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Budget preview: Osborne plays politics with Britain’s economy

20/03/2012, 07:00:25 AM

by Jonathan Todd

Literally no one alive today has experienced a period as economically bleak as we face today.

There could be hope. The chancellor retains a capacity to improve our situation through bold policy and a display of leadership. Instead we can expect a Budget of ruses, a rearranging of the pieces on the political chessboard with little or no thought for the wider reality in which the rest of us reside.

Osborne’s capacity to frame political debate should not be underestimated. He has the bully pulpit of office, a sympathetic media, and the public have bought into his central narrative: there is no alternative to his tough deficit-reduction medicine and anyone who suggests otherwise, particularly on behalf of Labour, who he paints as wholly culpable for our economic predicament, represents an unaffordable risk.

It is a powerful argument, a train rumbling down the track straight for Labour, threatening to smash us into another parliament in opposition. Some think the train will change direction, almost irrespective of what Labour does. They hope and believe that exasperation with Osborne will build such that his prescription is rejected.

Some contend that the train is immutable and that Labour had better adjust – deficit reduction will remain the key issue and Labour must do more to demonstrate how we would deliver this.

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Love thy Tory

19/03/2012, 07:00:01 AM

by Peter Goddard

Because I enjoy becoming maddeningly frustrated with other people’s stupidity I am a keen reader of the Guardian’s Comment Is Free (CiF) section.

On CiF over the last couple of years it appears that reasoned debate has become increasingly neglected in favour of vituperative attacks by all sides on all the others.

A five minute survey reveals “filthy free market scum” (Tories), “the scum of the Earth” (Labour) and “lickspittles” (Liberal Democrats).

And as the budget draws nearer, the temperature keeps rising.

All good fun, no doubt, but is it helpful?

From the perspective of what passes for everyday politics – I’m thinking prime minister’s questions, media interviews and press releases – the answer is “yes” (although perhaps without being quite so rude). This is because these events are not dialogues but showcases.

Ed Miliband will not rise to give the opposition response to the Budget on Wednesday hoping that maybe this time, this time he will finally succeed in changing Cameron and Osborne’s minds.

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Budget preview: an opportunity to change the nature of Labour’s political attack?

18/03/2012, 08:00:52 AM

by Anthony Painter

If the leaks turn out to be true, we are facing one the most radical Budgets in living memory. The abolition or reduction of the 50p rate, regionalisation of public sector pay, increasing the personal allowance, and the introduction of “tycoon tax” (ie: minimum tax rate for all) is a major package of reform. As soon as George Osborne stands up, the framing battle will commence. What should Labour’s line be?

I’ll put my personal allowance tax saving on the fact that the line will be “fairness”. Ed Miliband and Ed Balls will focus on the abolition or reduction of the 50p tax rate. They will say this proves we are not all in it together; one rule for the rich and one rule for the rest of us. They will follow with a flurry of numbers about how the average family has been hit by the Tory-led government’s tax and spending changes since 2010. Labour would tax banks, protect tax credits and reduce VAT. The Tories favour the rich over the rest.

When George Osborne announced the VAT increase, the reaction was pretty much the same. The party HQ printing presses went into overdrive even while the leadership election was on and off Labour went. People didn’t want VAT to increase and they don’t want the 50p tax rate abolished. So it’s a no-brainer, right?

The problem is that it didn’t work.

Labour cries “unfair” at every possible opportunity. People know that Labour thinks everything the government has done is “unfair”. A good portion of the population think it is unfair too. One problem is that they take “fairness” to mean a slightly different thing to Labour. They take it mean reciprocal fairness: you should receive in accordance with your contribution. Labour means distributional fairness: the poorer you are, the more you should get. That is why Labour’s cris de coeur about fairness slightly miss the mark.

There is another approach: attack the government’s fiscal and economic decisions. The package of measures which is rumoured undermines fiscal consolidation and economic growth.

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St. Patrick’s Day, the flag and Irish America

17/03/2012, 08:00:27 AM

by Kevin Meagher

The green, white and orange of the Irish tricolour, currently fluttering to questionable purpose outside a thousand pubs, has an interesting history.

