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Posts Tagged ‘George Osborne’

Less Tax, Less Spend

In Economy, Home Affairs on March 21, 2012 at 9:55 am

By polarii for The Daily Soapbox –@polar_ii

Today is Budget Day. All Westminster is on tenterhooks, looking forward to a relatively dry state from George Osborne about the state of the nation’s finances and his plans for the next few years. Anyone who’s been vaguely following the political news, whether in newspapers, in blogs or on TV will know the key issues in this Budget. Should Osborne cut the 50% upper rate of income tax (more specifically, can Osborne survive the political backlash by pointing to more revenues)? Should we introduce a new sort of wealth tax, either directly on wealth or on property? Should the income tax threshold be raised, and by how much?

I’m going to leave most of the economic arguments to one side and look at three political shifts since the last Budget.

1) The Liberal Democrats no longer have much influence at the Treasury

This year, the Liberal Democrats decided to make their positions on the Budget public. Essentially, they conducted Budget negotiations in full view. This has turned out to be a poor move. By tabling proposals for a mansion tax before anyone else had proposed anything, they had plenty of time to be savaged. The wisdom was once that the Lib Dems would not permit Osborne to remove the 50% tax rate without a huge concession like a mansion tax. Now, all it looks like Osborne will do is promise to close some tax loopholes on first homes (something he has promised to do before). Although Nick Clegg and Danny Alexander make up half the ‘Quad’ that negotiates the Budget, they have been comprehensively out-manoeuvred by Osborne and Cameron. The Conservatives are much closer to owning the idea of income tax threshold rises. They’ve avoided a mansion or property tax. The ‘Green Agenda’ has almost vanished from view. Unless Osborne surprises us today, there will be very little the Lib Dems can claim as their handiwork in the Budget.

2) VAT is off the table

Remember the heady days of 2010? The UK had its first Coalition government, Clegg and Cameron were making happy love in Downing Street’s Rose Garden, and George Osborne presented his emergency budget. In it, of course, he raised VAT to 20%, much to the consternation of the Labour party. Labour still want to reverse it, but only temporarily (at least, this is what they’re five-point plan says). Given that VAT is a regressive tax (the poor pay a greater share of their income in VAT than the rich) and it’s a tax on consumption (i.e. buying things), you would have thought that there would be widespread consensus against it becoming higher with a stagnant economy. However, someone has clearly won the argument for it – whether it’s the extra revenue it brings in for comparatively little impact on people’s pockets or the need to rebalance the economy away from consumption and towards production – and now Labour backs, in the long term, the 20% rate. It’s a U-turn they have managed with considerable deftness. But no-one is seriously suggesting cuts in VAT. Osborne’s won the major tax policy battle of the 2010 Budget with comparative ease. Perhaps this has emboldened him with the 50% tax rate?

3) No-one wants to talk about the cuts

As we know, this government is cutting. There are arguments about whether it is cutting too much or not enough, too fast or not fast enough, whether its cutting in the wrong place etc. George Osborne enjoyed a surplus of about £5bn since his last budget, meaning he has cash to throw around. And everyone seems to want him to throw it at tax cuts of one sort or another. Admittedly, in the grand scheme of things, £5bn is not a huge amount of money. It’s 1% of government expenditure, worth about somewhere between a half and a third of the international aid budget or maybe 1 in every 40 pounds spent on welfare. But there are certainly things Osborne could do with it. He could reverse the planned 20% cut to the non-means-tested disability benefit DLA (a cut which, incidentally, there is absolutely no evidence to suggest is desirable or sustainable) – this is planned to save just under £2.2bn. Admittedly, Osborne cannot do much with regard to reversing his cuts. But he could use the option to do something totemic but relatively inexpensive. Such as preserving the DLA budget as benefits for disabled people are reformed. But again, no-one is making the case for public spending cuts to be reversed over tax cuts. Maybe this is because people enjoy the idea of a tax cut more than they enjoy the idea of disabled people having enough money to live on, but this is perhaps too cynical a view. More likely is that everyone sees Osborne’s mandate is now so closely tied to the cuts set out in 2010’s Comprehensive Spending Review that going back on one element, no matter how good the arguments for going back, will fatally undermine his credibility.

What we can see then is this: Osborne’s Budget 2010 has shaped today’s political landscape. The direction he took in that Budget meant that any discussion about any other Budget before the 2015 election would be about tax and not spending. The Conservatives, as a low-tax party, will always enjoy the advantage over Labour and the Liberal Democrats when it comes to cutting taxes; just as Labour, a high-spend party, will always have the advantage when talking about spending. Perhaps this is why Miliband and Balls feel so out-of-place this year, with the Shadow Treasury Team reportedly having no comeback to Osborne despite practically knowing  his Budget in advance: Osborne has simply moved the debate onto territory with which they are completely unfamiliar and profoundly uncomfortable, and they cannot wrest the narrative away from tax cuts to spending cuts. 

