Friday, May 29, 2009

Just Going Round In Circles


On BBC R4 Today, Evan Davis chaired a debate between Miliband and Hague on Europe. Well, it wasn't quite a debate, as such, but they were both on at the same time, and they were both given an opportunity to have their say.

As you'd expect, Miliband said Europe is good because it means we get to tackle those famous "global issues".

And Hague said Europe could be good, but not the way Labour have been surrendering all our freedoms and cash to it.

And Miliband said that Hague was being ridiculous conjuring up the Superstate bogeyman, and anyway, the Tories mainly wanted to get into bed with a load of East European homophobes.

And Hague said Labour had lied to the British people about the EU constitution referendum, and that Labour's much vaunted "influence over our partners" doesn't exist.

Anyway, at one point, an exasperated Davis pointed out that exactly the same discussion could have taken place at any time over the last 40 years: why have we not progressed?

Interesting. Because out here, we know precisely why (and in fairness, Hague did sort of suggest he knows too).

The reason is that it's the Commissariat who have driven the entire European project, not the people. Right from the moment Ted took us in, the Commissariat have consistently moved us much further along the integrationist road than most of us want. Their entire approach has been to push us forward, generally under cover of darkness.

Since that one referendum in 1975 (which we thought was about a free trade area) we have been given no effective say in the matter. Our wishes have been ignored - or at least, sidelined as an unhelpful obstacle to be got round by fair means or foul.

And it only takes a moment to think of many other issues where the majority view has been entirely ignored by the Commissariat, such as:
  • Criminal justice - most people want far tougher sentences for serious crime than the lib Commissars are prepared to countenance, including - still - the restoration of capital punishment for the worst murders (abolished in the sixties against the clear view of the majority)
  • Immigration - over the last decade, immigration has escalated wildly, with an extraordinary two and-a-half million non-British migrants coming in (net - eg see this blog); and contrary to commissariat assertions, it has not made us richer, although it has put huge pressure on public services, and made life more difficult for the immigrants already here
  • Global warming - so far, the commissariat programme to cut carbon emissions has been presented as being big benefit and small cost, so no wonder it seems popular; but as the true burden of green tax and regulation becomes apparent, and as we enjoy those long promised warm summers, we will discover this is yet another area where the commissars have entirely failed to convince the people

What's that?

This is the Daily Mail talking, and therefore to be ignored?

You know, that's exactly what the Commissars say.

Thursday, May 28, 2009

Servants' Quarters In Woking


A typical Woking scene


Via the Major, Tyler happens to know a good cross-section of well-heeled Wokingonians. Quite a few of them live in houses that would be described by the Mirror as stockbroker-style mansions. A number even employ cleaners and gardeners. And yet, none of them - not a single one - has live-in servants.

What is it with these Tory MPs? According to Sir John Butterfill (surely a direct descendant of Sir Talbot Buxomly above):

"I purchased a house in Woking in ­derelict condition. I gutted and rewired it. I extended the living room, I extended the kitchen, and made a family room off the kitchen... The mistake I made was that, in claiming interest [from the expenses allowance] on the home, I didn't separate from that the value of the servants' … er the staff … wing."
We're trying to identify the house, although Sir John has long-since moved on. In the process, he made a £600 grand capital gain on which he paid no tax.

And WTF did Butterfill buy a house in Woking in the first place? For the last 23 years he's been MP for Bournemouth West, which he describes as "a wonderful place to live", and where he has his "main home" (a £56 grand flat which he says he did up with bits from B&Q). At no stage has he been MP for Woking.

On Newsnight, he said it was because his wife didn't want to live in London, and Woking has excellent commuter links.

OK, that's true - in fact, Tyler used those very links himself for over 20 years. But Woking is not quite the transportation idyll Butterfill suggests, as a journo resident explained in this classic FT article from 1994:

"Woking has one of the biggest colonies outside the capital of that semi-troglodyte sub-species - the commuter. You see us in the twilight hours at either end of the day flocking on to dirty trains to Waterloo station and the City where we grub out our high five-figure and sometimes six-figure salaries.

Pallid features, furrowed foreheads and greying temples are the hallmark of unfettered slavery, resigned adherence to the worship of work as the only source of keeping the head above water.

Filing off the train with all the other commuters at Woking railway station any evening of the working week, it would be easy to conclude from the vacant, fatigued expressions that you had joined the ranks of the living dead."

So was Sir John among those ranks? And did those feet in ancient time shuffle onto the 7.17 sardines express to Waterloo?

I doubt it somehow. Apart from anything else, Parliament doesn't get going until about mid-day, by which time you can grab an entire First Class compartment for yourself.


PS During the Newsnight discussion, Lord Fattersley said he was intensely relaxed about Tory duckponds and servants' quarters - after all, everyone knows that's what Tories do. We're pretty relaxed about them too - just don't ask us to pay.

Wednesday, May 27, 2009

Dictatorship By The Minority


I'm sure you will already know this, but further to recent posts, and just for my own interest, I've looked out the voting figures for general elections since WW2.

The blunt truth is that no post-War government has ever had majority support.

Not the famous 1945 landslide Labour government.

Not Thatcher at the height of her power.

Not A-New-Day-Has-Dawned-Has-It-Not Bliar.

Not a single one.

And yet we have somehow conferred on all of them the powers of that famous elected dictatorship - even the current shower, who have less popular support than any of their predecessors.

Why?

The Resurrection Of Faith


But surely he was the one who destroyed it in the first place

Yesterday we gave Cam 6/10 for his New Politics speech. On reflection that was maybe a tad harsh. Having now heard the panicky, vacuous, response from various Labour ministers and their erstwhile supporters in the press, we'd move Cam up to a 7.

Take the detailed analysis of the speech in today's Times by their leader writer and Labour insider, Philip Collins. He attempts to dismiss Cam's linking of the expenses row to the much broader small government agenda as being "plausible but spurious". According to him, Cam has cunningly "changed the subject" - a low-down political trick of the kind Collins himself routinely pulled when he was writing Bliar's speeches.

Collins either doesn't get it, or he thinks he can ignore it. Cam has struck a deep chord with many of us because he's resurrecting the Old Faith.

As we blogged here, the reason we are all so furious about the expenses scandal is not simply that we're paying for duck ponds. It's because the troughing epitomises the contempt with which our political class have treated us for years. That's what we're angry about, that's why we are demanding real change, and that's why Cam's linkage is absolutely direct.

The Old Faith says we must return power to the people to manage their own lives.

But faith alone is never enough. The real strength of Cam's speech - the bit that lifts it from a 6 to a 7 - is his linking of faith to a specific programme of action (school vouchers, elected sheriffs, etc etc). Yes, there's more he needs to do (see yesterday's post), but yesterday he moved way beyond the realms of pious platitudes: he finally showed us a radical policy platform rooted in a strong and coherent philosophy.

The official Labour response has been lamentable. In today's Independent, his batteries virtually flat, Gordo can do no more than repeat the same old meaningless guff we've been suffering for years:

"Jack Straw will announce the outcome of a long period of consultation... errrr... since March we have been consulting on a Green Paper on a Bill... drrrrrrr.... I spent time meeting young people in Fife... click... I will meet members of the Youth Citizenship Commission... drrrrrrr... click, click... in the Court of King Caractacus... click... there is no option I will not consider... click... Daisy, Daisy, giiive meeee yoooouuuuuurrranssssssssss...."