It was presented to the Irish nation by my illustrious forebear, Thomas Francis Meagher, in Dublin in 1848. Shortly afterwards he, and a gallant band of brothers in the Young Ireland movement, launched one of the many heroic, but ultimately fruitless, insurrections against British rule.

This was midway through the Irish Famine – An Gorta Mor (“The Great Hunger”) in which Ireland’s population fell by a quarter, with a million people starving to death and a million more emigrating to America, Canada, Australia and Britain. Cruel Victorian indifference to the plight of the Irish cast a lingering shadow until Tony Blair’s welcome apology for this disgusting episode in British history back in 1997.

Meagher was sentenced to be hung, drawn and quartered for his sedition – a sentence reprieved after public outcry – and instead he and his comrades found themselves transported for life to Van Dieman’s land in what is now Tasmania.

They were meant to remain there for life, checking in once a week with the authorities and expected to eschew thoughts of escape, on their word as gentlemen. Meagher thought better of it (as you would), procured a rescue ship and set sail for America whereupon he became a cause celebre to Irish immigrants who had reached America in less salubrious confines, usually aboard the infamous “coffin ships”. So great were the incidences of typhus among the starving Irish that a third died on the perilous Atlantic crossing. (It is said sharks could be seen following the ships, such were the numbers of corpses thrown overboard).

After starting an Irish newspaper and working as an attorney (he was on the defence team of Congressman Daniel Sickles, who shot his wife’s lover outside the White House and became the first person to successfully mount a defence of temporary insanity) Meagher became embroiled in the American civil war.

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The Sunday review on Friday: The Young Fabians’ jobs summit

16/03/2012, 02:35:50 PM

by Jonathan Todd

Earlier this week on Tuesday, the Young Fabians demonstrated their capacity to work for solutions to the most pressing of problems by holding their jobs summit in the week in which the ONS announced youth unemployment has topped 1.4 million – the highest since records began.

The discussion roved from the big, macro picture to very particular concerns. The willingness and capacity of young people to turn up on time for work and put a shift in was amongst the latter.

Punctuality isn’t just a challenge on the shop floor, though. The summit didn’t start on time. The star turn, David Miliband, we were informed by the chair of proceedings, Rayhan Haque, “had to do a bit of a vote”. The best laid plans and the NHS bill. Whether the lost time features on the risk register of the bill may never be known but the Young Fabians had become the latest to suffer from Andrew Lansley’s ill-considered reforms.

Manfully Will Hutton and his friend Sony Kapoor stepped into the breach created by Miliband’s absence. Many speakers at political events like to kick off with a joke. Hutton, in contrast, sobered proceedings by reminding us that we are living through the longest and deepest recession since the 1870s.

Comparisons with the 1930s are so 2008. We are now beyond them, with GDP still 3 per cent below where it was 4 years ago. Nobody living has ever lived through a recession as pronounced as this. Getting through this, Hutton insisted, is “the social democratic challenge of your lives”.

Helpfully he had come armed with suggestions for how this might be done: extending the kinds of business models that the ownership commission reported upon the day after the jobs summit; ecosystem policy, rather than industrial policy; a twenty-first century social contract, which would allow individuals to mitigate the risk in their lives; and a state-backed infrastructure bank. Some of these remained ideas thrown out to the room, unpacked and unpicked. Kapoor did, though, latch on to the infrastructure bank suggestion, pointing out that we are already serviced by one in the form of the European Investment Bank.

This was consistent with the strongly European flavour of Kapoor’s remarks. He provided a passionate and meaty articulation of the case that Europe, including the UK, now stands together or falls together. We shouldn’t be defensively building firewalls. We should be going on the offensive and taking advantage of the rock-bottom long-term interest rates across much of northern Europe to create an infrastructure boom.

