The Sad Stupidity of the Tory Conference

Political discourse is at the heart of our democracy. We are allowed to disagree, to argue our corner and to present our positions without fear. This is a hugely important thing, as anyone suffering under a totalitarian regime will tell you. Perhaps the most compelling facet of this debate is analysing the extrapolations of policy from a position of ideology, and reviewing the evidence. A well-reasoned argument over a policy approach may in fact just boil down to what each side believes, because there is a case to be made for the tactic either way. It’s possible to argue, for example, that red tape is strangling business and cutting employment rights will boost the economy. I would fundamentally disagree with this, citing the importance of secure jobs and confidence from a demand perspective. However, it’s a debate.

At the Conservative Party Conference, this type of political reasoning has gone out of the window. The week has been full of ideas which at their very heart are just utterly, irredeemably, stupid. It’s a shame, because it lowers the quality of politics in this country and it leads to government by headline. I’d love to analyse the merits of the Tory’s economic approach, but we don’t get anything new, apart from a plan to swap shares for employment rights (stupid).

Here’s my inexhaustive list of the stupid things cabinet ministers have said this week:

1. George Osborne announced that companies can offer shares to new employees if they sign away employment rights and these shares will be free of CGT. There are so many stupid things about this idea that I need a list:

  • How do you value the shares in a start-up? How can you accurately measure an increase in their value if they are not publicly traded?
  • If you can value them, as an employee, how can you sell them? Do you need to wait until a takeover or floatation to get any money out? How many companies will this then apply to? (Answer – virtually none)
  • Individuals already have a CGT allowance of £10,400 a year. If you get £5000 of shares, you need them to triple in value before you are even thinking about CGT anyway.
  • Companies already have two years to dismiss employees without them having recourse to tribunals. Why would a company give away equity when this already exists?
  • Assuming ex-employees can’t hold shares, if someone is fired, the company will need to value the shares (see above) and then buy them back themselves. This means a share capital account to cover liabilities arising from the issue of shares. Why would a small company want to go to these lengths?
  • If the shares have voting rights, companies are going to be even less inclined to issue them as it would tie their hands in terms of making business decisions
  • Given all this, why on earth would an employee even want the shares in the first place, especially if it left them without the chance to request basic employment rights?

I could probably go on, in particularly about the added bureaucracy and “red tape” this would add to a small business, but I think it’s pretty clear that just about no-one will ever use this stupid scheme. We are repeatedly told about the brilliance of Osborne’s cabal of advisors. After this (and pasties, caravans etc etc), it’s hard not to think that they are in fact, stupid.

2. Chris Grayling wants to change the law to allow homeowners to attack burglars more excessively. This is so incredibly stupid I can hardly bring myself to write about it. Another list:

  • It’s a stupid solution to a non-problem. Between 1990 and 2005, SEVEN prosecutions were brought against homeowners for tackling burglars. Less than one every two years. The chances of this being relevant to the average person is so infinitesimally remote as to make winning the lottery pretty much a 50:50 thing.
  • Grayling doesn’t want people arrested if they attack a burglar. However, all his new law does is alter one (established) judgement call on the reasonableness of the action to another. If a burglar is badly hurt, the homeowner will still be arrested while a judgement on the new test of “not grossly disproportionate” is made. As we know, virtually no-one is charged anyway, so the change will make no difference.
  • How can giving the general impression that violent actions are to be encouraged help make the country safer? Obviously, it can’t.
  • This is classic, stupid, knee-jerk, right-wing garbage that desperate politicians think makes them look tough, but in fact makes them look stupid.

I think Grayling may have won “stupidest person at Tory Conference 2012” this year, but it’s such a tough call.

3. Jeremy Hunt claims he’s increasing spending on the NHS by £12bn. This isn’t actually a stupid comment, but it does assume everyone who hears it is stupid, which they aren’t, so therefore becomes stupid in context. The £12bn figure is “nominal”, which means not adjusted for inflation, or, in practical terms, irrelevant nonsense. Spending on the health service is flat “in real terms” (ie adjusted for inflation). However, the NHS is widely agreed to require an increase of 4% each year to stand still. Under Thatcher and Major, when the service nearly collapsed, there were still real terms increases, just not enough. If you don’t think claiming to be spending an extra £12bn on the NHS now is stupid, wait till it falls apart in a couple of years.

4. Theresa May wants antisocial behaviour victims to choose the punishment for those convicted of wronging them. This is another policy which nobody has sense-checked. Or if they have, they have no sense. It undermines a basic tenet of English law, that crimes are committed against the community (embodied by the Crown), not individuals. Therefore punishment is managed by the Crown’s representatives. There’s a good reason for this, which is to ensure that everyone is seen as equal in the eyes of the law. Under May’s stupid idea, it will completely depend on what the victim chooses as to how people are punished for the same crime. This sets a very dangerous precedent.

Yes, the system needs to support victims better, but this can be assisted by them trusting in the state to manage prosecutions fairly and appropriately, not by introducing a roguish element of vendetta into the criminal justice system. Stupid.

These are just some of the stupid things said this week. There have been broader stupid claims made, like the highly dubious claim to have cut the deficit by 25%, which only works if you stop counting in March 2012, include massive cuts to capital spending and ignore the fact that borrowing is rising sharply again now. Still, pats on the back all round!