No wonder the massed ranks of the left are panicking. Carefully crafted triangulation no more than a distant memory, they are scurrying back to their own true faith, the faith of class war and conformity.

Also in the Independent (not an organ I normally frequent), an obscure theologian called Johann Hari lays into Cameron for being a rich toff who practises Voodoo Economics when people aren't looking. Hari warns that the evil Cam follows the dark faith of the false prophet Laffer, entirely ignoring the path of righteousness laid out in the teachings of Saints Obama and Krugman:

"Cameron is advocating policies that will benefit his tiny class of super-rich Trustafarians at the expense of the rest of us... and now he has announced his enthusiasm for a bogus economic theory that will justify shovelling far more of our money their way.

...it's clear how he will pay for these cuts for himself and his friends – by slashing the few redistributive programmes for the poor built up over the past decade, like the Educational Maintenance Allowance for poor kids to stay on to sixth form which his team derides as a "bribe", or the tax credits which his frontbench openly compares to the disastrous nationalised industries of the 1970s, or the SureStart centres which he has described as "a microcosm of government failure." They belong to a world he has never seen, or shown any interest in."


This is the Other Faith. The faith that hates toffs, hates markets, and believes in the wholesomeness and efficacy of Big Government.

Never mind that in the real world, Labour's EMA system is a disgraceful and costly shambles (eg see this post), or that according to its own official analysis, Labour's £3bn Sure Start programme has actually made things worse for the poorest kids it was supposed to help (eg see this post). Never mind any of that, because they belong to a world Hari and his fellow theologians have never seen, or shown any interest in.

Still, we should welcome the resurrection of political faiths, however whacky. Mainstream politics has lacked conviction for far too long. And we shouldn't decry the primitive faith of the left: they will need it to sustain them through the next 20 years in the wilderness.

PS Great article by Daniel Hannan welcoming Cam's speech:

"Brilliant: I couldn't have put it better myself. No, hang on: this is exactly how I did put it in my book Direct Democracy, serialised in this newspaper four years ago.

The solutions which David Cameron goes on to propose are drawn directly from that text, and from its sequel, The Plan: Twelve Months to Renew Britain, which I co-authored with Douglas Carswell six months ago: local control over schools, housing and policing; fewer MPs; more power for councils; referendums, local and national; legislation by citizens' initiative; a shift in power from the executive and judicial branches of government to the legislature; weaker Whips; the end of the patronage powers enjoyed by the Prime Minister under Crown Prerogative; the appointment of public officials through open parliamentary hearings.

Then again, there is no such thing as plagiarism in public life: we are all in the business of proselytising our creeds. As Ronald Reagan used to observe: "There is no limit to what a man may achieve in politics provided he is indifferent as to who takes the credit".


A great quote. And if you haven't already done so, you should read The Plan asap.

Tuesday, May 26, 2009

Hermit In Residence




At least the rubbish was cheaper back then


So Manchester Museum has appointed a hermit in residence:

"The artist Ansuman Biswas is to live in the museum's Victorian Gothic tower for 40 days and nights – with only a computer modem for company.

... On each day of his stay, from the end of June until early August, he will be concentrating on one object, and conducting an online discussion with the public about its significance - and its fate. Some of the objects he selects, some apparently trivial, some highly valued by the museum, may never make their way back to the collections.

"I will be developing a dialogue with the public, drawing attention to certain objects and ask why we care about them - and if we care about them," he said. "As Joni Mitchell said, you don't know what you've got till it's gone."

Fine.

After all, Manchester has spawned hermits before. There were the unforgettable Herman's Hermits, who also developed a dialogue on museums and stuff (see vid). And remember, they were pre-Joni Mitchell!

Of course, there is one teensy difference between the Hermits of Herman and Mr Biswas: the former were not tax-funded.

When last reported (seven ! years ago) Manchester Museum was getting £2m pa of taxpayers' money.

Sounds like yet another contribution to George's List.

The Direction Is Clear


The light that lightens

In these dark hours of our national crisis, Mr Cam steps forward with his programme for political reform:
"I believe the central objective of the new politics we need should be a massive, sweeping, radical redistribution of power. From the state to citizens; from the government to parliament; from Whitehall to communities.

From the EU to Britain; from judges to the people; from bureaucracy to democracy.

Through decentralisation, transparency and accountability we must take power away from the political elite and hand it to the man and woman in the street."


Tyler is cheering. Quite loudly.

It is a light to lighten the darkness.

It is a clear statement of guiding principle, that says we the people must be in charge of our lives, not the political class.

It is exactly what Tyler, the Major, and a thousand Surrey housewives have been crying out for.

So lets draw up an armchair and see precisely what he's proposing...

Hmm...

Ah...

I see...

Well, it seems there are a couple of details still to sort out.

Like, how specifically is Mr C going to downsize government? He mentions some of things we've praised before, like school vouchers and elected sheriffs, and that's good. But he says nothing about some of the even thornier issues that would make a real difference in weakening the grip of the state.

For example, there's nothing on fiscal decentralisation - ie re-energising local government by making councils responsible for raising the bulk of their own money themselves, through local taxes on local electors.

And there's nothing about breaking up the massive top-down quangocracy that is the NHS. Where's that bold initiative on social health insurance, the system that removes funding power from the hands of ministers?

In fact, come to think of it, he says pretty well nothing about the driving principle of all modern power relationships, which as BOM readers will know, is follow the money. Reform without sorting the money is no reform at all.

And how specifically is he going to make our MPs more accountable to their constituents rather than their party masters? Open primaries we already know about, and have praised, but what about giving disgruntled electors the power to recall a backsliding MP (check out the new campaign on this - 38 Degrees - here)? He doesn't mention that.

And what about splitting the election of the executive from that of the legislature? That would significantly weaken the hold of the government over MPs, and allow us to choose both the PM we want to govern our country, and a local MP to represent us in Parliament. No mention of that either.

Fixed term Parliaments? Well, yes, maybe. But is that actually at the heart of the debate about government accountability? How would that help with our current problems, including the fact that we've got a wildly unpopular, useless, and unelected PM? Under a fixed term, we'd still be stuck with him until next May.

Surely, much more important than fixed term Parliaments is that Big Lumbering Elephant known as PR. In fairness, Cam does mention it, but only to brush it aside with the traditional Tory line:

"Proportional representation takes power away from the man and woman in the street and hands it to the political elites. Instead of voters choosing their government on the basis of the manifestos put before them in an election, party managers would choose a government on the basis of secret backroom deals."

Now, to be frank, Tyler is still in hum and haw mode on PR - exactly where he's been for the last 40 years.

Fundamentally, there's something very wrong with an electoral system where as little as one-third of the voters can elect a dictator (in 2005, Labour got a 66 seat Commons majority on just 36% of the popular vote - which is worse than 1932 in Germany, where the Nazis got 37% of the vote but less than one-third of the seats).

On the other hand, PR puts a wholly disproportionate degree of power into the hands of the smaller parties (which of course, is why the LibDems always want it). And arguably, it also makes for weak unstable government, as Italian-style coalitions disintegrate under the pressure of events (although that doesn't seem to happen in Germany).

But however we run the argument, PR is just about the biggest and most obvious change we could make to our electoral arrangements (didn't you just love Rockin' Al's sly self-serving intervention on this yesterday?). And at a time when we all agree there's something putrid about the way we're currently represented and governed, we surely need to do more than brush PR aside by regurgitating some stale old lines from 1998.

