Labour’s anti-Semitism problems reflects political incompetence at the top

At first pass you can have some sympathy with Labour’s leaders as they are engulfed by accusations of anti-Semitism, just a week before important elections in Scotland, Wales and London. It is, of course, impossible to have sympathy with Ken Livingstone, the senior Labour adviser and former London mayor who was suspended yesterday after making one set of ill-judged remarks too many. But on closer inspection the sympathy evaporates; it is yet another sign that the party made a colossal mistake by choosing Jeremy Corbyn as its leader.

But the first thing I want to say is that the issue is not quite as straightforward as some make out. The wisdom currently doing the rounds is that collective references to “the Jews” is almost always anti-Semitic, that criticism of Zionism is usually code for the same thing, but criticising the actions of the Israeli state is fair game.  The first of these is clearly true, and the second probably is too – though I think Zionism poses some challenging questions over the rights of Arabic-heritage Palestinians (who, I remember a veteran British diplomat telling me, are rarely true Arabs).

But the third proposition, that criticism of the Israeli government is fair game, is more problematic. Try it. To do so, if you are considered to matter in political discourse, is to invite a concerted attack from supporters of the Israeli state, who will try to associate you with supporting terrorism or being closet anti-Semite, and who can never admit that the Israeli state does wrong, ever. I have to admit that I often self-censor, and do not comment on what is going on in Israel. I broke this rule last year, and got myself into hot water – though I was probably a bit less restrained that I should have been.

One problem with criticising Israel is that many Israelis clearly are racist, and their influence seems to be growing – though just how much such attitudes infect government policy I cannot say. But many aren’t. And Israel supporters in this country generally aren’t racist either, understanding all too well the difficulties of being a minority in a liberal democracy. This makes it very easy to give offence, even when making legitimate points. The whole things reminds me a little of how it felt to be British in my youth. Criticising the British Empire and its history was considered by many to be unpatriotic, even though racism clearly ran through it, and many wrong things were perpetrated. We were told to gloss over this and look at the positives. Many people of Jewish heritage seem to feel something of the same way about Israel – for reasons that are perfectly easy to understand.

So it’s a minefield. But it is a very well-marked one. There is no excuse for professional politicians to blunder into it unknowingly. When talking about Israel you must be very, very careful. It is one of the most basic rules of politics. This is what the Labour leadership under Mr Corbyn does not seem to have appreciated, Mr Corbyn having lived in a leftist cocoon for most of his political life. Mr Livingstone has made a career from egregiously insulting people and getting away with it. They have learnt that once they get into the political big-time, the normal rules apply to them too.

But there seems to be a wider problem on the left. Many on the far left have found it convenient to make common cause with radical Muslim activists. This seems to start with the principle that your enemy’s enemy is your friend, and hatred of America is a strong organising principle on the left. Looking for common ground, they find criticising Israel is one place to find it. They see no reason to challenge the often casual racism of these Muslim activists, and become, at best, careless, and at worst infected with conspiracy theories. It’s the same sort of stupidity that sees many apologizing for Vladimir Putin’s attacks on Ukraine, or defending the late Hugo Chavez in Venezuela.

This sort of lazy thinking has to be stamped on if Labour are to make progress in mainstream politics. The party’s Mayoral candidate, Sadiq Khan, seems to have grasped this, notwithstanding his own engagement with Muslim radicals – which, be it understood, is not necessarily a bad thing in itself.

Alas Mr Corbyn does not seem to have grasped the seriousness of the situation, or else does not have the skills to deal with it. Mr Livingstone loves to live dangerously, and is not a good friend to have. The Labour leadership need to get one step ahead, and come out unequivocally against anti-Semitism (and without the weasel rider that they are against all racism) and take some positive steps to heal the wounds with the Jewish community (as, to her credit, suspended MP Naz Shah apparently has). But that would require a sort of political vision of which they are incapable.

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Why it’s Caroline first and Sadiq second for me in London elections

While much of the news coverage in Britain is taken up by the EU london ballotreferendum, in under two weeks important elections take place in London. They are for Mayor and the London Assembly.  There are also even more important elections in Scotland and Wales, for their parliaments, but I have less to say on these. The postal ballots are already out. Here is how I am voting and why.

The most important of the London elections is for Mayor. Under the system of regional government implemented by Labour Prime Minister Tony Blair, and fully endorsed by his Tory successor, David Cameron, the Assembly has few powers beyond asking questions and kicking up a fuss. There is always a balance in these things, but the sneering disregard that Whitehall and Westminster politicians have for local councillors is very evident. As a condition for any serious devolution they insist on powers going to directly elected Mayors, about as far as you can get from the way local politics has usually been done in Britain.

So let’s talk about the Mayor first. The electoral system involves a first and second preference vote. This is widely misunderstood by Britain’s electorate, who are used to single vote first-past-the-post. What it means is that your first preference vote is never going to be wasted, because if your preferred candidate fails to get anywhere, your vote is switched to your second preference. If your second preference goes to a hopeless candidate, it will be wasted. So your first preference vote should be strategic (with your heart, if you like) and your second preference tactical (with your head).  Alas most voters get this the wrong way round, so used are they to voting tactically under FPTP.

Indeed, I think it is a waste to use your first preference on one of the front runners, Labour’s Sadiq Khan or the Conservative Zac Goldsmith, except in the unlikely event that you actually really like one of them. To be fair, Zac, as I will call him, has a certain sort of charisma, so quite a few people probably do really like him, though few will be reading this blog. That hardly applies to Sadiq (as I may call him with rather more propriety, given the different conventions for names of non-European heritage), though many admire him in a certain sort of way.

