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Cameron finally accepts that Trident shouldn’t cost a bomb

Oct 19

Posted by Jeff in Economy, Parties, Westminster | 2 Comments

There is something of a boating theme to today’s posts on here as the latest news in the drip-drip-drip of announcements before George Osborne’s CSR speech is that David Cameron has decided to delay the the replacement of Trident until at least beyond 2015.

Given the choice between Trident being replaced from tomorrow and Trident being replaced after the next parliamentary term, anyone against nuclear weapons would opt for the latter so in that respect today’s news is to be welcomed. However, given the choice between deciding once and for all that we will not renew our nuclear weapons and postponing the decision until later, the former is by far preferable. So, in short, good news but the fight goes on.

In political terms, the Conservatives are at risk of leaving themselves exposed by attempting an understandable compromise. The hawkish right wing of the Tory party will be deeply dismayed that they will have to wait longer for new toys in the arsenal and the left-wing anti-nuclear camp may be concerned that this was their best chance to put Trident to bed forever and that opportunity has been missed.

For the Lib Dems, while they have been criticised for reneging on some of their principles on here before, they should only be applauded when they make good on their objective to ‘leftify’ how a Conservative majority Government would have operated. It looks like this is one area where Clegg, Alexander, Huhne and Cable can be satisfied with their contribution.

For Labour, I have been unable to find a response from Jim Murphy on the Trident issue as it seems Jim’s deputy Kevan Jones has taken the lead on this one. I rather suspect that the coalition postponing the Trident decision will push Labour into being more ardent defenders of the (literally) indefensible and I equally suspect that Jim Murphy will step back from the headlines, for fear of painting Labour as the sole defenders of Trident which may not play well at the Scottish Parliament elections.

All in all though, this is surely a good day for the Greens, for the SNP and a for a significant tranche of the Lib Dems who have all argued that building Cold War bombs is a hideous waste of money.

QE2 is sailing our way, but should we give it a wide berth?

Oct 19

Posted by Jeff in Economy | 2 Comments

In 2009, the Bank of England embarked on a brave new strategy of Quantitave Easing, never before tried and tested in the UK. The idea was that the BoE buying £200bn of corporate bonds from financial institutions would increase the amount of money in the British economy and stimulate the markets out of recession and back into growth.

The adventure was hailed as a success but what is not so widely known is that Quantitative Easing did not work as it was supposed to.

There exists no evidence that the 2009 bout of Quantitative Easing increased the circulation of money as many lending institutions simply stocked up on their capital or let the money move outside of the UK. However, crucially, there exists no counter-factual that the Bank of England’s decision was harmful.

Sure, the UK is the only deveoped country with high inflation which QE may or may not have caused (it certainly took Mervyn King by surprise) but the difficulty that exists in controlling this index means that one should tread carefully for fear of hyperinflation and drawing Zimbabwe comparisons. Anyway, this higher than expected inflation is a good thing as energy sales and retail sales (despite VAT) staying robust are evidence of a healthy economy and a strong recovery.

Possibly as a direct result of this rather woolly ‘QE doesn’t seem to be causing problems so let’s crack on with it’ mentality, there is a growing expectation that a second round of Quantitative Easing is on its way, possibly as early as November, (the Bank of England has to produce inflation reports and Mervyn King holds a Press Conference every quarter so it is likely that big QE decisions would coincide with these).

So expect the price of Sterling to remain low as we attempt to embark on an export-led, tourism-driven, soaked-in-money recovery to take place.

Here is the thing though – Quantitative Easing is pointless if everyone does it.

More Sterling gives the UK no competitive advantage if there are also more dollars in the US, no Euros coming out of Europe and overflowing Renminbi in China. Given that the US Fed is expected to bring in Quantitative Easing, Europe has no joint strategy with Germany holding its hordes of cash and China not far off triggering a currency war with its stocks of US dollars, now might not be the right time for the UK to go printing more money.

Is the following scenario really that unlikely? – QE pushing inflation up further, inflation rising again due to rising oil/food prices, wages increase to cover increased costs, strikes and wage demands in protest at George Osborne’s slashing of the public sector, companies raise prices to maintain profits and bonuses. In short, wages chasing prices and prices chasing wages. The classic wage-price spiral.

Then again, perhaps there is a clever game being played here. The mere suggestion of QE2 in the UK has helped dip the Sterling currency lower, so too the Dollar. Might the Bank of England and the Fed be boosting exports without having to actually see QE2 through to inflation-causing execution? It’s a strategy that makes sense if you don’t actually know what Quantitative Easing actually did the first time around and you feel like jumping ship before even getting onboard.

So, here’s the economic weather forecast. Becalmed interest rates, biting frost from Chancellor’s cuts, choppy winds from all overseas directions and a QE2 trying to hold its course without any meaningful direction from its captain.