In the long term, of course, Osborne’s reputation is tied to whether Budget 2010 works in the long term. But there are so many factors beyond his control in that consideration that there will be plenty of wiggle room if it doesn’t work. The strategic victory Osborne has brought about is actually to move the debate away from where New Labour had it (i.e. on what do we spend more money) and towards where the Conservatives want it (i.e. what taxes do we cut). If the tax cuts in Budget 2012 are well-chosen, Osborne can entrench this attitude. And that entrenched attitude will be the greatest asset for the Conservative party come election time in 2015.

House of Cards (and Liberals)

In Government Spotlight, Home Affairs, Parliamentary Spotlight, Party politics on July 30, 2011 at 12:13 am

By polarii for The Daily Soapbox

With silly season on the horizon,will David Cameron and Nick Clegg take, like the Daily Soapbox, a new layout?

KEY: Name, Position, Party, Likely Movement: Comment

David Cameron, PM, Con, No Change: The only chance of movement here is personal tragedy or palace coup. Neither seems likely; having led the Conservatives back to government, and seeing their vote hold up in the polls, and being rated highest of the three party leaders, any dissidents in the party will likely be quelled. Read the rest of this entry »

Ed, show us the alternative

In BBC Question Time, Government Spotlight, Home Affairs, Ideology, Party politics on April 6, 2011 at 7:21 pm

By James Bartholomeusz

Audience responses on the BBC’s Question Time usually range from the mildly interesting to the banal, providing little more than an identification of which panel member the viewer most aligns with. However, once in a while, someone says something so original and yet so obvious that it merits serious consideration. Such a thing was said on last Thursday’s episode: a woman, chosen by David Dimbleby to speak, asked why Labour, if it’s so committed to the alternative, doesn’t pen a Shadow Budget to lay out their alternative deficit reduction plan.

The panelists response to this was painfully predictable. Diane Abbott, as the Labour representative, spluttered something about it being nonsensical four years before an election, whilst Mark Serwotka, the head of the PCS union, repeated his tenuous claim that there is no necessity for any spending cuts whatsoever. And yet this idea of a Shadow Budget, levelled by someone so lowly as to not be a professional economist or politician, is one that, I think, should be adopted by the Labour Party without hesitation.

The current debate on the economy, both national and global, has lined up between the two foremost schools of economic thought: neo-classicalism and Keynesianism. The neo-classicalists, inspired primarily by the 19th Century economist David Ricardo, see budget deficits as dangerous and immoral: according the Ricardian equivalency, any national deficit between income and spending (the UK’s being approximately 10% of GDP) is just taxation deferred for future generations. By radically cutting public spending to balance the deficit (‘expansionary fiscal contraction’, or, in Cameron’s terminology, ”rolling back the boundaries of the state”) neo-classicalists believe that the private sector will be freed from taxation and competition with the public sector to drive the economy back to prosperity. Keynesian thought, meanwhile, led the original response to the financial crisis, bailing out the banks and implementing fiscal stimuli to drive the economy quickly out of the recession. Now out of the immediate danger zone, Keynesians, such as Robert Skidelsky and Joseph Stiglitz, do not dispute the need for eventual deficit reduction, but are concerned that a premature fiscal contraction underestimates how much the private sector relies on the public sector, and so will drop the UK economy back into recession. Instead, Keynesians argue for fiscal policy based on growth and investment to stably harbour the economy, whilst slowly but steadily cutting the deficit.

This is the debate which, since the initial crisis response, has been mapped on to British party politics. Last May, both the Labour manifesto was based on the Keynesian response, whilst the Conservative one was neo-classicalist, and the Lib Dems in between but Keynesian-leaning. At least partially on these grounds, the majority of commentators predicted, before the election, a Lib-Lab coalition in the event of a hung parliament. And a hung parliament we had, except that the Lib Dem high command, vested with the choice of how to form the next British government, elevated David Cameron’s Tories over Gordon Brown’s Labour. Now in government, Clegg and his allies have apparently been won over to the neo-classicalist, and by extension George Osborne’s, fiscal plan: to entirely eliminate the deficit by the end of the parliament through a 73:27 ratio of spending cuts to tax rises.

All the evidence suggests that Osborne’s economic management so far has ranged from lacklustre to abysmal. The Office of Budget Responsibility, set up by the current government, has downgraded its growth forecasts from 3-3.5% to 2.6%. Unemployment is still rising, now at a 17-year high, with one-fifth of all young people unable to find a job. Inflation is at 4%, the highest in 20 years. The Consumer Confidence Index was last measured at -29, the biggest drop since 1994. Even the mainstream centre-Right newspapers, which had previously praised the Chancellor’s conviction, have now turned their attention more to the human costs of deficit reduction than the stability it will ostensibly bring. Osborne’s attempt to blame poor economic performance on heavy snowfall over December fooled no one: the US, German, French and even Spanish economies grew by over 0.5% in the last quarter of 2010, whilst ours shrunk by more than 0.5%. The problem is, what is the alternative?