Many of Mr C's other suggestions are utterly sensible, encompassing loads of BOM's old favourites: much more transparency, including easy online access to itemised spending accounts, both for MPs and much more importantly, public sector bodies (and we love Cam's reference to an "army of armchair auditors" combing through the nitty-gritties - we're ordering our new armchair right now); a war on quangos; an end - nay, a reversal - of the great Brussels power-grab.

So overall we give him 6/10.

A very promising effort, but some serious further study still required.

Monday, May 25, 2009

Now Is The Time




Concerned about the Major


Hot on the heels of yesterday's outburst, the Major was round again this am. And just like yesterday, he was carrying a newspaper.

But today he was very different. No more frothing and wild rolling eyes: today, he was smiling in that stained clarety way of his. But I also recognised a steely glint in his eye - the self-same glint I'd seen when he expedited our neighbourhood heron for crimes against goldfish. Here was a man set for action this day.

"Now is the time for all good men to come to the aid of the party," he announced. "Now. Today. No time to lose."

Marching passed me, he opened the Telegraph on the kitchen table. "Have you seen this?" He stabbed at an article written by David Cameron. "David wants me to stand as a Conservative MP."

"David?" I've heard the Major refer to young Cameron by many names, but never before David. I craned over to read. "Are you sure?"

"Oh yes - quite sure. He says... ahh... yes, here... 'it's not enough to just change the processes in Parliament, and when it comes to the people who actually become members of that Parliament this is also an opportunity to widen the net, increase the talent pool and attract people who have never previously thought of serving. How do we do that? We need to get the public more involved in decisions that political parties have, until now, had a monopoly on... That is why I'm going to reopen the candidates list and invite new people to come forward."

The Major was positively beaming. "New people... if that's not a direct summons to me, I don't know what is."

"Well, now, look Major... you may be right of course, but just think for a moment. Think. The very first thing they're going to ask is how old are you?"

"How old? I'm 62... 62 years young, and loaded with experience of life. Real Life... including all those years I spent fighting for Queen and Country against the Dervishes."

"So that's three years off being an OAP. Sex?"

"Well, perhaps not right now, sailor - B'Boommm!"

"So not only are you the wrong sex, but you treat gender balance issues as a subject for Bernard Manning style jokes. Ethnicity?"

"British! British and still proud of it."

"White British... not a plus, Major. Not a plus."

"Look, never mind all that. You seem to be forgetting something - I've been a member of the Conservative Association for my entire life! I even enter the raffle. You can't buy that kind of loyalty. Of course they'll put me on the list - they'll welcome me with open arms."

But by now I'd scanned Cam's article. "I think you should re-read this, Major. Lifelong Tories are the very last people Cameron wants to apply. What he actually says is 'They don't necessarily need to have been involved in the Conservative Party in the past – more important than that is a belief in public service, and a desire to clean up our political system.' I'm sure you don't need me to translate."

The Major clenched his jaw, the tell-tale vein on the side of forehead giving an involuntary twitch. "The trouble with you," he growled, "the trouble with you is that you're too damned cynical. But even if you're right, do you really think that will stop us?

Some day - and that day is not far off - I believe this nation will rise again. I believe we brothers and sisters will take arms against a sea of corruption. And I believe... uhh... something else to complete the rule of three."

It may be a work in progress, but frankly, we're concerned.


****

Interested?

"If you are interested in becoming a Conservative candidate and believe you would make a good Member of Parliament, please write to Gareth Fox at Conservative Campaign Headquarters (30 Millbank, London, SW1P 4DP) setting out why you would like to be a candidate, and enclose a copy of your CV. Please set out any work you have done in your local community, and achievements in your work or your personal life which you think would make you an effective MP."

Sunday, May 24, 2009

Contempt For Democracy




We hate Prince George



"Call the dogs off? What a joke!"

The Major smacked down his tightly-rolled copy of the Times on Tyler's kitchen table. But for the fact that he already got there some time ago, it sounded like he was being driven to drink.

"It's precisely because of people like the Chief Druid that we've got into this situation in the first place! Listen, the reason we have such contempt for our MPs is not because we're paying for their duck fetishes and porno films - we expect that. No - it's because they have such contempt for us! They don't give a stuff what we want! Never have!"

Take crime. That appalling case of those poor kiddies in Hackney. One child tortured to death, and the rape of a two-year old - a two year old! Unbelievable! Yet, when it comes to punishing the scum that did it,
all they get is a few years in some cushty PFI holiday camp.

Out here, most of us want to string 'em up. In fact, we never wanted to abolish the drop in the first place. It was our MPs that did that - against our wishes! And look at the murder rate now - three times what it was back in the 50s!

Take what happened to the Listeners' Law -
that dreadful twok Pound pushing his way onto the wireless, faithfully promising that he'd table in Parliament whatever law the listeners vote for. But as soon as they vote for the Tony Martin shoot-burglars law - well, bugger me - he vetoes it, literally calling the listeners a bunch of bastards. How dare he treat us with such contempt!?!! Who does he think he is!!

No, if anyone has brought democracy into contempt, it's not the Telegraph, or the Barclays, or that woman on Question Time - it's our MPs, and the rest of the ruling elite, including the Druid.

We need to change things all right! We need to make our MPs accountable to us, not their party leaders. And if that means electing Esther whatshername... hmm... well, maybe not her... and certainly not that sanctimonious white suit man. But somebody like our Club Secretary - very good man - he wouldn't forget us once up there.

Did you mention a drink?"

****

The yawning void (do they yawn?) between us and our ruling elite has been blown wide open. So you'd kinda think they'd have gleaned we aren't hailing them, but hating them.

But as we discovered with the unappealing Andrew MacKay, it doesn't work like that. Even in current circs, they have huge difficulties even understanding us (can he really have thought his meeting with constituents had gone well?).

We are all crying out for an immediate election to secure some proper representation. But the elite haven't quite picked up the message.

His Grace tells us to stop now, because further humiliation risks undermining the very foundations of democracy. Labour man Matthew Taylor tells us it would be dangerous to have an election because we've already got the most motivated possible set of MPs to sort out the mess. Labour ministers (various) tell us we can't have an election because it will distract Gordo's attention from the quite superb job he's doing managing of our economy.

We clearly want, and need, an election soonest to eliminate the worst of the sleazebags - without that, nobody has any moral authority to change anything.

But we also need be a lot clearer about why we actually need MPs.

At present, they are a malfunctioning electoral college whose purpose is to select a Prime Minister. But in Tyler's New World Order (TNWO), we would be electing the PM/President directly, for fixed terms - just like the Yanks and the French. So what then for our MPs?

We'd surely want them to be more than ministers in waiting, focused mainly on plotting their way up the greasy pole. And we'd surely want them to be more than social workers, sorting out housing benefit claims - particularly since in TNWO we'll have decentralised responsibility for welfare and many other public services back down to the local level.

Elected talking heads for Newsnight? Nah - we've already got more than enough of them.

So what then? Why do we need MPs?

Holding government to account - yes, that's it. We need them on select committees grilling ministers on the detail of policy. Yes, for sure.

And scrutinising key legislation. Certainly.

And Tyler would really like to see them reassert their traditional role in controlling government spending - and taxes. When did we last have a serious Parliamentary debate on the government's plans to spend our money? When did Parliament last say No - you can't have that much - you'll have to make do with less?