The stupid claims about fairness and “all being in it together” are so ridiculous as to barely merit comment anymore. However, although the richest 10% have been hit the most in percentage terms, they are only slightly ahead of the poorest 10%, who again just do worse than the next poorest 10% and so on. And none of this analysis takes into account the disproportionate use of local services by the poorest. It’s a mendacious argument to suggest the rich are being squeezed. As another £10bn is lined up to be cut from social security, the only way the rich are to be targeted is through some tax evasion work. This apparently will happen despite the Treasury having lost 1000s of employees.

Interesting, isn’t it – while the poor get hit harder and harder, the rich are supposedly suffering because the government will try to make them OBEY THE LAW!

It’s sad the Conservatives have been so stupid. I sense a real desperation. It’s the politics of last resort and I suppose for that we should be grateful.

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Balls’ Message Lost in the Noise

Let’s be clear, Ed Balls’ speech to the Fabians on Saturday was categorically not an acceptance of austerity as the solution to the economic mess we are in. So why to so many people, from the horrified Owen Jones to the gleeful Blairites think it was?

Balls’ analysis was classically Keynesian. It was a continuation of the themes he set out at Bloomberg in summer 2010. He knows austerity is wrong and events are proving him correct. I spoke to a technical market analyst on Thursday who assesses trends in the markets and openly admits he has no interest in geopolitical or macroeconomic reasoning for why things happen. He just looks at the facts. And the world is heading for a new, deeper crisis because everyone and everything is “deleveraging”, ie trying to pay off debt, at the same time. Banks, companies, individuals and governments are all sucking money out of the system at once. I suggested therefore that this was a terrible time for governments to be embarking on austerity. He shrugged and said “of course”. The world is grinding to a halt and government austerity, the one thing which could oil the wheels, is in fact making the slowdown much, much worse.

Ed Balls knows this, and what’s more, he said it. He made it very clear in his speech that withdrawing demand now was suicidal. He is in no way suggesting that the Tory approach is right, or that he thinks cuts will boost the economy or cut the deficit.

What he did say, however, is that Labour cannot promise now to reverse the cuts. And he’s saying this from an economic perspective. Come 2015, the damage from austerity will be done. Reversing cuts then won’t help the economy because it would be applying the economic medicine once the patient is dead.

Labour will look for ways to help those hardest hit, but reversing specific spending cuts is basically irrelevant. The new approach will need to be crafted out of whatever mess we are left with in 2015. I agree strongly with many party members that Labour must start now to explain how this new, post-Blair approach to building a fairer country will work. Balls cites a national investment bank and a reevaluation of pay and rewards. It’s a start, but only a start. People are going to be reeling in 2015 and will need a major new vision to rebuild the country. However, this can’t come from taxing the proceeds of growth in the way Blairites seem to think it should.

So while there were gaps in the speech, the basic analysis is not what either camp paint it to be. It’s not a capitulation to ridiculous Tory economic policy and it’s not a return to some mythical Blairite fiscal responsibility (which is both something to copy and apologise for, according to the increasingly incoherent reasoning of some on the right of the party).

How on earth did we get to this point over a practical speech which was tight in its analysis and undramatic in its proposals? Simple. A catastrophic failure of communications. I don’t know anyone who works in the Labour comms team, but I’m sure they are dedicated and hard working. However, somewhere the system is failing so badly it’s come close to splitting the party in two.

Ed Balls was interviewed by the Guardian ahead of the speech and it’s this that caused much of the consternation. This piece does indeed imply that Labour is accepting Tory cuts as the right approach now. It also suggests that we can’t do anything to help people stuck on poor wages suffering from high inflation. Read the speech and the position is much more nuanced. However it doesn’t matter. “Read the speech” I implored people all day on Twitter. “The public won’t” I was told. And those responses are right. The message was already out there and the anger or jubilation was out of the bottle.

So, a sensible and serious speech has managed to create a storm in two ways, neither of which can have been remotely intended. It’s staggering that Labour can fail so badly to manage this message. It doesn’t require “dark arts” or anything so nefarious. It requires clarity, simplicity and a basic grasp of how the media works. You cannot allow there to be the slightest doubt in your message. If you don’t back the current approach, you hammer this home repeatedly. If you are talking about accepting the consequences of cuts (not the cuts themselves), you bloody well say it. Again and again.

People are making huge play of this and it’s turning into a disaster for Labour. And it’s a disaster entirely of our own making. The core message is positive and realistic – austerity is failing and we will need to deal with the consequences. We don’t know how bad the Tories will make it so we don’t know whether we can directly undo the mess.

Labour is hiring executive directors of policy and communications this month. We can only hope that together they will bring some direction, purpose and professionalism to the operation. Ed Balls should be furious that his important analysis has been turned into either a treacherous betrayal of Labour principles or a timely embrace of austerity. And the only people to blame are his own.


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Cuts and the Credibility Gap

It has become fashionable in the Labour Party to take a conservative view of austerity. There have always been voices on the right of the party calling for Labour to match the Tories on deficit reduction in general and spending cuts in particular. These voices seem to echo much louder now as polls continue to show Cameron and Osborne have greater public trust on the economy than Balls and Miliband.

The solution to this crisis of confidence, according to the right, is to ape the coalition on cuts. If they’re seen as more competent than us, goes the exceptionally lightweight thinking, we just need to copy them and people will flock back!

The catastrophic nature of this mistake will haunt the party through this Parliament and beyond. First, we need to clarify cause and effect. While the Tories poll much better on the economy, they don’t poll very well on the specifics of their approach. Sixty percent of people believe the cuts programme should be scaled back if growth continues to stall. This suggests that while voters accept the need for responsibility, they don’t agree that cuts alone will provide it.