So I have no hesitation in voting for Caroline Pidgeon, the Liberal Democrat candidate with my first preference. This is entirely unsurprising. I am not just a party member, but an officer of the London party (Treasurer); I have known Caroline for a decade. Still, let me make the case. Caroline is hard-working, determined, unpretentious and very sharp. She has spent 8 years on the London Assembly (the only of the candidates with anything like that experience of London government), having chaired various committees, including police and transport, the critical areas for a Mayor.  Caroline would be a very different sort of Mayor, but there are many examples of where a commonsense and unpretentious female politician can make very a very successful mayor (I’m thinking of Watford’s Dorothy Thornhill – but there are US examples too, up to state governor level). This is what London needs, surely, rather than more male grandstanding.

But if you are not convinced by Caroline, give a thought to Green or Women’s Equality candidates Sian Berry or Sophie Walker. They have nothing like Caroline’s credentials, but would be much better than one of the “main” candidates. The rest are mainly right wing, and at odds with London’s liberal ways, though Ukip’s Peter Whittle is miles better than the others. Don’t even think about George Galloway – a self-regarding trouble-maker who would do no good. He can do a good rant sometimes, but that is about all.

When it comes to second preferences, though, you must be tactical. If you haven’t voted for one of the big two with your first preference, then you must with your second. Anything else is a cop-out. These Mayoral elections are the only time when I have had to choose between Labour and Conservative. In the first two elections I voted for Labour’s Ken Livingstone (not strictly Labour first time), who showed real political courage with his congestion charge policy. But he got complacent, and too into machine politics, so I reluctantly switched to the Tory Boris Johnson on the next two occasions. I have very little good to say about him, but Ken (his opponent both times) would surely have been worse. But neither Boris no Ken are standing this time. I have to choose between Sadiq and Zac.

I have not found the choice hard. I have seen Zac in the flesh once, at a Lib Dem conference over a decade ago (maybe two decades), before he was a politician, and when he was editor of Ecologist magazine. He alarmed me then: he struck me as a bit crazy, convinced of his own rightness, and not listening to other points of view. No doubt he has matured somewhat, but he has not held any serious administrative office, and I have severe doubts of his capacity to do so successfully. That’s a bad start. But the Tory campaign has removed any lingering doubts. It has been advised by Lynton Crosby’s organisation (though not the man himself), and it shows. There is a lot of dog-whistle, innuendo politics, shamefully picked up by London’s Standard newspaper. This has tried to suggest that he has links with Islamic extremists. Even the Prime Minister was roped into this last week, just as postal ballots were hitting the doormats. This sort of campaigning must not succeed.

What of Sadiq? I know him a bit better, because his base of operations is in Tooting, where he is MP, and that is where my local political experience, such as it is, has been. He did not make a particularly good impression, especially at first. He was utterly graceless in his election victories of 2005 and 2010, though he’d clearly learnt a thing or two by 2015. He is ruthless, and unscrupulous, in his local electioneering. He has ducked this way and that on many issues, including, shamefully, London’s proposed Garden Bridge, a dodgy proposal if ever there was one.  I would not buy a used car from him. He is actually less trustworthy than Zac.

But there is a certain sort of courage too. It was not easy for somebody of his heritage to come out in favour of gay marriage, instead of some kind of fudge. And his defence of Guantanamo internee Shaker Aamer – or rather his fight to ensure that he was subject to proper processes of justice – was both right and courageous. He has ministerial experience. He has a better chance of actually getting things done. He gets my second preference vote.

And what of the Assembly? The election uses a system of proportional representation with list and constituency votes.  The party list vote is easily the most important. It matters little for the Labour and Conservative parties, but does give a chance for the others to create a political foothold in the system. I am voting for the Liberal Democrats, of course. Caroline Pidgeon tops their list, and I am keen she stays in place; she has a strong list of candidates behind her, with housing lawyer Emily Davey number two (it would be very good to have this sort expertise on the Assembly – and she’s good), and Merlene Emerson, third, would be the first Chinese heritage member of the assembly – an important community in London’s mix.

And the constituencies? It’s hard to get excited about the main party candidates; this is a bit of a backwaterfor them. I would vote for whichever candidate catches your fancy as a bit different. In Merton and Wandsworth I would strongly recommend equalities activist Adrian Hyyrlainen-Trett, the Lib Dem, or if you dislike the Lib Dems, the Green Esther Obiri-Darko. Stay well away from Ukip’s Elizabeth Jones, who demonstrates that party’s tendency to come up with whacky candidates. Between the big parties, Labour’s Leonnie Cooper is miles ahead of the Tory David Dean.

But biggest hope is the Caroline Pidgeon and her team will do as well as she and they deserve.

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The #EUref campaign so far: Leave 2, Remain 1

First an apology. I haven’t been posting much on this blog in the last few weeks. This is for two reasons. First life is intervening, in the form of school governance duties and London election work (administrative rather than political). But also because I am experiencing severe performance problems with my website, which are entirely mysterious to me. Having tried a number of things I have now migrated to a new  hosting company which is both cheaper, and billed as a WordPress specialist, and so better able to provide the technical support I need. It does seem to be working better already. Strangely enough yesterday I had an email from my old hosting company (5Quid) to say that it was being taken over by my new one (TSOhost) and would be migrating anyway. It may help that I have got in first. Still I now feel free to post again.

The big political story of the moment is the referendum on Britain’s membership of the EU, which is due on 23 June. I want to offer thoughts on how the campaign is faring.

The first thing to say is that it is not an edifying experience. I have heard it suggested that regular public referendums help educate the public on political issues. That may be the case in some countries, but it is not how it works in Britain. I learnt that from the 2011 campaign on the Alternative Vote. No argument was too spurious to field. The public found the “raucous” mudslinging enjoyed by the press more engaging than any attempt to grapple with the issues. Public understanding of electoral systems advanced not an inch; even quite respectable, educated people still say that it was all about proportional representation. And so it is this time. No argument is too spurious. Much easier to tackle the man rather than the argument. It is in this context that we must judge the progress of the two camps.

Leave scored an early goal when two senior Conservatives, the Justice Secretary Michael Gove and the London Mayor Boris Johnson came over to their side, after rumours that they wouldn’t. Personally I find it hard to take either of these politicians seriously, but they are clever men, and have followings. They gave the Remain camp respectability and gravitas (in a funny sort of way with Mr Johnson – but he’s a serious politician) that they other wise lacked.