But our whipped lobby-fodder party hacks are never going to do any of that.

No, to get anywhere along that road, we will need MPs who are much more independent, and much more independently minded. Independent at Westminster.

So how do we manage that?

First, primary elections to loosen the hold of parties and strengthen the hold of local constituents.

Second, many fewer MPs - say 450 - but better paid relative to ministers (obviously the Allowance/hidden salary system goes completely).

Third, no doubling up as minister and MP - if you want to serve as a government minster, you have to resign as an MP. To get more independent MPs we need to split the executive from the legislature - just like in the US.

And fourth... I'm sure there's a fourth, but I've just run out of time on this post.

TBC...

PS There's a lot of hysterical talk about how all this MP-slagging will end with the ignorant masses electing Adolf Hitler. So the responsible classes must close down further discussion asap. But even we ignorant masses can understand the distinction between our self-serving sleazy MPs and democracy itself. It's only the former we hold in contempt: the latter is what we need to rescue from their clutches.

Friday, May 22, 2009

Cometh The Hour, Cometh The George?


Think of England George

This week's reports from the IMF and Standard and Poors (see yesterday's post) have piled the pressure on George.

The IMF says he must be much tougher than Darling in tackling the build-up of debt. And he must place the emphasis on cutting expenditure rather than raising taxes.

S&P threatens to remove the UK's coveted AAA credit rating if:

"... we conclude that, following the election, the next government's fiscal consolidation plans are unlikely to put the U.K. debt burden on a secure downward trajectory over the medium term."

So the heat is on, and George is the man strapped in the flaming seat.

What must he do?

First, as we've repeatedly and tediously blogged for years now, he must set out an explicit Medium Term Fiscal Strategy. It needs to incorporate a robust and quantified set of fiscal rules covering government borrowing, debt, and most crucially, spending. That last element was the gaping hole in Brown's famous fiscal rules, and George must close it.

The Strategy must set out a clear, and inevitably, stoney path for cutting the burden of government expenditure. A path which must be linked to, and driven by, a sustainable projectory for borrowing and debt. Spending must be driven by affordability, not grandiose social engineering projects.

Second, he must establish an independent fiscal monitoring authority to keep a very public eye on him - as he has promised to do (Another quango? Yes, but a critical one, fully funded by closing scores of others - eg the Equality and Human Rights Commission. And if we're that strapped, Tyler and a group of like-minded zealots might be able to cobble something together pro bono).

Third - and by far the most difficult - he must actually cut spending.

And unfortunately, that last task has just been made all the more difficult by the MPs expenses scandal. For how can these duck feather-bedded MPs possibly wield the axe on the poor and heavy laden? Where is their moral authority?

Take welfare. That comprises around one-third of all public spending, so it cannot possibly escape the cuts. But unlike say healthcare, where you can take refuge behind the argument that "efficiency" will deliver painless cuts (as Philip Hammond did on yesterday's Newsnight), cuts in welfare benefits mean someone loses cold hard cash.

Consider one of BOM's very first money-saving ideas - a redefinition of the poverty line (see this post).

The current definition of poverty is 60% of median income - ie households living below 60% of median income are defined as being poor (actually, it's 60% in so-called "equivalised income" terms - don't ask, but if you must, see here). And government welfare payments are driven by the desire to ensure nobody is below 60% (that's what they mean by "abolishing" child poverty).

But there's nothing magical about 60%. Years ago, it used to be 50%, and that was when median incomes were much lower than they are now.

We all know the argument: the old grinding financial poverty of popular imagination was long ago consigned to history. By and large, today's state benefits are more than enough to buy food, shelter, clothing, tellies, DVDs, and washing machines. And the issue with many of the poor is not money, but lack of ability to manage their own lives. Bigger hand-outs do not help with that.

So we suggested returning to 50%. And our fag packet suggested that would save around one-third of the welfare bill - a staggering £60-70bn pa. In one bound we'd be out of the debtors' prison free.

Is George up for that? Are our moat-owning, property-flipping, cosseted chauffeured MPs ready for the howls of outrage that would greet such an attack on the poor?

Yeah. I think we can see how that one will play out.

But if you rule out welfare, and you rule out the NHS, and you rule out schools, and you rule out overseas aid, pretty soon there's nothing left to cut.

Except of course, the second duck home allowance.

George, we need you to grit your teeth, close your eyes, stop reading the Grauniad, stop watching the BBC, and think of England.

Thursday, May 21, 2009

Stable To Negative

Are we sure this is a Magic Punch Bowl?*


Another day of grim debt news.

The latest monthly borrowing stats are appalling. Net debt has now surged to 53% of GDP, up from 36% just two years ago.

And this morning credit rating agency Standard and Poors has moved HMG's credit assessment from stable to negative, something that immediately whacked the financial markets. S&P now says there's a one in three chance of an outright cut to the UK's credit rating as debt approaches 100% of GDP. That would jack up the cost of government debt, and it's something we didn't even suffer during the 1970s.

In a different part of the forest, Tyler lunched yesterday with a senior and highly respected City-type. We'll call him Mr X, although his real name is gggg ggggg (redacted by Fees Office).

Surveying our watering hole, Tyler noted that since last visiting at the start of the year, things seemed to have picked up. Were we on the mend? Was Mr X tripping over any of those green shoots?

Mr X then proceeded to list scores of said shoots - equity markets up, credit markets up, easier funding, leading indicators turning, even the property market is bottoming. Yes, with June just around the corner, shoots are bustin' out all over. All highly gratifying... time for another drink?

As the FT's Martin Wolf noted yesterday:

"... policymakers have thrown the most aggressive fiscal and monetary stimuli and financial rescues ever seen at this crisis. Finally, this effort has brought some success: confidence is returning and the inventory cycle should bring relief. As Jean-Claude Trichet, president of the European Central Bank, remarked, the global economy is “around the inflection point”.
And in its latest UK assessment, the IMF gives at least a slight nod of agreement:

"... output is likely to continue to contract in the near term, although at a decelerating pace... with quarterly growth picking up gradually through 2010... the significant economic stimulus in train in the UK and other large countries should support the recovery."

So that's all lovely then. Large ones all round.

What an earth is going on? Green shoots in the financial markets, and a credit downgrade for HMG?

Well, the truth is that what's good for the financial markets isn't necessarily so good for HMG (aka UK taxpayers).
The IMF spells it out for us.
First, there's the tricky issue of the printing press. Easy money is great for financial markets in the short-term, but not so great for future inflation. Does that press actually have a reverse gear? And even if it does, how can we be sure the Bank of England knows how to operate it?

The IMF recommends a reassertion of Bank independence, and "transparent communication" on how precisely the Bank intends to drain off all the dosh now sloshing around. But all we've had so far is a stream of opaque analysis attempting to explain why the chunky 17.4% year-on-year growth in the money supply (M4) shouldn't worry us because it somehow doesn't count.

Then there's the disastrous condition of our public finances. In the short-term, government deficits may pump up the economy and underpin the equity market. In the longer term there's the small matter of repayment.

And on that, it's worth quoting the IMF at length (mainly because we agree with it):

"... the success of the current policy package hinges on the continued trust in the sustainability of the fiscal position. A continued strong commitment to medium-term fiscal consolidation is hence crucial... commitments would be strengthened by:

• Targeting a more ambitious medium-term fiscal adjustment path... The focus... should be to put public debt on a firmly downward path faster than envisaged in the 2009 Budget.