There is also a collective failure of memory in the Labour Party. We had thirteen years in power, the end of which coincided with the worst global economic crisis since the 1930s. Why would we expect people to run back to us so soon after a crushing electoral defeat? To be polling in the forties now seems incredible. Compare this to the Tories in 1998 where they struggled to break 31%. Of course our economic competence is being questioned, but this has less to do with our current approach and much more to do with historical blame.

Our response will define Ed Miliband’s leadership and the short-term future of the party. Recent pronouncements from figures like Liam Byrne and Jim Murphy suggest we have opted for a Tory-lite approach to the deficit. Byrne bemoans the high cost of Housing Benefit. He fails utterly to provide a distinctive alternative to cutting it. Housing Benefit goes to private landlords who can charge inflated rents due to a lack of rent control and a devastating lack of supply.

Here’s an issue where Labour can seize the initiative. A massive programme of social housing building would help stimulate a depressed construction market, create private sector jobs, put downward pressure on rents and rein in greedy landlords. As a result, government investment would drive growth, cut welfare spending and improve the lives of people trapped in unaffordable housing with all the social and economic benefits that would bring. It’s a clear message – bold, positive and financially prudent.

Instead, Byrne echoes the Tories and completely ignores the root cause of the cost of Housing Benefit. If voters like the Tory approach they will vote Tory. Labour cannot and must not compete on the same territory, because we will lose.

And here’s the essence of the issue. By fighting the Tories on their territory we are accepting the crux of their argument – Labour is either profligate or it’s useless: the party can only operate in an environment of over-spending. If our response to this is just: ‘No! We can cut too!’ then we are doomed. It’s such an obvious bear trap that Cameron hasn’t even bothered covering it with leaves.

The authors of the Policy Exchange pamphlet “In the Black Labour” make a valuable point. Labour must operate within the parameters of the country’s means. I accept and welcome this. But trust and responsibility will not be delivered by accepting a false Tory premise. Cuts of this scale in this utterly arbitrary, political timeframe (Osborne hoped for giveaways pre-election, remember) are not working. Even the ratings agencies and the IMF are getting twitchy. The US employment position is improving while austerity poster boy Ireland falls back into recession and has an unemployment rate over 14%. And yet we are being told to buy this as a party. Now, of all times.

For Labour to switch noticeably towards the Tory austerity agenda will simply make us look weak and indecisive. If we agree with austerity as “the only way”, then why are we only accepting it now? Why, when austerity is failing around the world, do we choose this moment to change tack? The consequences of this switch go beyond the (perhaps terminal) erosion of our own credibility; they open the door for the Tories to look like the more flexible, responsive party. If we are calling for Plan A, then not only do we look wrong-headed, but we are likely to be wrong-footed when Osborne inevitably softens his approach this year.

None of this is to say we don’t need a credible approach to the economy. Cuts do not need to be the sole defining feature of the strategy. Fiscal responsibility doesn’t come from attacking the £1.6bn of benefit fraud in a cheap tabloid gimmick. In a deficit of over £100bn, this is a drop in the ocean. It’s patronising to suggest that people can only see deficit reduction in terms of cutting. They realise that if you bring in more money, that does the job equally well, if not better.

So Labour needs a big, bold and clear strategy, supported by serious and impactful tactics. The strategy must be to build the economy, create jobs and reequip the nation for the 21st Century. At the same time, we need to re-evaluate our role in the world and also paint a picture of the society we aim to build. Paying unemployment benefit is a waste of money, so get people into jobs. Paying Housing Benefit is a waste of money, so build more houses and cap rents. Housebuilding and job creation go hand in hand.

Our infrastructure is rapidly become unfit for purpose and is making us uncompetitive, so invest (with private partners) in broadband, WiFi and rail. Energy costs are crippling household spending, reducing demand and costing jobs and growth, so invest in renewables, using UK technology and UK companies to overhaul our energy infrastructure, while getting serious about regulating profits in the existing energy companies. This can be driven through a meaningful, well-capitalised green investment bank.

There is a clear case to be made for government spending that delivers measurable returns. The coalition’s policy is tipping money and lives down the drain. It’s bad for the deficit and a disaster for future growth and prosperity. Labour can demonstrate how, far from cutting waste, the Tory approach is increasing it. Increasing benefit claimants, increasing pressures on housing, storing up huge future costs as a generation of young people are cast adrift. Far from being a responsible government, the coalition is wasting billions on pet projects like the NHS reorganisation and the free schools initiative. They are the profligate party, in hoc to the markets and blinkered by bankers.

So Labour must accept fiscally prudent government, but reframe the argument about what constitutes good spending. There’s no need to apologise for spending to improve schools, hospitals and the police. There needs to be recognition that we must be rigorous in its analysis of how money is spent, but a clear case made for spending for growth. It’s dangerous and expensive for a government to retrench now. Billions are being spent every week, but badly, harmfully and wastefully by a government that has lost sight of its purpose – to support and grow the country.

So Labour must not be the party of “soft” cuts with no vision. Governments will always spend. Some of this spending can bring exponential returns. Paying for the social consequences of unemployment, social breakdown and despair is a dreadfully expensive use of people’s money. Labour won’t do this, we will spend to invest, nurture and grow a fairer, better equipped and ultimately more financially stable country. Or so we should be saying.