Ed Miliband’s Labour, having dithered in the autumn months, has now settled on maintaining Alastair Darling’s plan of halving the deficit in a single parliament. With Ed Balls as Shadow Chancellor, this position has now been confirmed. Labour has since busied itself with rebuking the Tory-led government on its choices for deficit reduction: the VAT rise to 20% (predicted to cost families with children £450 extra in 2011), the rise in higher education fees, and front-line cuts to public services have been particular targets of the Shadow Cabinet. But Labour has yet to commit to what it would cut, or which taxes it would rise, were it currently in government. Although exactly how much would have to be cut under Labour’s plan is unclear, Miliband and his colleagues have so far sidestepped the sticky issue of what their ‘alternative’ would actually entail. It is this, more than any other factor, which will cost them electoral support.

I marched, carrying a Labour Party banner, alongside up to half-a-million others in London two weeks ago. And yet, will Labour’s reticence to commit to a specific deficit reduction plan, I am losing faith that there is a credible alternative to the government’s plan, however badly executed. A YouGov poll conducted on the same day found that the majority of the population, 52%, now supports the campaign against public sector spending cuts. But Labour should not fool itself that, just because it happens to be in opposition to an unpopular government, it will automatically gain the support of the electorate. This was the mistake made, in the last two decades, by both Kinnock and Cameron; 1992 resulting in a narrow Tory victory, and 2010 in a hung parliament. Labour should pen a Shadow Budget, laying out exactly which cuts and tax rises it would make. Ed Miliband has rightly sounded the death knell of New Labour and embarked on a holistic policy review, refusing to make manifesto commitments before the cuts have really started to affect the nation. But reconstructing its economic credibility needs to be the party’s top priority, and Miliband cannot afford to be haunted by the ghost of Gordon Brown any longer.

Libya: Winners and Losers

In America, Europe, Events, Foreign Affairs, Government Spotlight, Parliamentary Spotlight on March 23, 2011 at 7:40 pm

By polarii for The Daily Soapbox

The no-fly zone is up-and-running after a tense few weeks of events in Libya and tough diplomacy. The events that have led up to UN Resolution 1973/2011 have been complicated, and they have had political impacts on both individuals and nations. This isn’t as complete or detailed as it could be, but it includes some of the major movers, particularly in the UK. This was written shortly after the no fly zone was implemented, and the flow of events may have altered some of the analysis here.

Col. Moammar Gaddafi: Has fared badly in international eyes, most recently breaking a promise of ceasefire, but generally sounding rather detached from events, and indeed reality. However, in Libya, the picture is split; he’s managed to maintain popular support in the capital, and defections from his cause have not damaged his capacity to deploy aircraft and heavy weaponry. He still retains some loyalty, or some visage of terror, or both among the Libyan people. Anti-Imperialist rhetoric may play well to the people of Libya, but in rebel-controlled areas, there seems no evidence of this. He may take some pleasure from the fact that no-one in the English world knows quite how to spell his name.

UN: Despite questions whether a UN resolution was needed to impose a no-fly zone, all the countries involved chose to go through the UN. This will raise its damaged status as a body, and also encourage further interventions to be cleared through it. Resolution 1973 has been called a watershed for what the UN could hope to achieve in further crisis, as and when they arise in the Middle East and around the world. There are, however, questions as to what actions the UN will be forced to take in other countries this year, such as Bahrain.

USA: Has remained aloof and silent for much of the crisis, but eventually fell on the side of those calling for a no-fly zone, which added much weight to the case for intervention. The rebel faction in Libya seems well pleased with the decision to intervene, and some of this goodwill will rub off on America. The surreptitious transport of weapons across the Egyptian border to the rebels, quite probably at US instigation, will also have improved America’s image. However, in the broader international community, the country’s slow and cautious action will contrast with its previous history of reckless and large-scale intervention, and this has vastly improved its standing.

Barack Obama: Has taken a cautious approach, and has seen little change in his standing. Many in America would have wanted action more quickly; however, he secured a UN mandate and eventually delivered action. Prolonged silence had previously risked undermining the influence and leadership the President of the USA is expected to wield, but the silence and the risk was ended by his forthright support of UN Resolution 1973.

John McCain and John Kerry: Both these former American presidential candidates were vocal and early advocates of a no-fly zone, and now that it has come about, their gravitas has been augmented as they have been seen to give the right policy advice to the White House, which was eventually taken. Although this represents a coalition of opinion between a leading Republican and a leading Democrat, their influence is unlikely to secure a more consensual Congress for the rest of the Presidential term.

