury.

The unavoidable budget

That is how George Osborne billed his emergency budget today. He also described it as 'tough but fair'. No doubt subsequent debate will focus in part on how far it is.

The Chancellor said that a position in which one pound in every four spent by the Government was borrowed was not sustainable. Nor was it acceptable to have nearly half of national income spent by the Government. A quarter of a trillion pounds will be spent in debt interest over the lifetime of the Parliament.

77 per cent of the target of eliminating the structural deficit over a five year period would be met by spending cuts and 23 per cent by tax increases, largely through a 20 per cent increase in VAT from next January. The current exemptions from VAT remain in place.

Among the most controversial measures will be a two year pay freeze for the public sector (athough the 28 per cent of those earning under £21,000 a year will get a flat £250 increase in each year) and a three year freeze in child benefit. The Chancellor argued that means testing child benefit would have involved too many transaction costs.

One interesting commment by the Chancellor was that the UK was over reliant on financial services and a bank levy will be introduced in 2011. He also said that Conservative governments in the early 1990s made a mistake when they cut capital rather than current spending.

In a sense we will get a second instalment of the pain when the results of the public expenditure review are revealed on Ocrober 20th. However, there is now a credible medium-term fiscal strategy in place which should satisfy the international markets. Credbility with them was a criterion that the Chancellor specifically mentioned.

Preparing for the budget

The sentence being used in briefings for the Sunday press on the Budget was 'A budget that is popular the day after is not a good budget'. The public has been prepared for medicine which will be nasty, but may turn out to be a little bit less unpleasant than expected.

Any VAT increase cannot be implemented immediately for practical reasons. Indeed it is difficult to see how it could be introduced until the autumn and it would not be too popular just before Christmas. So I would not expect it to be intoduced until after the January sales and possibly not until April.

One off the wall prediction which will probably be wrong: an increase in the current VAT rate of 5 per cent on domestic fuel. It is below the EU average of 8 per cent and could be sold as a carbon reduction measure.

The fiscal Nimbyists were out in force today. People in Sheffield were upset because of the withdrawal of the loan to Sheffield Forgemasters, but if it is such a viable project, why can't it be funded commercially? On Midlands television, people from Bromsgrove were complaining because they won't get an admittedly needed new station.

Although talk of a double dip reception is overdone, the Government does need to be careful about how it cuts capital projects. These are usually cut severely in times of public expenditure restraint, because it is a way of achieving quick results in cutting spending.

However, the downside is that necessary infrastructure improvements which can contribute to economic growth do not occur. The construction industry is a labour intensive one and has already been hit hard by the downturn in house building which may be intensified by the Government's promised 'Nimby's charter' to block development.

It is clear that the Government is prepared to 'think the unthinkable' about benefits and Frank Field has been brought back to finish the job that he should have been allowed to undertake by New Labour. 'Two brains' Willetts made it clear yesterday that while some universal benefits would always be part of the welfare state, there was a need to re-consider the balance between them and selective benefis.

With increasing life expectancy, generous public sector pensions are no longer affordable and John Hutton has been brought in to tackle this thorny problem. He was immediately denounced by the soon to be ennobled Prezza as a 'collaborator': at least he didn't use the phrase 'class traitor'. As someone remarked it's the revenge of the Blairites.