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My Manifesto for Labour – Part One, the Economy

In this series of posts, I will lay out the headline vision I think Labour should adopt as its manifesto going forward. It is not a line by line spending strategy (which would be impossible to create from a home office in Wiltshire) but it will explain some fundamental themes the party should adopt to regain support, differentiate itself and gradually become a government in waiting. It is not intended to cover every aspect of every policy area, but instead to give some vital focus to the Labour approach.

Part One – The Economy, Business and Growth

The coalition plan isn’t working. The only rebalancing going on in the economy is the transfer of debt from the public sector into the private. Personal debt is predicted to rise by £566bn over the life of the parliament as the public deficit falls. This transfer will simply squeeze household spending and cause the economy to grind to a halt. Growth is flatlining, making it much harder to bring down the deficit, youth employment is running at 20% (again adding millions to government spending) and inflation is taking chunks out of the monthly income of workers whose pay is frozen. All this why executive pay rose 45% last year. Whatever the coalition may claim, we are clearly not “all in this together”.

Labour must address this. First, the reduction of the deficit must not come at the expense of jobs and personal debt. Growing our way out of the deficit is preferable to attempting to cut our way out of it. It’s a tested, logical and positive way to tackle our budget situation. To this end, Labour should support major infrastructure projects which will help bring us up to the levels of Europe and the US in terms of rail, road and broadband. It should also champion a huge housebuilding drive (more of which in a later post). In addition, the government should be investing in the development and implementation of green energy technologies. This spending, shared with private sector investors (not on a PFI basis), will help create jobs, apprenticeships and skills. These skills will then reside within the economy and can be exported – a genuine rebalancing can begin to take place. Without government support, the only shift towards manufacturing will be dependent on a weak pound and will be not driven by world-class skills and technology we need. The coalition plans for growth are feeble – expecting a corporation tax cut to filter down to more jobs and investment and hoping that low interest rates will encourage lending and investment, while in reality, none of this is happening.

In return for this government investment, industry must accept some fundamental changes to the way it supports its workers. A living wage should be introduced. Instead of providing tax cuts to large corporations, as the government is now doing, these will only be offered to organisations which accept the living wage strategy. The policy will then be rolled out on a mandatory basis. This allows Labour to support the enterprise culture the country needs while protecting workers from an increasingly insecure “flexible labour market”. The living wage will have additional benefits in reducing the need for tax credits, housing benefit and other “top-ups” to subsidise the poor salary levels offered by many employers, thus reducing the benefit bill and helping lower government spending. It is time that businesses took more responsibility for their workforce and relied less on government to keep them properly remunerated.

To better reflect workers contributions to businesses, every public company will be required to have worker representation on its remuneration committee and to adopt pay structures which ensure that if the CEO receives huge pay rises and bonuses, these are mirrored in the pay and bonuses of everyone throughout the business, at the appropriate level, of course. So board executives will only be able to grant themselves huge rises if they also allocate a similar proportion of profits to the people actually bringing in the revenue.

On tax, the burden needs to be shifted away from the poorest, but this means across the board, not simply through income tax. VAT is a regressive tax which hits the poor hardest. The balance of the coalition’s tax plans does not spread the burden equitably – despite its plans on raising income tax thresholds, the overall impact of tax credit and benefit cuts, plus VAT, leaves most families at the lower end worse off. The 50% rate should remain and serious investigation into the best way of implementing a wealth tax should be undertaken. It should be Labour’s stated aim to tax wealth while increasing the incentives for those at the bottom and the middle of society to improve their financial position. It is here that tax cuts should be targeted, instead of at the top 1% of earners. Rather than cutting HMRC staff, Labour should propose significant investment in tackling tax evasion (theft) and implement a thorough review into tax avoidance. These two areas cost the country a huge amount each year, vastly in excess of benefit fraud and should be prioritised as such.

Labour’s message should be clear – Keep the economy moving, keep people in jobs, ensure people are fairly rewarded for the work they do, make the fundamental changes to business practice we need and invest to transform our economy. It is a hopeful message which will restore shattered consumer confidence, motivate businesses to invest, create jobs and bring down the deficit. It will also demonstrate that while Labour supports enterprise and hard work (in fact more emphatically than the coalition), it also recognises that we cannot continue to exacerbate the dividing lines between workers and executives, which drives social disharmony and creates huge resentment.

I will deal more specifically with public sector spending cuts and reform in an upcoming post, as well as housing and education which I touch on here. In the meantime, your comments on this are very welcome.


Filed under Coalition, Economy, Labour Party

Uncomfortable Truths for Osborne’s Ideology Brigade

I make no apology for lifting this straight from the pages of the Guardian today (2 March) because I simply couldn’t rewrite these figures to make the point any clearer. There has been a complete lack of context in the debate over deficit reduction and without a solid factual base, it is impossible to make rational decisions over the action that must be taken. Therefore it is with huge gratitude to Barry Kushner that I replicate his letter here:

“George Osborne dissimulates. He knows that Ed Balls is at odds with Labour party policy on cuts, knowing that we have 12 to 13 years to pay off debt and deficit. But he also knows that our level of debt (less than 60% of GDP net of bank assets) is within Maastricht Treaty limits (60%) and lower than almost all OECD countries; that this debt is low by historical standards (we sustained debt at more than 100% of GDP for 20 years up until the early 1970s); that debt repayments (less than 3% of GDP) are lower than they were under Thatcher (5.15%) and Major (3.8%); that our deficit is partly created by a low overall tax-take (around 36% compared with the EU average of 40%). He knows this because these are official statistics (available on Google – mostly Office for National Statistics but also
He knows, therefore, that whereas our economy, dominated by manufacturing up to the early 1990s, delivered GDP growth of 2.5%, the financial sector since then has delivered growth rates of less than 1.5% – another element of structural deficit. He knows that, whereas public sector costs have risen year on year over the past 30 years, so has outsourcing to the private sector – currently at around 20% of total public sector resource. Though he may privately be content with Labour’s failure to stem the concentration of wealth (the index of inequality rose under Labour – the Gini Coefficient up almost 5 points), Osbourne will be more circumspect that Labour borrowed less and repaid more debt than previous Conservative administrations (borrowing was roughly 50% less under Blair/Brown than it was under Major – more than twice Thatcher’s debt repayments were made).
And his biggest dissimulation – under the continuing influence of the previous Labour administration, 2010 saw £20bn more than forecast wiped off the deficit as a result not of spending cuts but of “New Deal”-style growth stimulation. It is unremarkable that Osbourne can point to the OECD and IMF supporting cuts – they are the global advocates of public austerity. He does not mention the three Nobel prize-winning economists (Pissaredes, Stiglitz, Krugman) and Martin Wolf of the Financial Times, all of whom condemn this austerity policy as a serious historical error. Why not? Clearly because he wants no balanced public contestation over the sustainability of a public sector. The real question is why opposition parties and dissident Lib Dems allow this level of narrative control by the coalition government – “crisis”, “unavoidable cuts”, “Labour’s fault”. It’s neither “middle” nor “muddle” nor an economic crisis – it’s a crisis of democratic debate.”


Filed under Coalition, Economy

Sorry Seems to be the Easiest Word

David Cameron was “extremely sorry” that ex-pats trying to escape the political and social meltdown in Libya had been let down by the foreign office who failed to get a plane to Tripoli to evacuate them. He was sorry that he hadn’t raised the issue of child benefit cuts before the election. He was sorry that the plan to sell off our forests had been such an unpopular shambles. The list of open and frank apologies from Cameron grows by the week. If there is one thing you can’t accuse the Prime Minister of, it’s a lack of humility.

However, in politics, as in life, there is a fine line between humility and incompetence. We are willing to give the benefit of the doubt to anyone who can find it in themselves to recognise their mistakes. But if it keeps happening, people start to ask why the need to repeatedly apologise arises. Couldn’t some of these issues have been avoided in the first place? There is something reassuring about a spouse who says sorry for not putting the bins out, not washing up, leaving clothes scattered around the bedroom (draw your own conclusions as to whether this comes from personal experience). After a while though, this starts to niggle. Rather than say sorry, why not just not do it? The loved one goes from endearingly humble to irritatingly selfish.

I have a sense, coming (as Dave does) from a PR background, that he’s been told to apologise whenever anything goes wrong. It’s the first rule of crisis management. Customers and voters hate it when people in power fail to acknowledge responsibility. In politics too, a failure to accept mistakes haunted Gordon Brown, who perhaps saw it as an admission of weakness. Cameron is in danger of pushing his media training too far. The apologies are racking up now and the country has started to notice. What might have been seen as a strength is turning rapidly into a weakness.

Apparently this string of mistakes has panicked Cameron into drawing more power back into Number 10. If mistakes are to be made, they will be Dave’s mistakes. He wants to avoid the reflected humiliation of Michael Gove’s repeated calamities in Education (he’s now been successfully challenged in court over his incompetent approach to scrapping Building Schools for the Future). However this approach comes with risks. Undoubtedly, it’ll be harder to cut Ministers adrift in the humiliating way he did to Caroline Spelman over the forests debacle. So the next apology may not have the whiff of a parent saying sorry for a child (Gove, Spelman or Hague), but will be that very dangerous thing – another chip away at the foundations of his political competence.

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Cameron’s “Big Society” – More Profit, Less Caring

David Cameron retreated to the relative safety of the Telegraph this morning to explain how he plans to completely revolutionise the provision of “public” services. Let’s skip over the fact that he a) didn’t tell anyone about this during the election and b) didn’t win. This is more of the desperate rushing towards change which Cameron feels obligated to do after Blair was criticised for not doing enough early in his premiership.

Cameron says he will introduce “a new presumption… that public services should be open to a range of providers competing to offer a better service.” He doesn’t talk about the level of service that people should expect, only that the government should ensure “fair access”. Where budgets are devolved (and failing) and private providers are allowed to operate where they choose, this heralds the end of our “national” health, education and social services as we know them.

Cameron feels obliged to talk about co-ops and mutuals bidding for new contracts, but when budgets are squeezed, these groups of local workers won’t have the infrastructure and resources to step in. They certainly will struggle to find the time to run the services as well as provide them. Therefore the door will be wide open for established – often foreign – providers to snap up contracts where they feel they can make money. They can take advantage of economies of scale and loss-leaders which small, local providers simply won’t be able to match. Are they likely to be hunting for contracts in difficult areas of country? Not unless the government ensures that resources are heavily weighted towards those areas, with enormous subsidies to make operating in unhealthy, poor and disadvantaged areas commercially viable. You just need to look at the tiny Pupil Premium (culled from within the schools budget) to understand how improbable this is.