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What the next few weeks have in store for Charles Allen

16/03/2012, 07:30:34 AM

by Atul Hatwal

Charles Allen, welcome to the spotlight. You might have thought you were already high profile, after all running ITV and EMI made you a fixture in the business pages. And your turn on Channel 4’s the Secret Millionaire was genuinely touching.

But all of that is as nothing compared to what you will experience as chair of the Labour party’s executive board.

As you start your new role, you should be aware of the two pitfalls that perennially await ingénue businessmen keen to apply their acumen to the political world.

First, what works in business does not apply in politics. Second, the media are coming.

Politicians frequently muse about how good it would be to apply business practice to politics and improve efficiency. They do this because they have never worked in business, beyond perhaps a temporary sinecure in public affairs en route to a parliamentary seat.

Most politicians can barely run a bath, let alone any form of enterprise. Executive management as you understand it is almost non-existent. Just look at the how Labour party restructure has been managed so far.

But politicians are not an untalented breed and there’s a reason they have evolved in a particular way.

In business, all relationships are underpinned by money. Whether its shareholders and their dividends, employees and their wages or suppliers and their fees, power is held by the he or she who holds the purse strings.

In politics, most things that matter are based on goodwill.

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Sunday review on Thursday: Has the future a left? The thoughts of Zygmunt Bauman

15/03/2012, 01:19:59 PM

by Ben Cobley

The European left “is probably taking an afternoon nap”. That’s what the brilliant eighty-six year old Polish social theorist Zygmunt Bauman told a capacity crowd which included David Miliband, in London last night.

Speaking on the subject “Has the future a left?2 at the London School of Economics, Bauman gave a typically all-encompassing account of the challenges posed by contemporary capitalism and the left’s relation to them, bursting with ideas and full of luminous turns of phrase.

Though sticking to the broad brush and characteristically not pointing the finger at individuals or particular institutions, Bauman’s thesis was clear: the left “has sold out to the right” and become “a fake replica of what it was” in its “appeal to the poor, needy, and also the dreamers”.

He posed a question that he said he asks himself a lot: Do social democrats know where they are going and what they are aiming for? Do they have a vision for the good society?

In place of this, he said, the left has been defining itself in two different ways:

1) in terms of ‘whatever the right can do we can do better’

2) from collecting people who are discriminated against and trying to compose a “rainbow coalition” out of them – a perspective that is probably now losing ground.

Referring to the occupy movement and its Spanish forebears, the indignados (the outraged), Bauman said, “Some people think that if governments cannot do things, perhaps we can do them ourselves. The jury is still out on that.” In fact the signs are that such street protests are more effective in totalitarian regimes, he added, asking: “Where is the inch of change in Wall Street because of ‘occupation’? I wonder if they even know they have been occupied.”

Instead, Bauman made a plea for leftist politics that stick to principles, that we be self-assertive in defending our values, while measuring the quality of a society by the quality of life of its weakest members – something that is very distinctive from the right’s way of seeing things.

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The flaws at the heart of the Labour party’s reorganisation

15/03/2012, 07:00:22 AM

by Peter Watt

I have decided to write something about Labour party governance. Now wait; before you stop reading simply because you assume that any article about governance must be aimed at anoraks give me a moment as it really is an important issue.

The Labour party is governed by the National Executive Committee (NEC) who act in the same way as a board of directors or trustees do. In other words, they are responsible for ensuring that the party manages its finances well; delivers on its primary objective of securing elected Labour representation and other subsidiary objectives like better representation of women. And also for ensuring that the party complies with its legal responsibilities. They also oversee, but do not direct, day-to-day operations of the party. The day-to-day work is managed by the party’s chief executive the general secretary.

Traditionally the arrangement has not been a particularly good one in the Labour party with good governance being secondary to other political pressures. The result was that the party became horrifically in debt and no one on the NEC seemed to notice.

The reasons for this are twofold.

Firstly the NEC itself was much more interested in politics than governance. In other words they got elected or appointed by virtue of fighting for position or votes in internal elections on the back of taking positions politically.