UK: Negative reports were abound concerning the previous government’s close relationship with Libya and the poor contingencies put in place to evacuate British nationals. These were compounded by what seems to be one of the worst special operations missions in recent history. However, international leadership on the no-fly zone will have regained some of the nation’s democratic capability. A broader debate regarding whether the UK has the requisite military capacity to sustain a lead role in the no-fly zone has died down, but will weigh heavily on the minds of MoD staff.

David Cameron: Despite all the above, he has risen to the challenge of mobilising many reluctant countries to support a no-fly zone, and many in his own party and country. His campaign has been high-profile and high-minded, avoiding some of the dissent said to be at work in his cabinet. The no-fly zone will reflect well upon him.

William Hague: Blunder has followed blunder, from ill-advised comments that Gaddafi was on his way to Venezuela to poor management of aircraft and special forces. Although many from his party gave him plaudits for his work with UN delegates, his position is more precarious than it was, his aura of competence rather tarnished.

Douglas Alexander: Hague’s shadow sensed opportunity in his blunders and attacked him at every turn. However, if Hague now has egg on his face, Alexander now has boiled eggs on his face; his opposition to a no fly zone has led to an embarrassing and high-profile U-turn; though the damage to Labour does not seem to be too great, Alexander’s almost impeccable reputation is now bathing in the mud.

Michael Gove, George Osborne and Liam Fox: The most vocal advocates of intervention, along with William Hague, have won over the government and the Commons. Their standing in Cabinet will be increased at the expense of those opposed to intervention. In particular, Liam Fox is well placed to argue for fewer cuts in his budget, and since Osborne is on his side, it would not surprise me to see more money channelled towards defence at the budget after next, particularly if there is a windfall.

Bob Stewart: This mostly unknown Conservative MP (Beckenham) has become increasingly prominent due to his experience as a military commander in Bosnia, where a previous no-fly zone has been implemented. His expertise in this area has undoubtedly swayed government and international opinion, and he is likely to receive a ministerial portfolio before long, especially if he continues to sound so authoritative during interviews.

France: The Republic suffered embarrassing revelations about its foreign minister in the Tunisia crisis, but a quick sacking, a trial of a former President, and a well-managed evacuation managed to submerge most of the opprobrium. Meanwhile, vocal support for a no-fly zone will have won it kudos in diplomatic circles, however, undermining the EU’s nascent diplomatic efforts may in turn undermine attempts to centralise defence and foreign policy at the EU level.

Nicholas Sarkozy: Has had a good crisis, being seen to lead the world, and actually leading it. French fighter jets were the first to enforce 1973, and this show of strength will strengthen his upcoming election campaign. His name is, according to reports, being chanted on the streets of Benghazi, and the Guardian suggests that his handling of the crisis has saved him from electoral ruin.

EU: Has had quite possibly its worst crisis since the former Yugoslavia broke up. Two of its three major members have argued with the third, and it has been unable to build consensus among a Europe strongly divided on the issue. Its failure to secure the support of Malta and Cyprus for intervention will cost the coalition enforcing 1973 dearly. Any diplomatic efforts it made were largely or completely ignored, which will underline an impression of disunity and impotence; the UK and France will pursue their foreign policy almost without heed to the opinion of the EU.

Angela Merkel: Has had to balance the German public’s desire not to get involved in any foreign war with EU and US alliances. Due to an impending election, she has favoured the people’s view, and Germany abstained at the UN. Whether this will gain her many votes (coupled with withdrawal of troops from Afghanistan, she may convince the German people that she is indeed a pacifist) is yet to be seen. A good call – no permanent damage seems to have been done to bilateral relations, though any chances of diplomacy through the EU seem to be wrecked.

Lebanon: Tabled resolution 1973 at the UN, and had it carried by the necessary number of votes. A potentially clever move as it re-entrenches European (especially French) support for the embattled democracy. And the Lebanese public do not seem to mind their country inviting the US to bomb fellow Arabs.

Saif Al-Islam Gaddafi: Previously the hope of reform in Libya for the West, he has shown a ruthless streak, both handling the media with some guile and promising destruction to Libya’s enemies. Nonetheless, his political capital in the West has decreased. With his assets now frozen in most countries, he will struggle to find a way in life if the West does not make an accord with Gaddafi. His standing in Libya itself has also been harmed, as he is one of the few Gaddafi males not to be in command of a military unit, and his vision of a Libya reconciled with the West seems to have collapsed completely.

The London School of Economics: Was badly damaged when it was found that it had accepted large donations from the Gaddafi clan. Previously an institution with a reputation of spreading enlightenment throughout the developing world, it has pledged to return all the donation it can to the Libyan people, and made grovelling apologies to the government. There has already been one resignation, and another could shortly come from Shami Chakrabati, director of Liberty UK, who sat on its governing board. Harrowed appearances suggest that the folks at Liberty do not take kindly to her approving donations from sponsors of terrorism, though she denies the connection.

