Is it really only Wednesday?

The past two days of accusations, counter claims and u-turns have left this observer feeling weary, questioning the abilities of press officers, but growing increasingly excited about the upcoming twists and turns in this campaign.

Whilst most of the country was only interested in a great British (Scottish?) triumph at the Australian Open; we were instead to be found spending our Sunday morning watching the Shadow Chancellor’s appearance on the Andrew Marr show. George Osborne insisted he was sticking to his guns and making immediate cuts to reduce the national deficit.

But it appears someone forgot to inform him that David Cameron had other ideas. Perhaps that trip to Davos really had been transformative.

For later that morning, appearing on the Politics Show, Big Dave wanted to reassure the public that his administration would not implement any “swingeing cuts”. So who had gone off script we wondered? Labour and the Lib Dems jumped on the conflicting messages, accusing the Tories of a u-turn.

We arrived into the office on Monday with news that Labour HQ were going to let their “James Bond” loose to capitalise on the Conservative confusion.

And so Lord Mandelson summoned the city’s hacks to Victoria Street for a round of Tory bashing. Expecting the usual assured performance, our suspicions were first raised when the press release for the event was released. It seems a few more talented press officers could be required at Labour HQ if the best title they could think of was: ‘Instead of bobbing around like a cork in water David Cameron should level with the British people – Mandelson’.

Not exactly snappy.

Liam Byrne and Yvette Cooper stood meekly at the side of the stage, before Mandy glided to the podium and addressed us.  Osborne and Cameron – or Laurel and Hardy as the dark Prince coined them – were guilty of confusion and delay, he warned. The Tories, he said, very slowly and with a strange glint in his eye, would “strangle the recovery at birth”.

Quite the phrase.

Then he went and ruined it. Because Mandy decided the hapless press officer who had coined the clunky phrase was worthy of a mention, and so he publicly called Big Dave “a cork”. Yes, a cork. Followed by a turn as Anne Robinson in which Mandy suggested Cameron remove “his weakest link” (Osborne obviously, do keep up). 

Not the greatest performance by the First Secretary of State. A little too hastily arranged we agreed.

But it had stung the Tories. They used Twitter to mysteriously announce they would be fighting back later that day. When asked what was happening, no one seemed to have much information.

Possibly because the ‘Labour cuts’ campaign they launched later that afternoon wasn’t exactly brimming with new ideas or too much detail.

More was needed. Philip Hammond was allowed do some interviews, but it was not enough.

George would have to go face his critics it was decided. So they sent him to the British Museum the next day to explain his ‘eight-point pledge’ on economic policy. He was going to make Britain a nation of savers, he told us. How? Well the detail would be sorted out later. He was going to invest in green technologies, high-speed rail and broadband. How would he pay for this? All would be revealed at a later date. Hmm. Okay.

Lord Stern was going to advise them he announced. Oh no, actually later that day he was at pains to point out he would not.

“Judge me against these benchmarks”, George cried. Perhaps if you provided us will a little bit more detail we could. If Mandy had seemed a little flat on Monday, the Boy George was positively prancing with nerves on Tuesday. Never the most convincing of public speakers, this turn was proving particularly difficult for him. With half of the Shadow Cabinet also in attendance, at one point he begged the press pack to ask them a question and give him a break. The scent of blood was in the air and poor George floundered as he sought to convince us there had been no conflicting message, no disagreement and certainly no change in direction.

So its been quite the interesting start to the week. A completely lacklustre performance by Mandelson but he still managed to outshine Osborne who is beginning to show the strain more and more as we edge closer to polling day. 

 Oh and the Lib Dems have not escaped unscathed either. Vince Cable’s reaction to the debacle was to suggest that Osborne’s benchmarks were “motherhood and apple pie politics”. Have the parties got any decent press officers between them?!

An easy guide to reducing poverty

 

I have a sure fire way to reduce poverty in the UK. It would be quick. It would be cheap. And it would involve not one single human right being violated.

My simple idea would probably end poverty in time for next Christmas. And best of all it would mean handing more than £100billion back to the taxpayer. We don’t need to kill anyone. We don’t need to massage the figures. We don’t need to rob from the rich and the wealthy and give to the poor.

I’m not even talking about some insane judgement of what poverty. I’m talking about standard poverty. I’m talking about all those people on less than 60 percent of the mean income in the UK.

Indeed I much prefer the quite sensibly weighted, and widely used measure of poverty that only counts disposable income after income tax, with housing costs are stripped out as well.

www.poverty.org.uk has an excellent explanation of this measure, and how the weighting works. But put simply it means a man living alone needs £115 a week after housing and income tax costs to avoid being in poverty, while a couple with two children need £279 a week.

By that measure a little over 20 percent of households are in poverty in the UK. And that brings me to my solution. Let’s sell off the NHS and give an equal share of its annual cost to every man woman and child in the country. Doing so would mean a hand out of £33 per week to everyone, effectively eliminating poverty all together.