We don’t really know if we’re being handed lifejackets or being shepherded onto the Titanic but, either way, it’s going to be all hands on deck from Wednesday.

What is the point of political parties?

Oct 18

Posted by Malc in Parties | 14 Comments

I’ve been teaching first years this week on the Parliamentary Labour Party. We looked at questions such as “Is Old Labour dead and buried?” (consensus: pretty much) and “If New Labour is dead, what does “Next Labour” look like?” (consensus: ask again later).

It occurred to me – as it did the students – that Labour’s evolution from Old to New and beyond has changed the party almost completely from what it originally stood for. Gone, completely, are the remnants of Clause IV socialism, the nationalise everything we can, the opposition to European integration and support for nuclear disarmament. In its place (circa 1997) we saw a Labour party which was socially similar to its roots (protect the NHS, fund more education, increase welfare spending, legislate for a minimum wage etc) but one which had almost accepted Thatcherite economics as the way to go (limited taxation, low inflation, don’t rock the economic boat). They were also much more pro-business and entrepreneurial than they had been previously, accepting the market as a good. In short, they moved from being borderline socialists to social democrats.

One of the comments that came out of discussions in class was that New Labour’s “Third Way” (as outlined above) was nothing more than an electoral strategy designed to get the party back into government. I’d say yes and no to that – of course the country had moved on from Labour’s last election victory (1974!) when we went to the polls in 1997 and what worked for them then wasn’t going to work for them again. Yes, they realised that to get into power they had to ditch some of the more radical left-wing stuff and chase the Middle-England votes represented by their “Mondeo Man” campaign. But they must have – and judging by Peter Mandelson’s autobiography, they did – believe in what they were doing, believe that this shift to the centre was not only good for their party, but good for the country.

This is where I return to the above, in a round-about way. If that New Labour philosophy is done (and Ed Miliband has suggested so) then what next for Labour? But more importantly I think – what does it say about a party when they can dispense with ideology and pick up a new one so quickly? I’ll come back to that.

Part of the reason I’ve been thinking about this stems from the week the Liberal Democrats have been having. To go into a campaign with a manifesto commitment which has to be shelved because of coalition negotiations (read: PR) is one thing. But to have your leader – and, indeed, most of your candidates - sign a pledge to vote against any rise in tuition fees (an issue which the party is well-known and liked among students for) only to back track and back the abolition of a cap on fees is something else. But there is a wider point to be made.

Why do people join political parties? Obviously not because they agree with absolutely everything the party stands for – that would be near impossible. So you find a few issues you feel strongly about – perhaps university tuition fees might be one of them, or proportional representation, or funding for the NHS, or tackling poverty… etc – and you find a party whose views best fit with yours. Where you disagree, you go to conferences, you speak on motions, you try to convince others that the policy needs rethinking, perhaps you are successful, perhaps not, but your voice has been heard, the party understands the issues you have with the policy but you still believe in other things that the party stands for, so you stay.

But how far does a party have to stray from its ideology (and I use the term loosely) for you to leave? Labour, for example, is in a position at the moment – in opposition – where it can redefine itself, think about its position on any number of issues and emerge with different views than it currently holds. The same is true of the Lib Dems, though for different reasons – government forces decisions upon you as a party that you did not have to take in opposition.

My point is simply that there comes a point when what a party stood for previously is simply no longer represented by the party in its current form. And when that point comes, why do members stay with it? Presumably, it is out of loyalty, or for one or two issues that they still agree with. But for me, if ideology goes, if you define yourself as a “liberal” or a “socialist” how can you retain membership of a party which has shifted far from those ideologies? Incidentally, the same is undoubtedly true of conservatism and the Conservatives, but the point is better explained using more contemporary examples – plus the fact that conservatism has always had a degree of pragmatism attached to it.

I hope members of those parties – and others, for many are in a similar boat – don’t feel like I am attacking them as “blindly loyal” or their parties for being “empty vessels”. I know in a round about way that is what I am doing, but it isn’t intended to be offensive. It is simply a comment on the way that society – and politics – has moved in the UK in the last 20 years.  We’ve become centrists, hugging the middle ground, coveting the swing-voters, trying not to offend. There is no longer any room for the radicalism of Old Labour, perhaps not even for the “radicalism” of real electoral reform. All that is left is three large parties trying to put forward policies which distinguish them in a minor way from the other two.

I think my original question remains – what is the point of these political parties when a) they are represent the same things and b) they’ve abandoned some of the things that made people join them in the first place? Honestly? I have no idea.