Leave scored again, in my view, with a coherent and well-chosen core message in the first weeks, supported by some effective sound-bite arguments. This is quite remarkable since their campaign was and still is the more chaotic, with rival camps eager to dominate the argument. This shows some strong political instincts on their part. Their slogan “Take Control” gives a reassuring flavour to their proposition, in spite of it leading the country into a daunting political space. Two soundbite arguments stand out. First is that the gross contributions made to the EU (alleged to be £350M a week) could easily be spent on other things, specifically the NHS. This is nonsense of course, since most of the contributions come back into the economy in one way or another. Spending the money on the NHS would mean taking it away from farmers; the contributions end up being spent several times over with this sort of reasoning. And, of course, the financial effect could easily be swamped by bigger economic developments. No matter; all this requires explanation, and nobody is interested in stopping to listen to complicated explanations. The second soundbite argument is a more defensive one: which is that the UK’s trade deficit with the EU means that the UK can dictate trading terms, because otherwise those German exporters would get upset. Of course that only lasts as long as the trade deficit itself – and don’t we want to fix that? Even so, in the first weeks of the campaign this line of argument has been quite effective at neutralising Remain’s claims that the country will lose access to EU markets.

Meanwhile, Remain’s efforts seemed to fall flat. They tried to promote the idea that there would be short and long term damage to the economy. Leave called this “Project Fear” , which I thought was a mistake (drawing attention to the opposition’s claims), but it seemed to do the job. Steadily the polls started to drift Leave’s way. They had started with a Remain majority (which undermines my football metaphor a little – perhaps the campaign should be looked at as a return leg with Remain already 2-0 up from the previous one). A week or two ago the polls looked neck and neck – though phone polls (usually considered more reliable) showed a Remain lead, this was shrinking.

But this week Remain have pulled a goal back. This came with a weighty Treasury report suggesting that the economic costs to the UK of leaving, short and long term, would be very high indeed. The convenient headline figure was £4,300 per family – no doubt just as spurious as Leave’s headline numbers, but what the hell? This wasn’t news particularly, but it seems to have struck home. Why? Well it was weighty, and more objective observers, such as the FT’s Martin Wolf, consider it to be fundamentally sound in its analysis. But it also laid out in stark clarity the disadvantages of each of the various alternative trading arrangements. Again this is not new, but it had authority. It is the strongest intellectual argument for Remain, since each of the alternatives either has mighty drawbacks, or leaves you wondering what the point of leaving the EU would be, if you are still paying contributions and signing up to free movement of people.
That this move struck home was plainly evident from the Leave camp’s response. It was angry and panicky, and went for the man (George Osborne the Chancellor in particular – and economic forecasters in general). But they really didn’t want to take on the substance of the Treasury’s argument. Leave fielded their heaviest hitter, Mr Gove, but his economic arguments were  based on hope rather than substance, and he quickly tried to move the argument on to different ground. To do so he promoted his strange and a anachronistic ideas about Britain and its historical destiny, which will resonate with few. He accused the Remain side of treating the voters like children – but that felt like the pot calling the kettle black. As Martin Wolf says, “Avoiding needless and costly risks is how adults differ from children.”

Remain’s next step will be to use US President Barack Obama’s forthcoming visit to promote his support for Remain. Mr Obama has star quality in this country, if not his own, and it will undermine the optimistic picture painted by Leave of life outside the EU. Leave are already panicky about it, suggesting his views are hypocritical because he would never recommend restricting US sovereignty. But that is to suggest the countries are equals; in fact Britain is roughly the size of California economically; it is universally understood by Americans from Mr Obama down the California is better off in the USA than independent. Remain should score the  equaliser. The polls are already moving back their way.

But it’s not over till it’s over. Leave can certainly pull the contest back. Their strongest suit is the country’s anxiety over unrestricted migration from EU members, which can be used to promote all kinds of fears, from job security to terrorism. This is a genuinely open contest with at least a third of voters are not truly convinced by either side. And we haven’t even reached half-time.

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Brexit divides the middle class but the vote will be decided elsewhere

It’s often said the Britain’s referendum will be decided on emotions rather than facts. Well facts belong to the past, and the referendum to the future, so perhaps that is as it should be. The critical question is about the sort of country we want Britain to be. There is a difference between factually based opinion and raw emotion – but usually the former is just a tidy veneer on the latter. Our attitudes are driven by who we are, amongst the middle classes anyway.

There is clearly something cultural about it. It is very striking that amongst my friends and family, those with whom I feel able to talk about politics, the almost universal wish is for the country to remain in the EU. I have been politically active in the Liberal Democrats and its predecessors for 35 years, so perhaps this is not surprising. But it includes people who support Labour, the Conservatives and the Greens too. It also spans a wide range of ages; it is an issue where the younger generation agrees with its parents.

Who are we? We are middle-class, usually university educated, professional, civically minded, and political and social liberals. We hold a wide range of shred beliefs about the world, which go beyond the EU, including, for example, a belief in man-made climate change and the priority to reverse it.

And middle class folk who take the Brexit side, whom we hear every morning and evening on our radios and see on TV, are the fellow-citizens whom we most detest. We view them as self-interested, greedy hedge-fund managers and businessmen, or the sort of annoying intellectuals who take pleasure in disrupting consensus and ruining any kind of cooperative progress. Interestingly, from what I can make out, the Brexiters view us as the soft-minded, cosy consensual ruling elite, and themselves as the brave tellers of truth to power. They reject a whole range of our beliefs, including climate change, or what to do about it. Funnily enough, we Remainers, most of us, don’t feel that we rule anything more than school governing bodies, and we feel besieged. Indeed we trust our ruling elite so little that restricting them with constitutions and systems of rights seems to be a good idea. We don’t think that driving out he EU means taking back control – just handing it to an even smaller elite whom we distrust. The “elite” is always somebody else.