• Providing greater clarity on the specific measures needed... The emphasis in current plans to weigh the adjustment toward expenditure reduction is appropriate in light of international experience that expenditure-based consolidations are more durable.


• Allocating any upside surprises to growth or revenue to reduce deficits more aggressively and limit the accumulation of public debt.

• And finally, building a broad public consensus on the critical need for sizeable fiscal adjustment to assist in meeting fiscal challenges."


As we've blogged many times, we need a clearly stated medium-term fiscal strategy, anchored by a robust commitment to cut spending.

Unfortunately, we don't have such a strategy. All we have is a prospective credit rating downgrade.
*Footnote It was William McChesney Martin, the longest serving chairman of the Federal Reserve who told us that the central bank’s role is to “take away the punch bowl just when the party starts getting interesting”. Given our dire straights, I reckon time's up already.

We Can't Have An Election Because...


So let's see if I've got this straight. We can't have an immediate election because...
  • Chaos would ensue (Gordo yesterday)
  • The parties are agreed they have a sacred duty to put things right before asking voters to choose... er... between the parties (Hattie this morning)
  • Parliamentary committees must opine on weighty matters before voters can possibly be trusted to make their own judgement (Tony Wright, last night)
  • MPs need time to decode the latest message from Alpha Centauri (Limpid Opec, two thousand light years from home)
  • We will all lose our jobs (assorted Hon Members)

On the off-chance that you haven't read Peter Oborne's Triumph of the Political Class, you should do so now (and just for a giggle, see this review from staunch Labour insider Michael White).

What comes across ever more loudly in this scandal is that it really is them and us. They don't trust us to grasp highly technical issues, such as what they're actually paying themselves, or how many tubes of Rolos it's appropriate to claim for in a single month.

Will an election make any difference?

Well, it will relieve us of the worst, most discredited government since WW2, so that's a plus. And we should get a crop of untainted more independent members, which will be another plus.

But sadly, it won't transform the way we're governed.

Our first-past-the-post Westminster system ensures the primacy of party. As we've blogged before, with no separation of executive and legislature, the majority of MPs have no incentive to hold government properly to account.

Our Big Government elected dictatorship will simply carry on, albeit in a slightly less grubby set of clothes.

PS According to Nick Robinson, many "perfectly decent MPs" are so fed up with the way they're being pilloried, they're thinking of throwing in the towel. We'll believe it when we see it, but maybe if enough of them did so, it would force an early election. I for one would be much more inclined to vote for a candidate who had helped force an early poll.

Wednesday, May 20, 2009

Your Support Needed

No chaos here



1. Frank Field For Speaker

Frank Field has long been one of BOM's heroes (see many previous posts eg here). And now amid the wreckage, he stands as one of the few MPs with the experience, the character, and the moral stature to take over as Commons Speaker.

Clearly, we voters get no direct say in this: our MPs see themselves not as mere delegates, there to do as we say, but as representatives, there to do as they damned well please until we find out.

But we can certainly make our views known. And another of BOM's old friends, Henry De Zoete, has set up a Facebook group specifically to support a bid from Frank.

You can sign up here and may we urge you all to do so.

(You will need a Facebook account, but it's free).


2. Anti-BNP Petition

As regular readers will know, we are seriously concerned about the scale of immigration we've seen over the last decade. Contrary to government propaganda, it hasn't made Britain richer (in terms of GDP per head), but it has imposed huge strains on our public services, and it has cranked up social tensions (see many previous blogs). Which is why we want to see an Aussie-style annual limit.

Now we're in recession, the chickens are coming home to roost. And one of the major beneficiaries is the BNP.

Now, I must confess I don't know a great deal about their detailed policies, and I do need to find out more.

But what I already know I don't like. "Voluntary resettlement" for all immigrants is a euphemism straight out of 1930s Germany.

We are where we are, and one of the reasons we need to take decisive action on future inflows is precisely so we can work on the integration of those already here.

There is no way we should suppress or ban the BNP: we rather need to engage in an open robust debate with them about migration (and some of their other worrisome policies, like establishing a Bennite-style siege economy).

But we can certainly register our concern right now, which is why I urge you to put your name to the anti-BNP petition you can find here.

(And see this post for the difficulty of discussing immigration without appearing to support the BNP).

PS Does anybody outside the Labour Party believe we don't need an election soonest? Does anyone other than our increasingly unstable PM believe that an election would mean chaos? It is outrageous that in the midst of our huge economic crisis, we have to suffer another 12 months of such rudderless gutless deception. It is no comfort that Brown and his fourth-rate "colleagues" will go down in history as even worse than all the other Labour governments we've suffered.

Tuesday, May 19, 2009

I Blame The System


Wrong system

So the ultimate Man of System blames The System.

According to Gordo, The System governing MPs' pay and rations is a failed system. It is A System that has failed to prevent MPs systematically fleecing us for their own personal profit.

So his solution is - yes - A New System.

And the key element of his new system is that MPs' pay and rations will henceforth be determined and policed by An Independent Statutory Body.

An Independent Statutory Body? But who will be on it? And to whom will it report? Even Systems have to report to somebody.

It clearly can't report to Parliament, because we all agree they can't be trusted.

It can't report to the government either, because otherwise it wouldn't be independent.

So who?

The Queen?

But we discovered monarchs couldn't be trusted with our dosh, way back in the Seventeenth Century.

Ah! Of course! Taxpayers! Why not have us taxpayers vote on it? We could vote for its membership once every, say, five years. So if the Board screwed up, they could be replaced with new members. And while we're at it, maybe we could get them to take on one or two other duties as well.

Job done.

Well, job done except if we had this new elected board, we could wind up that useless out-dated pig trough on the North side of Westminster Bridge.

****

However Gordo's new "independent" board is structured, we have to keep firmly focused on two things.

First, we must insist on total transparency. All the money and perks dished out to our MPs must be fully documented and available to us online. It really is the best disinfectant.

Second, MPs are not underpaid and should not cop some fancy quid pro quo pay rise. As we blogged here, MPs are in the top few percent of the income distribution, and there is absolutely no shortage of applicants. And as the latest report from the Senior Salaries Review Body said, they should be compared to other public sector workers (not highly paid lawyers or bankers), against whom they stack up pretty well.

We might also note, once again, the ludicrous mismatch between the sleazy shambolic performance of our MPs as witnessed over the last couple of weeks, and their claims to be fit rulers over vast tracts of our lives.

Especially when even they now admit they cannot be trusted to run themselves properly.

Er... Still No Deflation


Down, but hardly out


The latest CPI release shows inflation is still alive and well: deflation is nowhere in sight (ignore the interest rate distorted RPI).

True, the 12 month inflation rate has fallen from 2.9% to 2.3%, but in the midst of the deepest recession since 1427, that's still over the government's 2% inflation target.

And when you look at the detail beneath the headline, you find food inflation still bounding along at 8.6%, housing and household services (mainly utility bills) running at 6.1%, and every single area except clothing and transport comfortably in positive territory.

And actually, the picture is even worse than that.

Remember the small matter of that temporary VAT reduction? That's had the effect of artificially depressing the headline inflation rate. When you look at CPI inflation excluding VAT and other indirect taxes, you find it's running at 3.8% pa - a full 1.5% pa above the official headline number.