Sound crazy? Well here are the figures.

The NHS presently costs us £110.5billion per year. And there are 61.4million men, women and children in the UK. That equates to a £1717 per person this year that we could save by not paying for healthcare anymore.

Meanwhile the mean annual income from which the above poverty level is calculated is £14,317.

Those of you good at maths will have worked out already that £1717 is just 12 percent of the mean income. So if we distribute it equally to absolutely everyone, the mean would rise by 12 percent too.

That means every weighted level of poverty would rise by twelve percent. So the man on his own would now be in poverty if he had less than £129 per week. The two adults with two children would now be in poverty with less than £312 per week to spend.

But think about what £33 per person does to the incomes of our two hypothetical examples.

The man on £115 percent, literally on the poverty line, would now have £148. That is a 29 percent rise that takes him well away from a poverty line weekly income of £129. To stay in poverty under my proposal he would have to be living on less than £96 today.

The couple with two children would see their income rise 47 percent from £279 to £411. Yet the poverty line for them would have risen only to £312. They would have to be on just £147 per week right now to still be in poverty under my plan.

However, I have to ask, do you see the flaw in this plan?

We would solve poverty at a stroke. We could even do to education what I’m suggesting for the NHS and add another £80billion d to the poverty beating pot. We could then means test the payouts to give more to the poor and less to the rich.

And yet those we help out of poverty would almost certainly end up far worse off because of it.

This has of course been a long winded way of saying we need to rethink poverty entirely.

We need to rethink the situation in which poverty is merely a matter of cash. After all, our reasons for thinking poverty is bad are not about cash anyway. We want an end to child poverty because poverty in our youth correlates strongly with an adulthood of drug addiction, criminality, physical and mental ill-health, worklessness, and family breakdown.  

So in poverty we take a social problem and monetarise it in a simplistic way. And that can’t be good for policy making.

For example, if the Government has to cut £10billion of spending, would you choose to cut it from the NHS or financial support for the poor? Far more importantly, would the poor be better off if it was cut from the NHS or from support for the poor.

That’s a tough question to answer. But it is one worth asking. You see, no party and no campaign group has tried to answer it.

I don’t have the resources to do so for this blog. I don’t know the cost of drug addiction to a person’s life, or of dependence on benefits. I also don’t know the extent to which those things can be attributed to degrees of poverty. But if free vocational training for children in poverty was found to better improve their future employment prospects than handing out cash, should poverty campaigners, the left, the right, and the centre not all want to know that?

An independent Scotland? RBS and Iceland suggest not

An independent Scotland? RBS and Iceland suggest not  

Alex Salmond today published Scotland’s independence White Paper. He offered his countrymen the chance to keep the status quo, take more powers to Edinburgh, take a lot more powers to Edinburgh, or leave the United Kingdom all together. Sadly for him that last option is pie in the sky.

The last year or two have been unkind to the cause of Scottish independence. The SNP won its first Scottish election victory, but only won well enough to form a minority administration. Because of that, independence has gone no further than renaming the ‘Executive’ the ‘Scottish Government’.

But while the other parties would vote down independence anyway, the SNP have made the strongest case for staying within the UK.

It seems an age ago that Scottish Nationalists could barely open their mouths without repeating the examples of Iceland and Ireland. Those were two fast growing, prosperous and independent nations that Mr Salmond and his colleagues promised Scotland would mimic. Once it was free of the imperial city’s rule of course.   

Then the world economy wobbled.

You can barely get SNP members of the Scottish Parliament to even admit Iceland exists nowadays. And that is hardly surprising. It was a small independent nation with a fast growing economy thanks to, among other things, a thriving banking sector.

Then the banks collapsed. By early 2009 Forbes was reporting foreign held national debt levels of up to 200%. Its banking assets in the UK were frozen. Its unemployment rate jumped from effectively zero to over ten percent in mere months. Eventually Iceland had to be bailed out and saved from possible national bankruptcy by a clutch of European nations and the IMF.

Contrast that with Scotland and the case for the union becomes clear. The banks collapsed and by early 2009 they were operating under effective state ownership. The UK, or London as the SNP tends to call it, was able to underwrite vast liabilities that totalled far more than Scottish national income. The banks remain in bad shape, but no one imagines Scottish unemployment will hit ten percent any time soon. Recovery, though likely to be slow, is now widely predicted and probably underway.

Then there was Ireland.

The same politicians have gone quiet about the Republic, though they are less willing to give up that example as they have little else to offer. It helps that most people know little of Ireland ’s problems as it just isn’t big news in Britain.  

But Ireland ’s example is more worrying. Iceland could be written off as one bad example where banking was too big a part of the economy, and where new cash was overspent on expensive foreign assets. That Scotland’s banking sector did the same doesn’t negate that Ireland was everything an independent Scotland was meant to be. It was fast growing, global in outlook, and even developed modern companies of world acclaim.