The Scottish National Party and the Labour Party: Both these parties curried favourable relationships with Libya during their terms in office at Holyrood and Westminster respectively. However, despite some cheap shots from some ministers, both seem to have emerged relatively unscathed from such a potentially toxic friendship. That said, Scottish voters have yet to have the opportunity to punish the Holyrood government at the polls, although it is unlikely that foreign policy will be a major factor at the elections in May.

Overall, the no-fly zone has been well-received in the international community. The first military Arab League involvement will shortly come through Qatari air jets; meanwhile, the normally pacifist Norway has also committed jets. The no-fly zone doesn’t seem to have stopped the civil war from either rebel or Gaddafi’s side, but it seems to have the desired effect of reducing the damage to civilians, particularly from Gaddafi’s aircraft and heavy armour. The issues that seem to be arising next are whether Resolution 1973 allows UN-affiliated forces to target Gaddafi himself, and, more broadly, what the exit strategy might be. Polling suggests strong division among the British public regarding whether this intervention is the right policy, and this may create political problems further down the line. The situation is still in flux, and the political consequences are still not settled.

Two resignations. Two bad decisions?

In Events, Party politics, The Media on February 1, 2011 at 1:10 pm

David Weber

Before I begin, I would like to welcome our newest writer, James Bartholomeusz. I enjoyed reading his analysis of Labour’s past and future, and look forward to future articles.

On the face of it, Ed Miliband’s recent decision to grant the shadow chancellorship to Ed Balls following Alan Johnson’s resignation looks like bad judgement. It is the most potent way he could have gone back on his decision to sideline the Brown treasury team back in September, when he appointed Ed Balls and Yvette Cooper to shadow Home and Foreign portfolios respectively. Not only this, but there would have been a strong logic in offering the shadow Chancellorship to Cooper instead, given that she came first in the shadow cabinet elections and has taken a less vocal line over the economy. Given that Cooper is married to Balls, this would have been a less than meaningful decision, but it might have looked ever so slightly better.

The truth, however, may be more nuanced. We do not know that Miliband had any real choice in who to appoint to the position. Cooper and Balls, sensing weakness and a lack of alternatives, may have threatened to consider their positions if the outcome was not to their liking. Both have a significant number of supporters within the party, and Miliband must be keen to avoid the kind of infighting that characterised Labour’s last spell in opposition. Without knowing the internal politics of the shadow cabinet, which has arguably not been infiltrated by the media to the same extent as the government, or the previous government, it is hard to evaluate Ed Miliband’s judgement.

What it is possible to say is that events are increasingly conspiring against him. Ed Balls repudiates the nuanced and flexible position laid out by Alistair Darling prior to the last election. He stood for the leadership on a platform laying out his opposition to the need to cut spending at all. This article will not speculate whether or not he was right to do so, but merely note that the public disagreement between Johnson and Miliband over tuition fees will pale in comparison should Balls choose to disagree over deficit reduction. An agreed economic policy is essential.

It is all very well for the political freedom of ideas brought by coalition, but I suspect that this is more workable in government, where the need to make tough decisions is at least recognised by the public, than in opposition. And it is perhaps an irony of coalition politics that people may become more accepting of disagreements between parties, rather than inside them. The opposition’s task in the short-term is to bring a simple, well-defined and credible alternative to the table. Only then can it worry about the niceties of pluralism and diversity of opinion.

Incidentally, I do not agree with those who argue that appointing Johnson in the first place was a mistake. There are two lines of argument: one which points to Johnson’s mistakes since being appointed, which is obviously opportunistic, and another which points to his lack of economic experience or qualification prior to being appointed. The latter holds more weight, but fails to credit his experience in government, which is greater than most of the current government, and surely counts for much more than a degree in PPE from Oxford. The argument also has no evidential strength to back it up so far. If George Osborne, who has been criticised too for a lack of economic credentials, single-handedly wrecks the economy before long, it will be strong evidence that Alan Johnson’s appointment was not a good decision. But unless that happens, we will not know whether economic qualifications are needed to take the role of chancellor.

So much for Reddening Ed. What of David Cameron, whose judgement is now called into question with the resignation of Andy Coulson? For many commentators, the ongoing fallout from the News of the World hacking scandal shows David Cameron’s judgement to be highly flawed in allowing Coulson to continue, and actively supporting him, for so long. I will not pass comment one way or another on the case, however. I know too little about it. I will rather look at a tangent that stems from it.

I believe this is further evidence to suggest the tenuous theory that Cameron is a far more relaxed Prime Minister than either of his predecessors. Although Brown’s government was famed for dithering over certain matters; when it came to the continued existence of liabilities, it tended to be more because of the party political context than because of any evidence of the Prime Minister being particularly relaxed. And Blair’s behaviour earlier on in his tenure bordered on paranoid at times, so determined was he not to lose momentum through scandal. A particular example was the first Mandelson resignation, which was back-dated in an attempt to make it look as if he had resigned the previous day, to avoid the opposition taking credit.