I think that this clash of values is based on civic-mindedness rather than liberalism. Many of the Brexit middle classes (think of Douglas Carswell the Ukip MP) have a basically liberal outlook. They like engaging with foreigners, are socially liberal, though some struggle with the idea of cultural diversity within their own communities. But they invest more effort in self-promotion, or individualistic activities, as opposed to cooperative, or civic ones (being school governors, helping at the church, and so on). Of course many Brexiters take part in civic activities, like supporting their local Conservatives or local business networks – but these seem to have a strong self-promotion agenda. People who join the Lib Dems after being with the Conservatives remark on how different, and less dominated by personal ambition, the culture is – though the Tories have many civically-minded people in their ranks too.

The idea of individualism against cooperation seems to be the central one. Individualists distrust government structures, and struggle to understand the point of cooperative ventures like the EU. Some think the EU is a plot to establish control over our lives by a shadowy elite. One such is the pseudonymous Alexander Niles, whose latest book on Europe I was asked to review. But it was so paranoid as to be unreadable by somebody not already in sympathy with that way of thinking. Cooperative ways of working seem simply to be beyond the imagination – they are either futile and ineffective, or a cover for a hidden elite, covering their tracks with lies.  And yet to many of us cooperation (and attendant compromise) is the very essence of how a complex society must operate. And the process of engagement with others often gives us energy. We are disposed to like other people rather than despise them. We are slower to condemn people as fools.

What has this to do with the EU? It is in essence a cooperative organisation, of course. That gives it permission to exist in the view of cooperativists, but it does not necessarily justify it. There is something about freedom of movement, and the right to go to another part of the continent and take many of our civic rights with us – or invite people from other parts of the continent to join us- that we like. We feel this openness is the surest path to human progress. It expands our horizons. And European-ness is part of our identity – it is particularly useful in setting us apart from Americans, that nation of individualists whom we struggle to understand.

If the polls are to be believed, we cooperativists outnumber the individualists in Britain’s middle classes – there is a solid majority for Remain in social groups A and B. But the vote will be decided elsewhere, by people with a very different outlook. Traditional working classes, a dying breed, but with a substantial hinterland of retirees and victims of economic advance, are disposed to vote to Leave. The arguments and passions of the middle class Remainers will cut little ice. They are not culturally adventurous; freedom of trade and movement seem more threat than opportunity.

I suspect that the decision rests a new working class of service workers, whose jobs are often insecure, but for whom opportunities remain. I’m thinking of the “new affluent workers” and “emerging service workers” from Mike Savage’s recent book on class. These are more culturally diverse and adventurous than the traditional working classes, but less secure than the middle classes. They may worry that free movement of people is a threat to their job security or pay; they may also fear the damage that the disruption of leaving the EU is likely to wreak, even if it is only for the short-term.

We, the divided middle class, rehearse our arguments about the EU in front of this decisive audience. But neither of us really understand what will make up their minds. And it really is very hard to see who will end up on top.

 

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The Brexit paradox: its strongest argument is its least attractive

I originally posted this article on Friday 25 March, but there was a problem with either my web host or WordPress or some other technical factor, which mean that although the email was sent out, and it appeared to be published on my browser, the publication never actually happened. This is the second attempt.

I have been relatively quiet about the biggest issue in current British politics: the referendum on membership of the European Union. It’s not that I don’t care – it has defined my politics for well over 40 years. It’s a feeling of inadequacy that I can say much that will heard beyond the babble. When I started this blog in 2011 I posted prolifically on the referendum for electoral reform. All I was doing was cheering along a rather small band of the already committed. No serious debate was actually taking place over the merits of the reform. I don’t want to be just another pro-EU voice that is only heard by other pro-EU voices. Alas, the remains my likely fate.

Still, I do want to engage in serious discussion of the issues, beyond the polemic. That debate will mainly be with myself, no doubt, but it is better than nothing. In this post I will to look at the economic arguments. Life will clearly be harder outside the EU, but might not that actually be a good thing? It is, perhaps, the central paradox of the whole debate.

The most commonly heard economic arguments for leaving the EU are based on three themes: the taxes the country pays to the EU budget; the weight of EU regulations; and the economic problems and slow growth suffered by other EU countries. None of these stands up to close examination. The budget contributions are the price paid for access to the market, and are payable by non-members like Norway and Switzerland for access rights; any savings made post Brexit will be balanced by costs, such as tariffs payable on imports, and loss of exports. This is a hard calculation to make, but the contributions look like small change in the bigger picture for an economy, like the British one, that is so dependent on trade. The argument that a sweetheart trade deal can be secured easily because the country has a substantial trade deficit with the EU is nonsense. That deficit is largely with one country: Germany, and the deal has to be done with 26 others too. And Germany’s support of sanctions against Russia, which were very costly to it, shows that politics trumps economics anyway, in Germany as in all countries.

On regulation it is hard to believe that things wills be much different outside the EU; much regulation will stay in order that the country is able to export goods. Those that don’t will be replaced by home-grown regulations that will be approximately as onerous. Democracy and regulation go hand in hand, and Anglo-Saxon cultures are as prone to this tendency as any other. Just try to set up a hairdressing business in the US. If the Brexit campaigners talked about which regulations they want to throw in the bin (other then fictional ones like those specifying the shape of bananas, etc.) they would quickly provoke a backlash. What they generally mean is employee rights.

And the economic problems of the rest of the EU do not stop Britain from exporting to the rest of the world. After all, one of the most dynamic of the world’s exporting nations, Germany, is at the heart of the EU.

And yet. A while ago I heard an interview on the BBC Radio 4 Today programme with British businessman Peter Hargreaves (co-founder of financial adviser Hargreaves Lansdown, with whom I had many dealings when I worked in financial services). The Telegraph report is here. He spouted a lot of the usual nonsense, waving away concerns about disruption to trade and investment, and suggesting that relations with Commonwealth countries could substitute for those with our European neighbours. It is remarkable about how disciplined and on-message the disparate Leave campaign is, so early. But Mr Hargreaves went onto say something much more interesting. He suggested that life out of the EU would be more “bracing”, and that would stimulate British society to greater efforts that would make it more efficient. He wanted Britain to emulate Singapore after its breakaway from Malaysia.