That VAT reduction will be reversing next year. At which point, what was a 1.5% cut in headline inflation will become a 1.5% increase.

It could well be even worse - if the rumours of a new 20% VAT rate are true, we will get a whopping 3 percentage point jump in CPI inflation.

Like we've said many many times, deflation is not the problem.

As we'll all discover post the 2010 election.

PS A couple of weeks ago I heartily recommended lefty Brad DeLong's podcast lecture course on American economic history - for those whose knowledge of the pre-WW2 US economy is sketchy (like me) it seemed ideal. I was immediately contacted by BOM reader Philip W who warned that DeLong gives a highly partisan and distorted view of the Great Depression and the New Deal. And he suggested the following antidote:

Thank you Philip - a very good corrective.

As for Brad's podcasts, once I got onto the post-WW2 period, with which I am fully familiar, I soon discovered I couldn't bear more than about 20 minutes. I'm sorry, Brad mate, but I don't believe all Republican Presidents have been evil idiots, and I don't believe all Democrat Presidents have simply been unlucky. And I certainly don't believe we can afford to be relaxed about high inflation because net-net it's costless and it's just a redistributional thing robbing from the rich to give to the poor. I'm now worried for the Berkeley students taking Economics 113.

Monday, May 18, 2009

An Expensive Shot In The Foot





In case you missed it, a tax-funded quango has just succeeded in further undermining the fighting capacity of our armed forces.

The Equality and Human Rights Commission has spent an undisclosed, but doubtless considerable, sum of our money pursuing the sad case of Pte Jason Smith, who died of heatstroke while serving with the Territorial Army in Iraq in 2003. Largely as a result of the Commission's efforts, the Court of Appeal has ruled that the Human Rights Act, and in particular, the "right to life", applies to British soldiers on active service.

So how's that going to work exactly? How are our army commanders going to discharge that obligation while still beating our enemies?

As we've blogged many times, it is absolutely right that our frontline troops should have the very best kit and support we can buy for them. And it is disgraceful that they are still forced to cope with death-trap kit like the so-called snatch Land Rovers* and those decrepit Nimrods.

But that is a political issue - we should make our politicos do much better than they have over the last decade.

It is not a matter for the crackpot Human Rights Law: the very last thing we want is to place yet another burden on our frontline commanders.

We blogged the superquango Equality and Human Rights Commission several times while it was being set up in 2007 (eg here and here). It costs us £70m pa, and it's headed by long-time Labour insider Trevor Phillips (on £110 grand pa). And its finances are so questionable the National Audit Office has reportedly refused to sign off its first annual accounts.

Another £70m contribution to George's spending cuts?

You bet.


Meanwhile... mid-life Mr Phillips himself is mainly focused on his new life with his new partner:







*Footnote - Tyler recently dined with another patriotic Major of his acquaintance. This one is very familiar with Land Rovers, having used them both on operations (if I told you I'd have to kill you), and to scout his considerable acreage in East Anglia. But he recently drove a Toyota Land Cruiser, and was absolutely amazed at how much better it is. Now he's switched, and even though he knows his military-family-back-to-Waterloo father will be spinning in his grave, he will never go back. Another fine old British tradition bites the dust... until, that is, you remember that the original Land Rover was actually no more than a Jeep rip-off.

Get Ready For The Inflation Tax




Aharrrhh Jim lad, no good ever came of a-pumpin' up the money supply


Throughout the ages, highly indebted governments have turned to the inflation tax to bail themselves out. By ramping up inflation, they impose an effective tax on all who hold any form of government debt fixed in money terms.

So if you hold £1,000 in I Promise to Pay the Bearer on Demand tenners stuffed under the mattress, 2% pa inflation means that by the end of the year it's only worth £980. You have lost £20 to that year's inflation tax.

If inflation ramps up to 5%, your inflation tax becomes £50. And if it's 10%, the tax is £100 (actually it's "only" £91, equals £1000 minus £1000 times 1/1.1, but let's not split hairs). Etc etc.

The inflation tax in Britain was at its height back in the 70s. In 1975-76, inflation was 25%, and with Public Sector Net Debt standing at £52bn (start of year), the inflation tax amounted to £11bn, a staggering 10% of GDP.

Where do we stand now?

As you know, we believe inflation is set to take off again - driven largely by the government's desperate need for increased "revenues" from this inflation tax. And with public sector debt ballooning, the tax-take will soon ramp up.

Based on the latest HMT budget projections, and using a range of very modest inflation assumptions, here's how it looks:




So after two decades when it has bobbled along at less than 1% of GDP, the tax is now set to soar. Which is pretty scary.

And it's especially scary when you realise that the HMT debt projections take virtually no account of the vast banking debts the government has taken on, and there is little reason to think inflation will stop at 5%. A £60 bn pa tax could easily turn out to be much higher.

So who are the poor schmuks who will pay this tax?

And more importantly, how can you make sure you're not one of them?

Well, like we said, anyone who holds government debt fixed in money terms will pay.

What's fixed in money terms?

Money is fixed in money terms, for a start. So you want to make sure you don't hold too much of that. Or rather, make sure that any cash you do stuff under the mattress looks like this:


Tomorrow's hardest currency



But most of HMG's debts are not money per se: notes and coin only account for around £50bn of the trillions they are busy running up.

No, the main chunk of debt comprises gilts and similar "interest bearing instruments".

And who holds them?

Here's the official breakdown for gilts as at end-2008:

As we can see, one-third of them are held overseas, so you may say fine: we don't care if they pay the inflation tax. Except we will care if scammed foreigners get so angry they stop buying any more.

The biggest chunk - 40% - is held by insurance companies and pension funds, and again, you may say fine. That's their problem not mine.

But of course, it is your problem if you're anywhere close to drawing a private sector pension. Because your pension will come from an insurance company or a pension fund, and will almost certainly be pretty well fixed in money terms, backed by gilts or similar bonds. And once inflation moves above 2-3%, you will be on your own, paying the full inflation tax on your gilts-backed pension.

So private sector pensioners are stuffed.

For most other people, the good news is that the inflation tax is largely voluntary. You simply have to get shot of your HMG fixed debt (including cash, but possibly excluding index-linked gilts), switch your High Street bank and building society accounts into a handy Renminbi Savings Account, buy gold, buy silver, plant carrots, and pray.

Of course, widows, orphans, and ordinary savers of modest means will never move quickly enough. And they will pay this tax with the money they would otherwise have had to heat their homes and eat.

Sunday, May 17, 2009

Running Sores


Slightly held-up in the Smart Procurement Gateway

Last week brought updates on two of BOM's longest running sores: the interminable scandal of defence procurement, and the moneypit that is the 2012 Olympics.

Defence procurement scandal

The Public Accounts Committee published its annual update on the MOD's 20 largest procurement projects. And the story is all too familiar (see previous posts gathered here). Despite the introduction of a deckchair rearrangement known as Smart Procurement (don't ask), the projects have fallen even further behind schedule and gone even further over budget:

"In the last year, the 20 biggest projects suffered a further £205 million of cost increases, and 96 months additional slippage. This is the worst in-year slippage since 2003. The total forecast costs for these projects have now risen to nearly £28 billion, some 12% over budget. Total slippage stands at over 40 years, a 36% increase on approved timescales. The number of Key User Requirements reported as being “at risk” of not being met has also increased from 12 to 16 in the last year."
A very serious implication of this incompetence is that British servicemen are being forced to fight with equipment that is obsolete and/or past its planned scrappage date. I know we've said it before, but if the Spitfire had been built to this timetable, the RAF would have had to fight the Battle of Britain with Sopwith Camels. Either that, or ask the Luftwaffe to postpone until 1980.