Once “power is in hands of individuals” and he’s given “more people the right to take control of the budget for the service they receive”, what’s the next step? Cameron says he used to wonder why he wasn’t given control of the budget for his son’s healthcare. Perhaps because it would force almost impossible decisions on the NHS. How much is worth spending on each child? The Camerons would have been able to add their own money to make up a shortfall, but what if they were normal people? What if they chose a private hospital who put up their prices and suddenly Ivan would have been moved out because they hadn’t paid his bill? The NHS doesn’t (currently) make decisions based on price on an individual basis. Yes, price-related decisions must be made somewhere, but this is what the PCTs and Strategic Health Authorities are for. On the ground, you don’t have treatment stopped because of an outstanding bill. You aren’t thrown out of a hospital because you can’t pay.

The scope for disparity and resentment are enormous. Even as power for spending is handed to GPs, this is a serious concern. Now, the GP is on your side. In future, you may ask to be seen at a specific hospital, but be refused on the grounds of cost. And this refusal will come from the GP. In a properly competitive market, the logical progression is obvious. Fancy that lovely new private hospital? Just top up with your own money. It’s the end of a national system of healthcare and now it seems Cameron is extending the principle to every other facet of public service too.

The dangerous conclusion to this is a complete breakdown of the post-war social contract where people accepted that they pay a percentage of their income for the greater wellbeing of the nation as a whole. Why pay tax when you can simply hold onto the cash and buy your own services? Will people start to look resentfully at the amount being spent on one family’s healthcare and wonder why they are contributing when their loved ones remain healthy? What is you don’t like the local services on offer? Well, just “top-up” and buy your way to the front of the queue. The whole notion of national services unpinning our society comes under question. Why should someone who is paying for their own services also be paying for other people’s?

Very quickly we will find our country in a situation where if you can afford good services and you live in the right area, you will undoubtedly enjoy great provision. If you are unlucky enough not to be born wealthy you will have to get by on bargain basement services provided by the badly-motivated rump of the public sector. Think US healthcare.

If this seems like a faintly paranoid extrapolation, then look at the alternative. If every public service is competitively tendered, and price is a driving factor as “Big Government” budgets are squeezed, then the pressure to deregulate is enormous. Only within a very heavily (and centrally) regulated market can the service to everyone be kept at a specific level. How does the government drive new providers into the sector if it is going to keep a firm hand on the provision of services at a national level? Quite simply, it can’t, it won’t and doesn’t want to. The divisions this will create will make the current “postcode lottery” look like a minor inconvenience.

A defence of our national services requires two things – firstly, the loud and proud recognition of what they offer and what they have achieved. The NHS remains a beacon around the world, despite only recently being funded at a level close to the international average. It’s achieving record satisfaction ratings and while it’s not perfect, it does not discriminate on the basis of ability to pay. Alongside this is, perversely, the very notion of a “Big Society”. If we believe in society, then we accept that the better off contribute more, but they do so because they believe that our very Britishness is defined by fairness and a willingness to ensure every child has some basic services they can rely on, regardless of the circumstances of their birth. It comes from a recognition that everyone has a contribution to make to our country and that we share something as Britons which makes us happy and proud to contribute to the greater advancement of our nation.

A company is legally required to be amoral. This is not a criticism – its duty is to its shareholders. The state, on the other hand, has a responsibility to provide for people even when it may be messy, expensive and difficult. Remove this responsibility and all the relaunches of the “Big Society” in the world won’t keep the fabric of our nation together for much longer.

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The Centralisation of Localism

The Tory-led government (yes, I am using Ed’s new phrase from now on) is all about localism. Localism is very much its thing, we are repeatedly told. But does the reality live up to the rhetoric? It won’t surprise you if you have followed politics for the past few months to discover that it doesn’t. And more worrying, where localism is being given a genuine chance, it’s as a cover for “chaos” in the delivery of public services.

First, let’s look at two flagship policies which are being touted as a move to a more local way of doing things. Education is an obvious example. Michael Gove wants local parents, charity or business groups to set up schools in their local area to offer schooling appropriate to the local children. These free schools are being driven by local demand, not managed from Westminster, we are told. They will have the freedom to teach what they like and employ who they like. Except. Except the decision on whether a school gets the go-ahead is entirely down to Gove himself. He is also solely and personally responsible for ordaining academy status on existing schools and can even force schools to become academies, regardless of whether they want to or not.

And while he talks about freeing the curriculum, he has decided which subjects actually count. So a school which wants to offer music, RE, sport or other subjects which fall outside of his arbitrary “English Baccalaureate” won’t be recognised in league tables. This is centrally applied pressure on what gets taught in schools and a million miles away from the localism agenda.

In education, the bodies which were responsible for ensuring local areas get proper school provision, the Local Education Authorities, are effectively being scrapped and decision-making is moving to Westminster. It’s clear that Mr Gove, while talking the talk on localism, is actively sprinting in the opposite direction when it come to genuinely localising services.

The same is true of enterprise and development. In England, the government is scrapping the Regional Development Agencies (RDAs), which were responsible for investing and supporting economic development in the English regions. They are being replaced by Local Enterprise Partnerships (LEPs), which are supposed to be more local, more accountable and more effective because they are focused on smaller areas and run through existing local authorities. Except. Except the funding for the LEPs, which, let’s face it, is the important bit, isn’t local at all. The Regional Growth Fund (RGF) is a centrally-managed pot of cash which is doled out on the say so of ministers. In fact, it’s worth quoting directly from the BIS web site here as to who makes the decisions:

“Final decisions regarding support and prioritisation will be taken by a ministerial group chaired by the Deputy Prime Minister including the Chief Secretary to the Treasury and the Secretaries of State for: Business Innovation and Skills; Communities and Local Government; Transport; and Environment Food and Rural Affairs. The ministerial group will be assisted by an independent advisory panel chaired by Lord Heseltine that will make recommendations on which proposals best address the objectives of the RGF.”