Cameron, in contrast, has shown little evidence of paranoia or dithering. He has wisely kept himself further from the forefront of the coalition in the media than Nick Clegg, investing his efforts (as far as one can tell) in its smooth running behind the scenes. This has worked well for his political momentum, as it leaves those out of the know more confused about his political positions, leaving him more room for manoeuvre and minimising accusations of dithering and U-turns. It also avoids the impression that he seeks to control every area of government, which ironically ended up costing Blair so much control.

So both resignations are at present very open to interpretation. Both risk accusations of bad judgement, slow decision-making and lack of control. Yet as we have briefly discussed, there is in reality very little difference to the way previous resignations have played out, other than in spin. Both were of figures who their employers were less than willing to lose; Johnson because of the political significance of his appointment, and Coulson because of the importance of his job. Both Miliband and Cameron may have been wise to play a relaxed game, letting events unfold leisurely rather than spin out of control as a result of frantic behaviour.

True, the wind may be blowing more in Cameron’s favour than Miliband’s; after all, when have more parties been united in government than opposition? When has the collected opposition lacked not just a majority of seats but also of votes? The other conclusion, which I was uncharitably tempted to disguise, is that this is a key lesson in the limits of pluralistic politics, such a key feature of my reasoning in recent articles. Oppositions, as I pointed out earlier, have traditionally had to put up an artificially united front in order to be seen as credible. This is a problem which needs addressing, but which it is difficult to see a solution to.

£7bn, 1 Province and 13 Miles of Sea

In Europe, Events, Foreign Affairs on December 6, 2010 at 7:46 pm

By polarii for The Daily Soapbox

George Osborne has made the incredible announcement that he will provide a £7bn direct loan to the Irish Republic, to support its struggling economy. Incredible because it belies a surprisingly good relationship between the Kingdom and Republic. Which we might not have assumed given the history between the two countries. That Osborne has chosen to do this by means of a direct loan rather than through the EU, or the IMF is explicit and public affirmation of this close relationship. However, there is a fair degree of self-interest at work as well.

The primary cause of concern is that Britain’s banks are now exposed to the tune of £50bn in the event of the Irish economy collapsing. Obviously, this would be a near-fatal blow for the economic recovery we are now beginning to see, but, on a more immediate level, the government is guaranteeing a sum of the deposits in British banks, some of which rest upon the debt held by Irish banks. When we consider that a collapse in the Irish economy may well lead to a crisis of confidence in the Spanish economy, where Santander is based, the ramifications of not supporting Ireland are actually quite staggering for the British economy.

In another area, the Northern Ireland economy has been hit particularly hard by the recession, and, of all regions in the UK, unemployment runs highest here. The collapse of the Irish economy would hit this area particularly hard, as it is estimated that 40% of NI exports work their way into the Republic. This is also true of most of Britain’s agricultural output; but the situation is at its most accute in Northern Ireland. The relative stability in recent times in Northern Ireland is, in part, due to an period of economic prosperity, which could well be undermined by spending cuts, and would certainly be undermined if the Republic also collapsed as an export market. To see this loan as a massive bung to Northern Ireland may be a slightly cynical viewpoint, but it goes some way towards justifying George Osborne’s decision.

Perhaps there is further political machination going on here: if the UK supports the Eurozone, though not a member, it gives further bargaining power to Cameron around any future European table; it also allows him to say to Europhiliacs that he is supportive of the European ideal, in general terms. The Euroskeptics in the Conservative party have turned round and asked whether this is prudent; Cameron can justify it amply on grounds of national self-interest too.

The one objection is that £7bn is more or less the figure that will be saved by public spending cuts this year. The British public, who may not fully grasp the potential problems that beset Northern Ireland, the Eurozone, or the banks, may, understandably, feel a bit peeved. But, as we have seen, the loan is firmly in Britain’s interest, and moreover, unlike loans to mega-banks, we actually have a legal and diplomatic apparatus to eventually get it back – the Irish Republic can’t move its accounts offshore. Plus Ireland’s credit ratings will be absolutely shot if they refuse to pay it back. Though it would ultimately be financed by yet more borrowing, it would be a really stable and sensible investment rather than an injection into the less certain realm of public service; at any rate, saying we can borrow more so we should spend it on services is exactly what got us into this mess in the first place. This money is being spent on keeping us out of another one.

And here’s where we can take the discussion in all sorts of interesting directions. We could discuss whether the Euro has helped or hindered Ireland. We could discuss whether the free market or state ownership should be the answer to the underlying problem. We could also discuss if there is an underlying ironic narrative that Ireland is being bailed out by an Ascendancy aristocrat, the likes of whom it was so eager to get rid of.