We should note too that the additional cost overrun has only been kept to £205m because the MOD has slashed the number of orders:

"For example, it has trimmed the number of Future Lynx helicopters being bought from 70 to 62, and delayed a number of projects, such as Future Aircraft Carrier, Future Rapid Effect System and elements of the Military Afloat Reach and Sustainability fleet auxiliary programme. We remain deeply concerned that further cost overruns in projects will result in additional reductions in current defence capability and added delays to projects..."


Of course, the scandal of defence procurement isn't just a question of delay and cost overrun: it's much worse than that. There's the whole question of fighting the last war.

As General Sir Richard Dannatt*, the head of the Army, said just last week, the government is "squandering our increasingly scarce resources on those things that are not relevant for today's requirements... At present I can only conclude that much of our planned investment in defence is at the very least of questionable relevance to the challenges we face now and will in the future."

As we've blogged many times, the £20bn we're blowing on the Cold War Eurofighter Typhoon is money that would be much better spent on kit for our boys on the North West Frontier. Along with the £1bn apiece we're spending on the new Type 45 destroyers (which according to ex-Navy man Lewis Page, will simply spend the next 20 years cruising the world hosting cocktail parties - and see BOM vid here).

2012 Olympics moneypit

The government has finally admitted that the £1bn cost of the Olympic Village will all have to come from public sources. Since we never believed their pie-in-the-sky claims that it could be privately funded, this is hardly surprising.

But what it does mean is that the "cast iron" £9.3bn budget has now been breached. Not only has the budgeted contingency fund been raided, but £268m of extra cash is being smuggled in under the guise of social housing support.

Despite this fiddle, and with 3 years still to go, the unused contingency fund is down to a mere £585m. There isn't a prayer it will be enough.

Still, there is now an obvious use for this village post-2012. A few hundred of the 2,900 apartments should be used as London accommodation for our spendthrift MPs. Stratford and Westminster are directly connected by the Jubilee Line, the village will come with built-in security, there'll be an onsite canteen, and the members could keep fit in the abandoned white elephant swimming pool. David Sparkes, British Swimming's chief executive, describes the idea as "excellent".

Could have been built for the job


PS Talking of MPs, would you stand for election as one? "Honest John clean hands" Tyler has been approached by "dissident elements" from a local Tory constituency party, suggesting he seek selection in place of the current member "who will not be standing again". But, protested an immensely flattered Tyler, surely a humble citizen such as his good self could not possibly hope to be selected - he's not even on the Z List, let alone the A List... besides, he's male, heterosexual, white, middleclass, and nearly 60. That doesn't matter at all, said the dissidents. In fact, in the current circs, not being on the Central Office list would be a positive advantage. Trust us, we could get you selected. Yeah, right. But just suppose they were right. Could Tyler possibly contemplate running as an MP? Why would he do it? Why would anyone volunteer for all the brickbats and social work entailed? Because it's a chance to do something about the terrible mess we're in, he was told. But isn't that how they all start?

*Footnote - General Sir Richard Dannatt GCB CBE MC was educated at St Lawrence College, a public school in Ramsgate. And do you know how many of the Army's top 10 officers were privately educated? Hmm? According to the PAC, it's 9. Like we blogged here, looks like the Army will always comprise Ruperts and orphans... or at least, Joannas and orphans. Thank God for the public schools, eh? Otherwise it might be all orphans.

Saturday, May 16, 2009

I'm Really Rather Relaxed About This Claim



He won't be so relaxed once the Major gets there


Old-time lefty Tam Dalyell (another Old Etonian) tells us he's "really rather relaxed" about the £15,000 he claimed for expensive bookcases just before he retired as an MP.

The Major, on the other hand, is really rather agitated. Even as we speak, he is assembling a crack team for a Where Eagles Dare raid on the Schloss Dalyell to liberate the bookcases and return them to the taxpayer.

Dalyell - or to give him his full moniker, Sir Thomas Dalyell of the Binns, 11th Baronet - is another jaw-dropping illustration of just how out of touch our MPs have become. Admittedly, he was never altogether "of the people", but his four decades at Westminster left him unable to see that £15 grand bookcases are not something most taxpayers would even dream of, let alone offer to pay for.

And then there's Gerald Kaufman's £8 grand Bang & Olufson telly. I once saw Mr K preening himself in the First Class compartment of a train going North. He'd boarded wearing one of those white raincoats specially designed for people who want to get noticed, and he spent the entire journey being important. You can hardly expect a man like that to settle for 19 inch Alba from Argos (£99.99, home delivery for £5.80).

And so the list goes on.

But at least we know what to do about it. Listen to any phone-in, and there's unanimity:

  • Publish all the expense details now - immediately - this daily dripfeed is no good for anyone, and it's especially no good for our Parliamentary institutions

  • Abolish the second homes allowance - immediately - replace with government owned apartments (there are plenty of bargains available in central London)

  • Hold an election now - immediately - leave it to the parties to decide whether to risk running their hundreds of discredited MPs, or to replace them

  • Cut the number of MPs by at least one-third, for the election after - we've got far more than most established democracies and we don't need them

  • Reform the Lords - elected and much smaller for sure, but do we actually need it at all?

So that's all pretty straightforward, then.

Will we need to replace all our MPs?

Maybe not quite all. As the Telegraph sets out today, some seem to have been a lot more scrupulous than others, and indeed some have claimed nothing at all. Tyler's champions are Martin Salter (Labour MP for Reading West), and David Howarth (Lib Dem MP for Cambridge). They both live around 50 miles from London, both commute, and both have refused to claim for their costs. In other words, they have both chosen to live as many of their own constituents live.

They really should feel relaxed.

Friday, May 15, 2009

What Should Cam Cut?


Time to stop mucking about


As regular readers will know, we reckon Cam will need to target public expenditure cuts of around £50bn pa. But what?

First, let's remind ourselves of the situation he'll inherit.

According to the Budget (see here for excellent IFS analysis), Labour have already slashed future investment spending, which is set to fall by 17.3% pa in real terms from 2011 onwards. There is almost certainly a bit more that Cam could do there - such as canning the bonkers programme to rebuild all our state secondary schools (eg see this blog) - but the real action will have to be in the much more difficult area of current spending (ie wages and salaries, welfare benefits, NHS drugs, school building maintenance, etc etc).

The Budget projected further increases in current spending, averaging 0.7% pa in real terms from 2011 onwards.

Why not just freeze it?

Unfortunately, it's not that easy: relative to what's been achieved historically, 0.7% pa is already heroically restrained, as shown in the IFS's handy chart:


So just to make sure we all understand, over the last half century, current spending has only ever declined in five years:

  • 1977-78 - the IMF mid-air emergency cuts
  • 1985-86 - strong Thatcherite growth had enabled the sick man of Europe to rise from his bed and get back to work, thus cutting the welfare bill
  • 1988-89 - My Brilliant Chancellor had delivered a loadsajobs boom, thus cutting the welfare bill
  • 1996-97 and 1997-98 - the Major/Clarke golden legacy had not yet been squandered by Prudence Brown

The bottom line is that cutting current spending is not something UK governments have ever shown much aptitude for. And cutting spending in the teeth of a massive recession is something they have never ever achieved.