It would be easy to poke fun at this. Singapore might be a paragon to Mr Hargreaves, but the country is subject to an authoritarian regime that puts British complaints about political correctness (and state paternalism) into the shade. It is also a city-state, without the complexities that a large hinterland brings. But. Think about that persistent trade deficit with the rest of the EU, which contributes an trade deficit. Since joining the EU the country has been living beyond its means. A strong pound, strong inward investment, and drawing down generations’ worth of foreign assets has given the country an illusion of economic success. There are no doubt many reasons for this: North Sea oil, the illusions brought about by global finance, loose fiscal policy after 2001, and so on. But being in the EU has surely contributed. It has anchored the country in a wider international system that makes imbalances easier to sustain; it has been most helpful in drawing in inward investment, a key factor in supplying the country with the foreign currency it needs to keep going. Life outside would surely be more bracing.

An interesting digression from this line of reasoning is how things might have been different if Britain had been part of the Euro, since so much of the economic illusion was sustained by a strong pound. A topic for another time, except that I must point out that the Euro was brought in too late to be of any use – the pound was already too high by then.

And so the best economic argument for Brexit is this: the EU is a comfort blanket that is preventing our political and economic elites from facing up to the country’s true predicament. Leaving the EU would provoke a necessary economic crisis, but this would head off an even deeper crisis down the road. Of course Remainers will hope that the deeper crisis can be headed off by British economic reform within the EU, while Leavers will hope that Brexit will have a delayed economic impact, allowing the crisis to be headed off.

But, of course, the Brexiters cannot sustain this line of argument in public. It is a hair shirt argument, and the wider public would rightly suppose that it would be them that would wear the shirt (the “necessary price”) and the various business elites that would scoop the benefits. In fact the line that life outside the EU would be “more bracing” was distinctly off-message for the Leavers – though the consistent refusal of Brexit campaigners to acknowledge any risk of economic cost or uncertainty is their least convincing line.

Nevertheless, we supporters of Britain’s future in the EU should pause and reflect. Our relationship with the rest of the EU is not quite right. That trade deficit is a worrying sign of weakness. Too much of our country is inward looking. The paradox is that membership of the EU makes that inward focus more sustainable – and yet it is precisely what makes it is easy for so many people to contemplate life outside.

 

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To see the significance of IDS’s resignation we must look past the dead cat

My last post on the Budget took on the gorilla cliché. This time I want to talk about dead cats. What brings this on is the spectacular resignation of Iain Duncan Smith, popularly referred toas IDS, who had been the Work  and Pensions Secretary.

Is this a dead cat moment? The metaphor comes from election strategist Lynton Crosby, who guided the Conservatives to their spectacular election win last year. He suggested that if the news agenda goes awry, you should “throw a dead cat onto the table” to distract attention. The IDS episode has certainly done that. It has dominated the news for well over a day now, pushing out all other political stories from home and abroad.

In whose aid would the dead cat have been brought into play? That would have to be the Leave campaign in Britain’s EU referendum, and indeed much of the comment suggests that this issue lay behind the resignation. But Mr Duncan Smith says it is about the Budget, and how it juxtaposed tax for the wealthy with withdrawing allowances for the disabled.

But it is hard to see what the dead cat was meant to distract our attention from. The Budget was hardly a triumph, and was pretty neutral in the great EU debate. The Remain side wanted to claim a coup with regard to VAT on tampons, which has got tangled up in EU rules. But that’s small beer. Maybe the Remain campaign were plotting something. There is surely frustration about how easily the Leaves seem to be able to hijack the news agenda, but it was surely too early for a news coup. If it had been timed to coincide with President Obama’s future visit to the UK, then that would have been different.

Indeed Mr Duncan Smith is a particularly guileless politician. This lends him a certain charisma, which briefly took him to a disastrous period as Conservative leader, but his general lack of political and management skill is very evident.

Which leads me to think that he can be taken at face value this time, which is what Observer commentator Andrew Rawnsley suggests in what looks like an authoritative analysis. The referendum has created the general context of tension, but Mr Duncan Smith and George Osborne, the Chancellor, have been at loggerheads for many years. Mr Osborne tweaked his tail once too often.

Which means that much of the chatter about the episode being linked to the referendum is misplaced. It is very hard to know what its impact will be on that campaign. It’s effect on two other issues may be more significant.

The first is the fate of IDS’s pet project: Universal Credit (UC). This aims to replace a complex system of tax credits and benefits with a single scheme that is linked to income levels in such a way that incentives to work are not destroyed. This idea has wide political support, and it is the a centre piece of the government’s benefit reform narrative. But it is technically difficult to do because it depends on near real time data on income levels. This, incidentally, is the opposite approach to that taken by the Treasury, which prefers to focus its data gathering on a small number of better off people, rather than tangling with the sometimes chaotic lives of the less well off.

The technical challenges mean that the roll-out of UC is a long way behind schedule. It had really only been sustained by Mr Duncan Smith’s political capital. Now that is gone, surely the project will collapse? That will be a victory for the Treasury, but it will leave a hole in the heart of government policy. What will the government do next?

But there is a bigger issue for the government than even that. In my last post I pointed about how hard it will be for the government to force through further cuts in public spending, leaving the government’s financial plans dependent on a sudden, and unlikely, spurt of old-fashioned productivity (as opposed to the new-fangled sort that will leave tax revenues untouched). The government has a small majority. It needs political will, discipline and cohesion to push its fiscal plans through without breaking promises on tax. Mr Duncan Smith had shown that solidarity until now. The Conservatives will have to find a way to rebuild it after the referendum, probably under a new leader. That is now more difficult than ever.