But I want to take it in an historical direction. For at least 800 years, the English have been interfering in Ireland. By the early 1800s, Britain and Ireland unified into one state. About 100 years later, most of the groundwork was in place for the two countries to split. During WW2, Ireland did not join Britain against the Nazis, not because it was secretly fascist, but because it did not want to be seen on the same side as the English. Hostility continued right up into the 1980s and 1990s, until the Northern Ireland problem became so serious that Major had to involve the Republic in sorting it out. Since the Good Friday agreement, The Kingdom and the Republic have been not merely on speaking terms, but positively friendly – quite probably the best ever sate of Anglo-Irish relations. Hence the loan.

But the loan, for me, begs a much broader historical question. To what extent is Ireland viable without being intimately intertwined with the UK? At which point does Ireland become so intertwined that we’ll have to unite again? And is it better for Ireland to be united with the UK anyway? Of course, popular opinion in Ireland would probably not stomach such a union, but, when the UK decides to throw Ireland £7bn, when their economies are so inter-related,  with so much culture and history being shared, a union between these two seems a much more reasonable prospect than a united Europe. And perhaps here is the broader comment on the European project: if countries who share a land border, around 30% of trade, a language and much of their history can club together in times of need, then there is hope for Europe. But if 13 miles of sea and 1 province is a big enough gap to make union seem absolutely impossible, even when it seems really very logical and sensible that  the countries should join, then Europe should simply stick to a loose alliance, and not hope for anything greater.

A Strategically Defensible Review

In America, Europe, Events, Foreign Affairs, Party politics on October 22, 2010 at 3:42 pm

By Polarii for The Daily Soapbox

George Osborne has delivered with surprising gravitas his Comprehensive Spending Review (CSR). It was indeed comprehensive, incorporating almost every government department in the cost cutting measures. Whether such cuts are good or bad or necessary, and whether they fall in the right place or not, and what they will mean is a tangential theme to this article. Instead, we shall consider the Strategic Defence and Security Review (SDR). It was delivered by the Prime Minister to the Commons on the Tuesday, and almost – but only almost – snuck under the news radar. It is, in many ways, more important than the CSR, and so demands closer scrutiny. It is also more radical, believe it or not, and it should not go unmarked amidst the various cries of uproar that the CSR has triggered.

The SDR was a long-overdue document. Labour conducted the last defence review in 1998, and, for some incomprehensible reason, they did not think to have another after the world-changing event that was the 9/11 attacks. This changed the nature of warfare: previously, it had been thought that Britain would be the major contributor against legions of Soviet tanks rolling across the plains of Europe. By 2001, that threat had gone. In its place has arisen a guerilla effort in some of the most hostile environments known to man. And in this age of unipolarity (which will only last for another 20 years or so), other powers have turned to financing or supporting these guerilla groups, or, more intriguingly, using technology to undermine key computing services – case in point, the Estonian Cyberwar of 2007, widely alleged to have occurred with the blessing of the Kremlin. Piracy on the high seas has also been on the rise. All these threats would have been anticipated in a review in, say, 2002 or 2004.

Yet, we had to wait for a new government, and a time of cuts, to work out our defensive priorities. This left any new government in an awkward position: to cut defence under 1998 priorities would clearly be stupid; but to run a review alongside a programme of cuts would look vindictive. The Coalition wisely went for the latter. Though the SDR occurred in the context of cuts, it ensured the cuts were better directed at things that are no longer useful: accordingly, some 100 pieces of heavy equipment are to be discontinued (tanks, artillery, so forth) and there will be increased investment in more mobile units (helicopters, Humvees, etc). Anyone who knows anything about Afghanistan will tell you that this – at least for the medium term – is a sensible move.

However, the SDR makes a broad change of focus for Britain’s long-term strategic objectives. A military presence in Germany is to be discontinued. This is because two strategic threats – the Soviets, and the possibility of a re-emergent fascism in Europe – are now so distant as to be unthinkable. Plus, a number of former Soviet countries (Czech Republic, Estonia) are much more westward looking, and have joined NATO. There is now no longer a need for Britain to hold Europe on behalf of the Europeans. This has led to cuts of 7000 in the army. For the first time since WW2, Britain’s army will be smaller than Germany’s. Given the relative land held by each country, and the length of their borders, it seems that normality has been restored. Army forces can now concentrate on crisis points: Northern Ireland, Afghanistan, and wherever else may arise.

Now for the Navy. Britain’s strongest defence has historically been the Navy. That is entirely unsurprising for an island nation. It is an area in which Britain has traditionally excelled. But the Navy’s role has changed – it is now suffering cuts to its fleet of destroyers and frigates. It may well have suffered cuts to its aircraft carriers too, but the Labour government were stupid enough (or wise enough) to ensure that the contracts cost more to cancel than continue. This is a sound move: the countries that will most likely present a problem for Britain over the next 20 years are: Somalia, Iran, North Korea, Argentina (this last is tenuous). Against all these nations, having seaborne air power would be an eminently sensible move. Two carriers also keep Britain in the major leagues of military power: only the USA has more aircraft carriers. Furthermore, by fitting catapults for aircraft onto the aircraft, the Harrier jump-jet can be retired and French and US planes can use our carriers.