Scandinavian spending on defence would save the UK £21.7bn

Oct 17

Posted by Jeff in Economy | 4 Comments

The UK spent 2.5% of its GDP on Defence in the last budget year. This amounted to £46.1bn but we already know that, thanks to Liam Fox’s foot-stamping, the MoD’s budget will decrease by only 7.8%, down to £42.5bn, for 2011/12.

Now I personally believe that, given all the stomach-churning belt-tightening and belly-garroting that’s going on in other budgets, that this 7.8% is too small. We shouldn’t be expensively gallivanting around the world as the self-appointed world’s policeman more than other countries do, especially while we charge students tens of thousands for degrees, hold back investment on Renewables and make hundreds of thousands unemployed. Furthermore, we meddling Imperialists shouldn’t be building £34bn nuclear weapons just so that we can cling onto our grossly undeserved permanent seat on the UN Security Council.

I know that the above doesn’t have to happen because there are other countries out there who have quite happily eschewed onerous defence spending and unnecessary nuclear weapons, four of them in Scandinavia.

Per the latest information that I could find, Sweden spent 1.3% of its GDP on Defence, Norway 1.3%, Denmark 1.4% and Finland 1.3%. It’s almost not worth taking an average given how consistently peaceable the Scandinavians have been but let’s go with 1.325% anyway.

Were the UK to adopt the same approach and drop spending to a Scandinavian ratio of GDP at this Wednesday’s Comprehensive Spending Review, we would be saving £21.7bn per year. 21,700,000,000 of extra cash every single year. That’s over £80bn for the rest of this parliamentary term.

That’s a lot of tuition fees, a lot of wind turbines, a lot of new schools, a lot of welfare cheques and a massive head start on high speed rail.

While delivering once in a generation cuts is the perfect time to shake off the old British mentality of needing the biggest stick in the playground. I know it won’t happen but I thought it was well worth pointing out just how much money is available to be painlessly saved.

Rail fares to rise 30%-40%

Oct 16

Posted by Jeff in Transport | 20 Comments

The fight against Climate Change from a transport perspective is quite simple isn’t it? We need to wean people away from oil-driven cars, out of convenient domestic flights and into trains. Listening to transport champions and making trains greener, cleaner, faster and cheaper must surely be a top priority for a Government that is serious about realising its self-appointed title ‘greenest Government ever’. Infact, I’d say such an objective should be a bare minimum.

It is incredible therefore, genuinely incredible, that train fares are expected to rise by some 30-40% over the course of this coalition’s administration.

Taken from the Liberal Democrats’ own website, the same website that contains the line “Nuclear has a dirty legacy and increases global security risks. We oppose construction of further nuclear power stations.”, we have the following:

“Liberal Democrats believe buses and trains should be affordable and reliable so people can have a real choice about how to travel.”

The Telegraph had them down as specifically pledging to “cut commuter rail fares”.

How does increasing rail fares by a third, rail fares that were already the most expensive in Europe, make travelling by train “affordable”?

Indeed, a damning 2009 quote from current Lib Dem Transport Minister Norman Baker makes this all the more uncomfortable for the Lib Dems:

“….the government has failed train passengers for over a decade. Prices have been allowed to mount to an unacceptable level with British passengers paying the highest train fares in Europe.”

In The Guardian, the generally oafish Lord Sugar talked of the Lib Dems today in a way that I daresay a growing number of Brits agree with:

“”One thing that’s for sure, this coalition thing is an absolute joke. It’s got to be sorted out. It can’t last for long with these Lib Dems and all that. These two people, [Nick] Clegg and [Vince] Cable, in their heart of hearts never thought they would get into power, now it’s as if Leyton Orient suddenly found themselves in the Champions League. Fish out of water! Unbelievable! They don’t know what they are doing! I think Cable should … he should just give it up. They should put him in a field somewhere and give him a bit of hay.”

Nuclear power, tuition fees, rail fares and VAT rises. Nick Clegg must really love the Alternative Vote if he is willing to give up so many principles for this referendum.

Not that the buck stops only with the Lib Dems. The Conservatives are taking this country in an almost diametrically opposite direction from where it needs to move towards if the problems of climate change, inequality and social mobility are to be solved.

Many people live outside of London and other big cities and pay expensive season tickets just to travel into work each day. These increases in fares may well result in many of them deciding to move into the city to cut down on travel costs, a change to how we live that would be a hammer blow for some rural communities and would see cities bursting at the seams.

It’s the lack of joined up thinking that gets me, the myopic approach taken inside each individual Government department area that seems to ignore the whole gamut of problems that need to be addressed in their totality. Chief amongst these is climate change and if all areas of policy are inadequate then the guilty party is the man at the top, David Cameron. Zac Goldsmith must be pulling his beautifully coiffured hair out.

Vote Blue, get Green? What a joke.