So, do local people decide on which projects get the investment? Is it planned on a regional basis, as was the case with the RDAs? No. Nick Clegg and his cronies decide who gets the money. This is becoming entirely typical. A project supposedly designed to improve local economies is driven from the centre and turns out not to be local in any meaningful sense whatsoever. As in all these things, the wise approach is to follow the money. And you’ll usually find the money is in Westminster.

Where the government is happy to let local bodies take control is in areas where the cuts fall hardest. A cynic might suggest that as Eric Pickles announces more “localism” and the provision of services through local authorities on the one hand, he is dishing out a poisoned chalice of 25% budget cuts with the other. So, who gets the blame for failing services? Why, the local providers of course. After all, they are in charge now!

This is the essence of the “Big Society”. An abdication of government responsibility for services people rely on. There was a truly staggering piece on the “Office of the Big Society” on Radio Four’s PM programme on 12 January (listen from 22 mins). In it, Francis Maude made it clear not only that the government doesn’t know what’s happening on the ground in terms of service provision, but that it doesn’t want to know. In fact, it doesn’t care. It sees the obligation of government not to ensure everyone has local services they can rely on, but that they stand as far back as possible and see what happens. There is an admission that provision will be chaotic and patchy. They don’t care, because once the responsibility has gone from central government, they don’t think they can be judged on the outcomes.

So this is what localism means to the Tory-led government. Either it’s nothing more than shallow rhetoric, with powers being dragged back to Westminster, or, where it suits, it’s abandoning local communities to their own devices, to struggle on with vastly reduced budgets. Whichever way you look at it, it leaves people less in control of their own lives and the government’s claims to be empowering local communities looking very hollow indeed.

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The Long-Term Threat from “Govern Now, Think Later” Politics

For a party that’s had thirteen years to plan its next government (or nearer eighty, in the case of the Lib Dems), this Tory-led administration is incredibly short-sighted. It has rushed headlong into a mass of reorganisations and restructurings which look very badly planned and certainly lacking in democratic mandate. Take the School Sports Partnership, a way of allowing schools to co-operate in providing competitive and social sporting activities for their pupils. Scrap it, said Michael Gove, let Heads decide how to run sports. A stream of Tories lined up to praise this new approach – “free the schools!”, they cried in unison. However, people who actually understand school sports made it clear that without properly funded local organisation, school sport was under threat as Heads were forced to prioritise their spending at a time of limited resources. Which to scrap – the sports and games, of those extra computers or even a new teacher? It’s fairly obvious where the axe would fall.

So Gove relents and performs a u-turn which is indicative of this government’s short-sightedness. Hours of discussion about a new approach to school sports and then a hurried about-face. What a waste of time, effort and resources. A little more thought, a bit more planning and this could have been avoided. It’s vital that Labour portray this u-turn for what it is – poor government, hasty management and wasteful ineptitude.

If it was only school sports which suffered from this “govern first, think later” approach, we perhaps could excuse the coalition. They’re new, after all. However, across the board, the Tory government is rushing through decisions without proper consultation and often against the wishes of those impacted most.

In the NHS, a hugely costly reorganisation has the support of only a minority of GPs, who are now being handed £80bn of commissioning budget. The change will cost around £3bn at a time of falling revenue for the Health Service (ignore the “ring-fenced budget” claims – experts say the NHS needs 3% increases p.a. to simply stand still. It’s getting 0.1%). So why do it? The only groups clamouring for an overall like this are the private health companies who are lining up to provide the commissioning services GPs won’t be able to. Report after report has warned of the risks of the dramatic overhaul in the NHS, particularly when money is tight. But Cameron and Andrew Lansley don’t care. They’ve made a decision and evidence be damned. The difference between this and School Sports Partnerships is that while some kids might get fat with the one change, people might die under the other.

Of course the government don’t want people to die, but the stampede to be the most radical minister in an unelected government is leading to rash decisions which will unquestionably have serious effects on people’s lives. There is a lack of evidence that this is at the forefront of any minister’s mind as he or she lines up the next dramatic shake-up of public services.

Finally we come to the big one. The economy. It’s stalling as the effects of Labour’s stimulus packages wear off. Unemployment is rising and the private sector is failing miserably to fill the gap left by public sector lay-offs, precisely as most serious commentators expected. The only jobs being created are part-time, which provide no security to people and often mean families rely on benefits to achieve a living income. Everything is focused on the deficit. The price of Osborne and Cameron’s blinkered obsession with cutting the public sector to somehow restore economic balance is record-breaking youth and women’s unemployment and, perversely, negligible economic growth.

The short-termism is frightening. Even if the Tories manage to eliminate the deficit in an entirely arbitrary four-year period, what will the consequences of their approach be? We will have a generation of young people trapped in unemployment. A lack of stable communities as people are forced to move around hunting for work. Increasing resentment from those who lose out towards those who seem impervious to the deficit-cutting measures. In short, a much worse country to live in.