Who might that new leader be. Mr Osborne looks to divisive. The London Mayor Boris Johnson probably lacks support within the parliamentary party, and has a credibility problem. He’ll lead the polls under the going gets serious. I would not rule out that dark horse: Theresa May.

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Tax is the Budget gorilla

As a rule I hate clichés. I cringe whenever I hear about a “perfect storm”. But I have a soft spot for the gorilla in the room, who is sometimes an elephant. The huge thing, obvious to everybody, but which it is impolite to talk about. In responding to Britain’s annual (OK, twice yearly) Budget I’m looking at one of them.

Britain’s Budgets are political theatre staged by the Chancellor of the Exchequer, as our senior finance minister is known, annually, or whenever there is new government. There is also an Autumn Statement, which amounts nearly to the same thing. The whole exercise is a process of heavily manipulated speculation in advance, followed by a tumble of instant reaction. All this shows how news is the enemy of information. By the time facts are known, contextualised and properly analysed the news media have long since moved on. People who try to be a bit more serious, like me, are torn. By joining the circus of speculation and premature response we get more readers and more reaction. But this is often at the cost of saying anything that is worth saying. My compromise is not to respond until after I have read the reactions the morning after.

The Budget process seems particularly farcical at the moment. The government is trying to set out its plans over a five year period, and in particular over the five years of a parliament, which in both cases means up to 2020 at the moment. This means they depend on five year projections of the economy. These projections are produced independently of the Treasury by the Office of Budget Responsibility (OBR). Without the smoothing hand of political manipulation, the five year outlook is highly volatile. Last Autumn the OBR “found” £27 billion; a mere six months later they had “lost” £56 billion. I can’t offer much help about what is going on here, except to point out that economic forecasting is a dodgy business, and this sort of volatility simply shows the absence of manipulation. It is no basis upon which to carry out serious economic planning. And yet the government says that it is doing just that. Last Autumn it used the £27 billion windfall to relax its fiscal plans. This time it was forced to tighten up a little, plus deploy a few accounting tricks to pretend that it is on course to meet tis five year target to move the budget into surplus, even as interim targets fall by the wayside.

But nobody is convinced, and nobody cares. It is far too early to worry about 2020, with so many unknowns. The critical thing is the next year, and nobody disagrees much with the overall thrust of George Osborne’s strategy. The muddle is particularly noticeable on the left. They are trying to capitalise on the fact that the government is missing its short-term austerity targets, while at the same time condemning austerity. Since 2010, the government has taken a pragmatic, Keynesian stance to fiscal policy, while pretending that it is being austere.  This means that the country’s fiscal deficit and levels of public debt are higher than pretty much any other major developed economy apart from Japan, having started the crisis in a much stronger position. That this has still meant dramatic cuts to public spending shows just how out of control the government finances had become under the previous government, as it pursued the illusory goal of Scandinavian public spending backed by US taxes. The left are still in denial about this.

So what did Mr Osborne do? Not much. There were promised tax cuts on personal allowances and higher rate thresholds. He failed to increase tax on petrol, even after petrol prices have fallen so far. There were cuts to company taxes and capital gains. I don’t approve of much of this, though many liberals do. But the impact will not be huge. He stepped up the ratchet on public spending, without being too specific, but pushing the hard decisions way into the future in the hope, no doubt, that the economy will come to the rescue. There were gimmicks and irrelevances aplenty, like a sugar tax, and pushing schools towards academy status, which I comment on in another post.

But here’s the problem. Constraining, never mind cutting, public spending is getting harder. Benefit cuts are causing anguish that even Conservative MPs feel; the ambitious idea for Universal Credit could yet collapse amid its technical problems. The attempt to drive efficiency savings in the NHS through ratcheting up financial pressure annually, a policy that predates 2010, has now collapsed. Hopes that the NHS can achieve substantial savings through re-engineering are vanishing. The ugly behemoth is unmanageable, and the reforms made by the Coalition aren’t helping. Outsourcing bits of it will not help. Meanwhile demand continues to rise. The government’s bid to reform schools finance requires a lot of extra money to placate the losers if it is not going to run into big problems. Social care is in crisis. Attempts to curb the defence budget have collapsed.

Behind this can be spied a strategic problem. Or, rather, two. The first is a growing proportion of older people, with an added demand for public pensions, and health and social care support, while dropping out of the tax base. The second is that the benefits of a modern economy are increasingly going to the richest, leaving many behind without adequate savings, and putting pressure on the social security safety net. Rising property prices are exacerbating this, burdening many younger people with huge rents and no prospect of joining the property bonanza. I could add a number of further issues which suggest that the days of easy economic growth are over.

So demand for public services is rising, but the tax base is shrinking, or at least stagnating. There is a substantial current account deficit, which limits the scope for creative government finance (like “people’s QE) we need lots of foreign currency to buy the all those foreign goods we depend on. There is really only one way out. Taxes will have to go up, and not just on the richest. That means the sacred trio of income tax, national insurance and VAT. But nobody talks about this. Not even the opposition parties.

And that is the gorilla.

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Tim Farron sets about changing the Lib Dems

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Tim Farron is proving a decisive leader of the Liberal Democrats. The party is in a poor way. It languishes at about 6-8% in the opinion polls, and its doings are almost entirely ignored by mainstream media. Whether he is able to save the party remains to be seen; but he is certainly making his mark.

This struck me forcibly as I attended the party’s Spring conference in York last weekend. The most dramatic development there was the adoption of a motion on ensuring greater diversity amongst the party’s elected representatives. This has always lagged behind the party’s rhetoric. Dominance by white middle class males remains largely undisturbed after decades; even the Conservatives manage better. Some of the stories put about by female activists show the party in quite a shocking light, with discriminatory questions and petty harassment widespread (though I have to say that I haven’t seen it in cosmopolitan London – but maybe it isn’t the sort of thing I register). The only proven way of breaking this is positive discrimination, with the use of quotas or exclusive selection contests. This has been proposed many times in the party’s history, always to be knocked back by the conference as illiberal.