They were experts in lots of things to do with politics, trade unions and so on. But that didn’t make them experts in governance, asking the right questions, finances and the like. Whilst other organisations could undertake a skills audit of their boards and appoint non-execs or other trustees to plug the skills gap – the NEC had elections to its various stakeholder sections.

And secondly the party management team saw it as their job to keep the NEC out of decision making. What they didn’t know couldn’t hurt and anyway the NEC really weren’t that interested, or so the argument went.

It was just easier to set up NEC committees and structures that provided more confusion than transparency. Plus there was always a third source of power that party managers had to worry about – the leader’s office. The leader’s office always wanted to be in charge of everything but knew that the key to managing the weird and byzantine world of the NEC was the general secretary and their team.

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Labour needs to wake up to the threat of Nick and Dave’s very civil partnership

14/03/2012, 12:00:50 PM

by Kevin Meagher

“If it ain’t broke, don’t fix it” remarked Bert Lance, the former Carter-era official. His homespun phrase, much emulated since he coined it in 1977, is intended to ward off the siren demand for change for change’s sake.

That very same advice now rings in the ears of Liberal Democrat ministers as they ponder what state their party will be in at the next general election. Don’t change what doesn’t need to be changed.

Frankly, as most Lib Dems must realise, it would be easier to sell the Sun in Liverpool than hold many of their marginal seats. How can their ministers hope to stay in the style to which they are undoubtedly now accustomed riding a dying horse into the 2015 election?

Let’s fast forward three years. David Cameron will surely – and reasonably – hope to win a big working majority at the next election; this is his obvious Plan A. But continuing with the coalition will be his close-run Plan B. His worst of all worlds would be to win with a small Tory majority. The last thing he wants is to be reliant on his party’s backbenches or, even worse, his rank and file, as John Major was following his general election victory twenty years ago.

For the Lib Dems – trailing in single digits in most polls – their very salvation lies in preserving the status quo. Their worst of all worlds is to see a return to binary politics with Labour and the Tories carving up British politics once again. That appears a distinct possibility with the Lib Dems now seriously looking over their shoulder as UKIP threatens to usurp them for the third party slot.

They should seek payback for holding their collective noses and backing Cameron over issues like tuition fees, austerity and NHS reform in the shape of a semi-formal electoral pact. Their candidates go into the next election with their nominal Tory opponents defending a joint record, so why not a joint ticket as well?

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Revealed: How BIS abandoned British shipbuilding

14/03/2012, 07:00:21 AM

by Iain Wright

A couple of weeks ago, the MoD announced that a £0.5bn contract for the next generation of Royal Navy tankers had been awarded to a South Korean company.

Ministers thought that they had got away with this because there had been no bids from a British firm.

Peter Luff, the defence procurement minister, was quoted as saying that: “There was no British bid. That does make it a tad difficult to award (the contract) to a British company if there is not a bid from a British company. We don’t build tankers in the UK.”

Excuse me? We don’t build tankers in the UK? I think the minister should try telling that to the Shipbuilders and Shiprepairers Association (SSA), whose membership comprises about 99 per cent of the UK ship production and supply chain, and whose director still insists that this contract could be built in the UK within the timeframe and to the quality required and awarded to a UK shipyard to help maintain jobs.

The government is hiding behind the excuse that no British firms applied. But this is sophistry.

There was a European bid on the table that offered a greater share of work for the UK than the South Korean winners. This would have meant 35 per cent of the contract being delivered in Britain.

But the MoD ignored the wider British economic interest.

This sorry episode raises two serious questions: – why wasn’t the broader economic context taken into account, and could the government have done more with British suppliers to help them bid?

In both cases, it is down to the departmental champion of business across government, the department for Business, Innovation and Skills, to make the Britain’s economic case to other departments and support British companies in engaging with government.

So I asked a parliamentary question as to what meetings the business secretary Vince Cable and his ministers had with MoD ministers and civil servants, UK businesses and trade associations to prioritise the British economic interest in such an important contract.

I got the answer back last week. No meetings had been held between BIS ministers and anybody on this matter.

I find this astonishing.

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