For anyone searching for an alternative, look to the post-war period. Despite a deficit and debt which puts the current one in the shade, various post-war administrations managed to invest in huge housing and infrastructure projects and of course, the NHS. Boldness brought great rewards. It’s time for further boldness now. Government should be looking to the horizon and to our future, rather than the present. Of course we must increase efficiency wherever possible and provide the absolute best value for money in our public services, but relentless cuts will hollow out the foundations on which they rely. Once lost, local services will never be recovered.

We should be investing in a genuine green investment bank, with the power to raise funds and independently invest in new technology. Instead we have a fund of £1bn, considered entirely useless by all serious commentators. This country has a proud tradition of pioneering innovation, but short-sightedness from the Treasury is standing in the way of a potentially lucrative new industrial sector. If we don’t seize the initiative, others countries will. We need an active and engaged industrial policy which supports industry, encourages businesses to build links with communities through specialist skills and secure employment and sooner rather than later, the Treasury coffers will feel the benefit.

As for our young people, much better to invest in genuine work placements (such as offered by the now-scrapped Future Jobs Fund) than simply hand out benefits then kick people for not finding jobs which don’t exist. When recovery final does come, how does the country benefit from underskilled and unemployed people, out of touch with work? Pay for jobs and training now and reap the benefits in the future.

The thinking required is joined up. Connect each stage of people’s lives to the next. Attacking Sure Start and removing the element of universality will remove the community cohesion these centres currently provide. I have seen first hand how bringing families from across the community together improves the local area as people recognise they have more in common than they imagined. Turn our schools into a market place of special interest groups and the “sharp-elbowed middle class” and watch as these divisions widen further. I would scrap charitable status for private schools, ease the administrative burden on Heads and work towards a truly comprehensive system where every student has a fair chance, not just those in a position to exploit their time and influence.

Support the Educational Maintenance Allowance which keeps pupils in education and allows them the best chance to achieve. Fund universities properly – we will never be the factory of the world, but we could be its R&D department – in culture, academia and humanities as well as engineering and science. Offer proper alternatives to university too. We should support apprenticeships and training schemes which provide paid employment to young people embarking on a career.

And finally, recognise the importance of a life outside work. Community stability, confidence in the next pay packet, a feeling that work and community are not always separate can rebuild society where too often, poorly paid and part-time jobs for multinational companies leave people feeling undervalued. We shouldn’t be demonising those unable to work, but creating an environment where work is available, properly paid and secure. Then we can tackle the tiny minority who are over reliant on the state.

This comes from a recognition that a divided society is an unhappy society. As bankers waltz on, bonuses in hand, ordinary workers are suffering. A paltry, watered-down bank levy does nothing to ease the sense of unfairness that the economic crisis created. The country cannot tolerate further division between the haves and have-nots. We can’t return to the way things were before. Labour gambled on an asset boom and a drip-down from the financial sector. While the revenue this created rescued our public services, the wider picture was ignored. But what this means is more government spending, not less. But this time, we need to spend to invest in the long-term. Only then will we see a rebalanced economy with stable, fulfilling jobs for everyone. This will bring the deficit down as genuine, secure growth returns to our country. It creates a future full of hope for our children, rather than debt and despair and it shows that while innovation is to be rewarded, greed never should be.

This government shows no signs of looking to the future, only a panicky rush to make changes before public will make it impossible. They may be building for their own futures, but for the rest of us, the outlook is bleak.

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Don’t Confuse Ideology with Arrogance

The former Lib Dem spin doctor, Olly Grender, drew my attention to an article on the Labour Uncut web site today, with the implication that I am an out and out Labour tribalist with a sense of moral arrogance. Naturally, I disagree. I believe passionately in the politics of the left, but I often find myself frustrated with the Labour machine as much as the opposition.

However, there is some truth in the line Peter Watt takes in the article that Labour has a sense of moral superiority. We do tend to think our way of doing things is better, fairer and just, well, right. It’s easy to forget in this context that some people, even those we profess to stand up for, may disagree with our approach. The entire working class doesn’t think that government can play a vital role in levelling an inherently uneven playing field. People of all incomes and backgrounds can hold the view that individuals should be left to sink or swim, according to their luck and efforts.

Peter Watt is right to remind Labour that projecting values onto people is a dangerous game. What he must not forget, however, is that while it’s entirely wrong to hold the blinkered view that our ideology is the only humane one, and that all Tories are evil, it’s vital we retain an ideology. Without a motivating ideology, the Labour movement means nothing. Trying to be all things to all people was arguably the major failing of the Blair / Brown years. A lack of courage of your conviction is as bad as no conviction at all.

In opposition, Labour must rediscover its soul, not simply allow itself to be buffeted by events and the media’s reaction to them. We must be able to say to people that as the Labour Party, we believe in social democracy. We believe the government can help people get on and improve their lives. We believe that life is inherently unfair and politics can help those born in less fortunate circumstances to have the chances to succeed. We believe that capitalism has its limits and the free market doesn’t have all the answers. We believe that when difficult choices are to be made, our first concern should be for those least able to protect themselves from the impact of the decisions.

Yes, we must listen to people more, but if we fail to approach them with a vision, then they’ll never trust us. Look at the state of the Lib Dems, who are suffering a backlash against their brand of politics in which long-held principles turn to dust at the sight of government.

If you think you can please all of the people, all of the time, you are doomed to failure. You can’t be a libertarian and a social democrat. You can’t be a free marketeer and a socialist. If you try, you’ll end up confusing yourself, confusing the electorate and most importantly, lose your soul.


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