So, with globaleconomiccrisis.com reporting eleven percent unemployment earlier this year, and an economy still shrinking having already shrunk by nearly double digit percentages, the SNP case for freedom was in tatters.

Ireland’s case was also alarming for another reason. The public spending deficit there rose to around 14 percent of GDP without the large stimulus measures seen in the UK. The rise was primarily a result of falling revenues and higher benefit costs. Indeed the price of servicing Irish debt has also risen recently, along with many other small European countries, as the risk of default is emphasised by Dubai World’s turmoil.

In the UK meanwhile, we have similar deficits, but with a great deal of that allocated to initiatives to keep the economy moving, keep people in jobs, and to keep a rather large Scottish bank afloat.  

And that leaves the long term problem of public spending north of the border.

According to the IFS, annual per capita public spending is £9,162 in Scotland. In the UK it is £8,219. So Scotland spends 11 percent more per head than the UK average.

The trouble for an independent Scotland is that Tax in the UK is raised universally, not at different levels in different regions. So to make up the difference Scotland would have to hike up taxes, or cut spending by eleven percent. That would get the deficit down to the UK’s present 14 percent. And that would only be enough if the Scottish tax take matches the average for the UK as a whole. Given our London centric economy even that assumption seems generous.

Likewise, with ongoing trouble in the world economy, and the high prices of debt for small countries, Scotland may face higher servicing costs on it’s share of the UK ’s £800billion accumulated debt.  Its population is eight percent of the UK ’s so it might be expected to take on around £70billion of that debt for itself.  

At least it seems unlikely the British would be quite so cruel as to give Scotland its share of the banking liabilities as well, or worse still all those losses associated with RBS.

So should Scotland go independent? No, clearly it should not. There might be a time when it is in fine shape and has a fair wind behind it. But that seems further away now than at any point in my lifetime, or Alex Salmond’s.  And the Nationalists probably know it.

Hence the three other options in the White Paper.

Will the real Shadow Chancellor please stand up?

Philip Hammond launched Conservative plans for public service reform on Friday. The announcements received some press coverage, yet one of the most interesting aspects of the morning appears to have been ignored.

Luckily Westminster Village was part of the packed audience at the Policy Exchange event, because the Shadow Chancellor did something very interesting. To our reporter it almost sounded like an admission of his limitations. It might even have been an acknowledgement that the heir apparent to the Osborne baronetcy may not be entirely suited to the role of Chancellor-in-waiting.

The previous day an invitation had been sent to the great, the good, and us, announcing that the Shadow Chief Secretary to the Treasury would be launching Tory plans to ‘do more with less’ at the right-wing think tank. The invite added that George Osborne would be introducing Mr Hammond.

Intrigued at the prospect of the Shadow Chancellor playing a bit-part role in a launch designed in part to overshadow leaked reports of the government’s work on the issue, we went along – curious to hear what the Boy George had to say.

Sweeping into the room Osborne took his place at the podium and provided us with a short summary of his conference speech. Again. Thankfully there was no repetition of the Disney-lite catchphrase reminding us how “we’re all in this together”.

Usual spiel over with, the Shadow Chancellor had a complaint to make. Labour, he said, had completely downgraded the role of Chief Secretary to the Treasury during their time in office. All of this would change under his reign, he pledged.

To what extent, we wondered.

Well, George told us, Philip Hammond would be at the heart of the Treasury. His role would be “one of the most important” in government. A quick grin and George took his place in the front row to allow Philip cover what mattered most after the buzzword-filled opening. The detail.

So had George admitted what we presumed all along? That he would be the one holding the red box and grinning inanely for the cameras whilst Hammond poured over the figures and hatched plans to restore Britain to more halcyon times.  

The speech was somewhat light on specifics beyond the ‘transparency, efficiency and culture change’ the party pledged to implement. The biggest announcement was the establishment of a Shadow Public Services Productivity Advisory Board which sounds more than a little similar to the PSA that Thatcher abolished.

Hammond also made some rather lofty claims that Labour had wasted £60bn a year on the public sector which conveniently ignored the state it had been reduced to by 1997.

Regardless of the issues we have with the content, what was more interesting was Hammond himself. He spoke with a confidence and competence that Osborne has yet to demonstrate.

Despite protests that he would never write Osborne’s budget for him, a telling moment followed. Using a rather stretched metaphor, he announced that he saw his role in the next Tory government as that of “ensuring that the machinery in the engine room of government is calibrated to deliver a continuous stream of productivity improvements”.

A convoluted way of telling us he was the power behind the throne? Judging by Friday morning’s performance it appears so.

Of course George Osborne’s credentials have been called into question on numerous occasions. He has also been accused of retaining the job either because of his close friendship with David Cameron or because of the sway he holds within the party due to his vast wealth and useful contacts.

There are even some who argue that Hammond is preparing to do the real work at Number 11 whilst Osborne merely ratchets up his rhetoric. And for the first time both men appear to have tacitly acknowledged there is more than a degree of substance to that.