Hmm.

What can be done?

In a quest for ideas, Tyler has just read Reform's recent report Back to Black. As always, they are prepared to name names, and they make specific proposals for cuts. They also grip the urgency of the situation, focusing on next year (2010-11) rather than pretending the pain can be pushed off beyond the distant blue horizon.

Here's their summary, featuring some highly contentious items:

  • Abolish universal Child Benefit. Instead Child Benefit should be targeted on families on low incomes. Saving: £7.1 billion (after making allowance for additional expenditure of £5 billion on the poorest families).
  • Reduce the pay of doctors and NHS managers by 10 per cent. NHS pay rocketed in the middle years of this decade, far above the average rate of pay growth in the economy. NHS pay rises are already falling as the service returns to sanity, but not yet far enough. Saving: £1.3 billion.
  • End inappropriate defence projects. Several projects (the future carriers, Eurofighter Tranche 3, A400M and Nimrod MRA4) do not contribute to the UK’s modern defence requirements. Saving: £2.7 billion.
  • Remove pensioner gimmicks, such as the winter fuel payment and free TV licences for over-75s. Saving: £3.2 billion.
  • Introduce market rates for interest on student loans. Saving: £1.2 billion.

They make a number of other proposals, including axing various quangos, and abolishing large chunks of the spectacularly useless nationalised skills industry (see many previous BOM posts).

Their overall cuts stack up to £29bn in 2010-11, as follows:



This is a serious piece of work, and Reform is notably not ducking the issues.

It's also fairly clear that Cam drew on their work for his New Age of Austerity speech (see this BOM post). Except for some unaccountable reason, he forgot to mention the cuts to benefits and NHS wages.

The only problem with Reform's cuts package is that it doesn't go far enough. Cutswise, we need to find roughly the same again.

Gulp.

PS As we've blogged many times, to push through the necessary spending cuts, Cam is going to have to grow an even thicker skin than he's already got. He will soon be joining Thatcher on the left's Pantheon of Evil. And as if to underline that point, this morning's BBC R4 Today programme featured leftwing pundit Oliver James, who was given yet another opportunity to tell us how evil Thatcherite attitudes are. He told us the best thing now was to abandon economic growth altogether, and learn to live a better non-Thatcherite life. Of course, it's easy for Old Etonian James to say that, since he was born with a whopping great silver spoon in his mouth (said spoon may since have migrated to his arse, from where he now speaks). Not that Mr Naughty mentioned any of that: as per, James was introduced as a "psychologist", with no warning that he speaks for the Hampstead Soviet.

Thursday, May 14, 2009

A Fresh Start


Does my expense claim look big in this?


If ever we needed proof positive that these people are not fit to rule, we're getting it right now. The sty door has been smashed down and we can all see the upturned trough, the piles of empty KitKat wrappers, and the stinky steaming mountains of manure.

That is an unmitigated good. All of us have been reminded that our politicos are no better than the rest of us: it therefore has to be barmy to give them so much power over our lives.

Unfortunately, we happen to be in the middle of the worst financial and economic crisis in three generations. And we need some decisive leadership to stop it getting worse.

Our discredited dead-end government isn't capable of providing it. It had already run out of ideas and energy, and now its authority has been terminally undermined by the moral collapse of its Westminster powerbase.

We shouldn't have to accept another 12 months of this. There is no way Labour can recover, and having them hang on, hoping for something to turn up, risks turning an economic crisis into a catastrophe.

We need an election soonest.

But that's not enough.

We need a clear statement from Cam that this is a turning point. We need a bankable undertaking that he will cleanse the stables. Much tougher expense rules for MPs, many fewer of them, and deselection of dodgy Tory MPs, for sure.

But that's still not enough.

We also need to know he will take an axe to our o'ermighty "them and us" central government. Localism, fiscal decentralisation, privatisation, vouchers... BOM readers know the score.

And now there's that other small matter. As I'm sure somebody once said, corruptionwise, absolute power is never a plus. And our present governance arrangements concentrate power to a degree even Stalin would have envied.

It's that elected dictatorship thing. Once every four years or so, we voters get to choose whether we want Tweedledum or Tweedledee. But for the rest of the time one of the Tweedles is our dictator.

There is no separation of powers between executive and legislature, and most of the time Tweedle can legislate pretty well at will. His MPs are lobby fodder who will do what they're damned well told. And even when he collapses at the controls - as now - his MPs will still prop him up.

Why do we tolerate such a set-up?

Everyone surely understands by now that we elect our MPs almost entirely on the basis of who we want as President. Half of us don't even know who our MP is.

But very few of us actually want a dictator President. We'd like to see some proper independence among our MPs, elected on their own merits to limit the power of the executive and hold it properly to account.

It's time for a radical rethink.

PS Yes, I know the powers of Westminster have been reduced already - by the EU. But in Tyler's New Model State, we have renegotiated ourselves back to a simple free trade relationship.

Wednesday, May 13, 2009

So... Er... Where's That Deflation?


Are you sure we just need to pump up the tyres?

The government and the Bank of England have spent the last six months telling us the country faces the mortal peril of deflation. Unless they slashed interest rates to the lowest levels ever, and cranked up the printing presses beyond the wildest dreams of Robert Mugabe, Britain would surely disappear into a vortex of plunging prices and mass starvation.

As regular BOM readers will know, we think they've got it dead wrong. We reckon they've now pumped in so much monetary stimulant, inflation is virtually certain to return as a major problem. They are taking us straight back to 70s style stagflation.

Today, the Bank published its latest Inflation Report. And guess what - even they no longer think we're facing deflation.

Here's their updated inflation "fan chart", summarising their main projection of future inflation:


As we can see, the Bank now envisages no serious risk of deflation. Apart from some slight chance of CPI inflation dipping briefly into negative territory later this year, it's higher prices throughout.

So what we'd like to know is WTF are they still running the presses at MAX?

Yes, we all know we're facing a pretty horrible decade. We have to recover from Brown's Bubble. We have to consume less, and pay down our debts. We have to start earning our living without all that froth in the financial and property sectors.

But these are painful structural adjustments we cannot avoid. The Bank's extreme monetary stimulus is not going to help. It may make us feel a little better in the short term, but only at the cost of worsening our longer-term problem. The 70s showed us only too clearly that we can have a stagnant economy right alongside roaring inflation - the worst of both worlds.

With the world and his wife now gabbling about those greenshoots, and even Money Box Live urging listeners to dribble themselves back into stocks, the Bank should certainly not be pumping yet more money into the system.

It should be reversing course.

Now.

Before it's too late.

PS No, sorry, I've finally snapped. Why does BBC R4 PM bother to have a business report? In case you've missed it, the report is called "Upshares Downshares", and is introduced by the theme music from - yes, that's right - Upstairs Downstairs. We then get four or five minutes of "comedy knockabout" between lovable Eddie Mair and Nils Blythe, the biz correspondent. It's lame, lame, lame. Sure, the BBC despises business - that's understood. But rather than subject their audience to this cringe-making amateur nite comedy slot, couldn't they just do another report on how man is destroying the planet, or how the arts needs more money, or how we're to blame for criminals, or... well, anything other than this.