Tim meant to change that this time. He supported a motion that imposes all-women shortlists for replacing any MP that stands down, and at least one other more winnable seat in each region of the country. Local parties are mandated to apply all-women or all-disabled lists more widely. Positive discrimination for ethnic minorities is a lot harder legally, but the party is meant to push matters as far as it can. Having thrown his weight behind the idea, and, importantly, spent considerable effort in persuading key people in advance, he secured the change by an overwhelming majority, notwithstanding many eloquent speeches against.

That is quite an achievement. It is not beyond the bounds of possibility that if the party has a moderately successful general election next time (say raising its tally of seats from the current  eight to twenty or so), it could become 50% female in one sweep. Tim has already shown he means business by having more than 50% female and 10% BAME in his shadow cabinet, if it can be conferred such a grand title. Whether you approve of it or not, this is decisive leadership.

On policy too there is an evident change, led from the top. He is following a “core vote” strategy by picking issues that are likely to motivate core supporters, rather than the general public. The leadership supported motions against fracking and in favour of legalising cannabis at the conference. In his closing speech Tim supported the accommodation of refugees, backed the junior doctors in their dispute with the government, and opposed laws designed to make life easier for the security services to gather personal information. This is all crowd-pleasing stuff for liberals that a party with ambitions to govern would struggle with.

A third element of Tim’s strategy is more strategic. He is promoting community politics – which means the party’s activists cultivating contacts with their local communities and facilitating solutions to local problems. Related to this he is trying to promote policies that support small, locally based businesses. The party at large likes this in theory, but often lacks the understanding or appetite to put these ideas into practice. It pushes political activists way out their comfort zone and forces them to deal with real peoples’ problems, rather simply sounding off amongst the like-minded – which is, of course, why it is such a powerful idea if it can get going.

As with all strong leadership, this is taking risks. The diversity ideas have put quite a few people’s backs up, and may hasten the departure of many older hands who run local organisations. As one such I always feel weak after being lectured by assorted conference speakers about how local parties need to be made to do this, that and the other – and I support them. That is no bad thing in itself, but will enough younger and more willing people come to take our places? The collapse of much of the party’s local organisation will no doubt be hastened. With the paid part of the organisation also in free fall, and with the regional layer dependent on a small number of usual suspects, this is going to be hard going. The party will need to develop online networks and non-geographical interest groups to compensate for the hollowing out of much of its organisation. The push on diversity is hardly the cause of this hollowing out, and one day it will even be part of the solution, but it will make things worse in the short run.

The liberal populism is also risky. Some of the ideas are probably ahead of their time, like more liberal drugs laws perhaps. The world will catch up and the party will get kudos. But others will look plain nuts to most people. It’s lovely to help refugees, but won’t it just encourage more to take to boats and get drowned? Or just divert developing world entrepreneurship towards people-smuggling? It tends to reinforce the public’s fear about liberals – nice but too soft to be given real power. I think a lot of the party’s ideas on privacy may be backward rather than forward-looking, too. All this risks leading the party up the same old blind alley which it took in Charles Kennedy’s (much less vigorous) leadership – which means that if it enters government it will be accused of betraying its principles. Tim ran into bumpy waters himself when he decided to support the government over bombing in Syria. He risks more of that sort of thing. A broader fear is that “core vote” in fact equates to “middle-class”, and the party cuts itself off from working class support.

Community politics should counter these problems. It is a very good way of involving and empowering working class people, as well as showing that the party can deal with, tough, practical problems. It is Tim’s strongest suit, after the idea has been systematically neglected by his three predecessors. The danger is that he finds himself unable to deliver on it, as activists prefer sounding off in blogs and social media to helping to create a thriving environment for local businesses.

But the party must take risks. I admire the way Tim is trying to take the party by the scruff of its neck. He is working out much better than I feared. The unpredictable world of British politics may yet throw the party the lifeline it needs to make a comeback. The progressive destruction of the Labour Party makes that look a distinct possibility. And if it does, the party will be a different thing to the one that embarked on coalition government in 2010.

 

 

 

 

 

 

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The speech I would have given at #ldconf

I wasn’t called to speak to speak at the economics debate. Only one speaker was picked to oppose the motion. That reflected d the balance of cards submitted, apparently. This is what I was planning to say:

What on on Earth am I doing? Vince Cable is one of my heroes! He is one of the few economically literate people in British politics. How can I oppose a motion that he has proposed so eloquently? And a motion with so many worthy sentiments in it. It’s like voting against motherhood.

Well maybe that’s the problem. The party at this point in the political cycle needs  a serious motion on economics to do one of two things.

First it could set out a clear but simple vision that shows what the party stands for and who we are. It could pick up themes such as green growth or local enterprise.

Or it spell out specific policies. Things that can be put in a manifesto, or, Heaven forbid, a coalition agreement.

But the motion has no clear organising theme. Vince’s speech helpfully offered us four. But not the motion we are being asked to adopt. As originally published it had 10 complaints about current government policy, and no less than 15 themes for Lib Dem policy.  From my Conference Daily I see that it has grown. It truly is no hobby horse left behind! Where on earth is the clarity and vision in that?

Amendment one does try to build a green theme, which improves the motion, and I support it. But it cannot save it.

And neither does it help create detailed policy. Each of those 15 proposals needs a debate of its own.

This motion is neither fish for fowl.

Conference, you could take the easy option. You can vote it through, and let it be instantly forgotten. For that is the only fate that can await it. But is that what you really want for the first motion under One Member One Vote? No. You can be brave. Throw it out and send a signal that this conference means business.

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Neither fish nor fowl, why I will oppose the economics motion at #ldconf

This weekend the Liberal Democrats meet for their Spring Conference. To most observers of the political scene, this is an irrelevance. But with the growing gap between Labour members and the general voting public,  and the Conservative Party riven by splits on Europe, who knows what opportunities might arrise for the party? I still care about it, anyway.

The party is rebuilding itself after the five year car crash of coalition government ended last year with it being reduced to near irrelevance in the House of Commons. And that followed five years of rather gentler decline after its peak year of 2005. The party conferences are an opportunity for members and leaders to decide what the revitalised party stands for.

One complaint after last year’s meltdown was that the party was weak on economic policy, and so let others set the agenda. No doubt that motivated the submission of a motion on the economy as the first item of policy business on Saturday with just an hour’s debate. Alas the motion plumbs the depths of awfulness.

I can’t find a neat link to it, so I will reproduce it here in full below, so you can judge for yourself. But with its 10 whinges about the current situation, and 15 proposals, I’m not sure I would recommend a close read. It is mostly unobjectionable. It has some worthy ideas, and some airy aspirations. Item 11 od the 15 reads: “Addressing inequality through a renewed commitment across Government and society to analyse and address Beveridge’s Five Giants in modern society.”

In some contexts a list of 15 rather disconnected policy ideas is not a bad idea for a policy motion – for example if the party was planning to negotiate a coalition programme from a position of strength. This is hardly the context now, and even then it fails. Just what would you do with a commitment to tackle the Five Giants in a coalition negotiation? Instead all such a long list of vague ideas serves is to offend people whose own hobby horses are left out of the 15, or are underrepresented, or given too low a prominence.

What the party actually needs from a debate on economics at this stage in the political cycle either of two things.

The first thing it could do is set out a very limited number of general themes, around which to hang more detailed policies. These need to display a bit of vision, and show  what the party is all about. I suggested a few last year: green growth, small is beautiful (or greater diversity and innovation, if you will), problem-solving public services and addressing inequalities and imbalances. It would not be hard to do better than that, and any debate would say something about the party’s values and campaigning priorities. I can find no such clear general themes in the motion. Worse, I am rather shocked to see so few references to environmental sustainability in a party that used to pride itself on environmental consciousness – that alone is reason enough to vote the motion down.

The second thing it could do is develop a particular economic idea or solution to a specific economic problem. There are plenty of places where this needs to be done: investing for green growth; tackling the housing crisis; free but fair trade; taxing businesses. Or the role of fiscal policy in economic management, though the chances of getting a rational debate on that area in a left of centre political party are slim. This is actually where the heavy lifting needs to be done, and where the Lib Dems can make a substantive contribution to the wider political debate on economics.  The real world of democratic politics is evolutionary; revolutions fail. What is needed is a series of practical changes, each of which will works on its own merits, and which collectively will amount to radical change. The motion does point to some specifics, but each of its 15 proposals needs to be picked apart in a debate of its own. Instead we have a series of vague and useless commitments.

And as a result the motion is a complete waste of time. Much hope seems to be being placed on amendments. But unless these are allowed to replace the motion with an entirely new one, which would be an abuse of process, I can’t see how it can either be turned into a general vision or a specific economic proposal. It is neither fish nor fowl.  The best thing to do with it is to throw it out and start again.

Conference re-asserts the Liberal Democrats’ continuing commitment to sound public finances, social justice, an open economy in an open society, and the principle of free markets whenever possible with intervention where necessary by an enabling state.

Conference notes:

a) The Liberal Democrats’ effective record in Government in stabilising the public finances and major contributions in the fields of apprenticeships, banking regulation, the British Business Bank, the Green Investment Bank and the promotion of innovation through the Catapult network.

b) The fragile nature of economic recovery following the 2008 crash, evidenced by interest rates which are historically low and continued Eurozone uncertainty.

c) The growth of house prices carrying the threat of a price bubble and subsequent crash.

d) The Chancellor’s unhelpful and arbitrary re-definition of the deficit, doubling the total by including capital spending, in his attempt to justify Tory spending cuts.

e) The medium-term risk to the UK economy posed by increasing and unsustainable private and household debt.

f) The threats to the UK economic prospects posed by Conservative approaches to UK membership of the European Union and immigration.

g) The International Monetary Fund’s advice to reduce debt through growth not cuts.

h) The UK economy’s over-dependence on London and the South-East.

i) The UK’s bad record in allowing the growth of an increasing number of young people with low levels of education, training and aspiration.

j) Growing inequalities in wealth and income, coupled with unfair and regressive action against the poorest people in the country, now exacerbated by the assault on welfare spending.

Conference calls for effective measures to support and grow the UK economy, including by many established Liberal Democrat policies:

1. Increased investment, both directly by Government financed by public borrowing, and stimulated by Government, particularly in affordable housing including social housing and infrastructure to support balanced growth throughout the UK.

2. Support for planning reform, institutional lending to small builders and action by local authorities for planned development, including assembling land for auction.

3. Further measures to improve and regulate banking services by promoting efficient lending, particularly to small and medium-sized enterprises, encouragement of challenger banks and increased personal accountability.

4. Strengthening takeover legislation to protect the country’s science base.

5. Reversing cuts in the development of green energy and promoting investment in green business initiatives.

6. Further development of the Government’s industrial strategy, promoting co-operation and supply chain development in key sectors for the long-term.

7. Re-balancing the economy towards manufacturing industry and regions, based on the coherent and substantial devolution of political and financial power.

8. Further reform of corporate governance to encourage ‘long-termism’ and to discipline executive pay, including an employee role in determining executive pay.

9. Renewed emphasis on vocational education and training, particularly through effective apprenticeships and especially higher-degree level and engineering and construction apprenticeships.

10. Coherent efforts across Government Departments to address the needs of young people who are excluded from the labour market and participation in wider society.

11. Addressing inequality through a renewed commitment across Government and society to analyse and address Beveridge’s Five Giants in modern society.

12. Investigating sustainable ways of funding universal services, including a cross-party, cross-society settlement on funding health and social care.

13. A new commitment to taxing unearned wealth, including Land Value Taxation.

14. Measures to dampen the growth of asset bubbles in opposition to Conservative approaches which tend to increase that growth.

15. Support for more diverse ownership models including worker ownership, social enterprise, mutuality and co-operation.

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