While it may not seem that UK-France relations are at their strongest ever, it is a sensible alliance to be forming. Up until WW1, Britain and France adopted a concerted naval policy, with France protecting the Mediterranean, and Britain the Atlantic – protecting both countries’ trade. A similar policy of naval co-operation seems to be forming between Cameron and Sarkozy, and not within an EU directorate. This will help retain the military influence of both countries within the world (though not to the level of the Imperial Age). It may also draw France away from the idea of an EU-Russia Defence force, which, as it is currently envisaged, is dangerously anti-Atlanticist; possibly leading to Europe becoming a plaything of Russia. We just have to hope that this sensible alliance outlives the two pragmatic politicians currently in office.

As for the airforce, the Harrier is being retired; the Tornado remains. Bases in Scotland could well close – not especially alarming, given the threat posed by military giants such as Norway and Iceland – retaining bases towards the South. Cuts of 5000 jobs are not unreasonable, and they will probably be regained once fiscal retrenchment has occurred. The RAF has managed to avoid being merged into the other branches, and it will proudly retain its identity of service and professionalism.

As for Trident, its renewal has (again) been deferred, to save money. This seems to have been driven by several factors: the nuclear threat to the UK is not terribly high for the next ten years (by which time, Iran will have nukes); it is cheaper to do it later and paying for it would mean cutting something else; the old system is not top-notch, but it still retains a good retaliatory capability; the Lib Dems don’t really want it. A combination of these views result in the decision, and I am too far removed from the decision-makers to analyse which combination. More pleasingly, budgets to GCHQ, SAS, MI5 and SIS will be increased – which is incredibly sensible given that the main threats over the next 10-20 years are terrorism and cyberwar; these are also areas in which Britain has traditionally excelled, even above major superpowers.

In short, I am loath to see cuts to defence spending, seeing as defense is the primary duty of the government. To paraphrase Lenin, without adequate defence spending, there will be no schools or hospitals. It also pleasing to see that the aid budget is now being diverted to genuinely poor areas, which are generally those areas where conflict may arise. Investment in backwater areas is the solution to extremism, rather than war. Further requirements for Afghanistan will be taken from the reserve, which prevents the troops suffering needlessly. The cuts prioritise certain areas – that is the Navy, Intelligence, and International co-operation, which are the areas Britain has most historical experience to bring to the table. It is, given the circumstances, given the potentially deep divisions in the Coalition about defence, a surprisingly elegant solution. It was right of Dr Fox to fight for the defence budget, and right of David Cameron to intervene to protect it from an extra 2% of cuts. It is a difficult pill to swallow, but it looks like life-saving medicine.

Disabled People Get Cold Too…

In Uncategorized on June 14, 2010 at 5:50 pm

By polarii for The Daily Soapbox

George Osborne has a small but important opportunity to underline the coalition government’s committment to fairness in his upcoming budget. Part of this budget, undoubtedly, with Iain Duncan-Smith at the helm at DWP, will be benefit and welfare reform. One benefit that is in need of some reform is the winter fuel payment. This is made to OAPs who are house-bound to help them heat their homes, since they are often less wealthy than other groups in society and more vulnerable to afflictions like pneumonia.

However, severely disabled people are also house-bound and vulnerable to these afflictions, yet don’t receive this payment. Many severely disabled people are dependent on incapacity benefit to support themselves and on their carers, who, again, are often drawn from the poorer sections of society, as caring for a severely disabled person is a full-time job. By contrast, some OAPs are extremely wealthy and need no additional help in heating their homes, or live in sheltered accomodation where heating costs are kept flat throughout the year. Meanwhile, there are heart-rending stories of severely disabled people still paying off their debts from last winter, and struggling to find the money to stay warm through the next one. Those receiving the higher-rate mobility component of the Disability Living Allowance account for 1.6% of the population; around 1 million disabled people, incorporating 21,000 disabled children and young people.

Therefore, Osborne should consider making this winter fuel payment means-tested, or raising the age threshold for the payment to 65 (as in the Liberal manifesto), thus saving money, and direct some of the savings to providing a similar winter fuel payment to severely disabled people. This would sit well with Nick Clegg’s call for more disabled MPs, the Liberal Democrat manifesto pledge to move severely disabled people onto the winter fuel payments and show that the coalition government did actually care for fairness, the disabled and the poor. At the time of writing, Nick Clegg has not publicly expressed his support for this campaign.

The last government became notorious for its raising of winter fuel payments on the eve of crucial elections, in order to stop pensioners voting for the Lib Dems’ proposed pensions increases or being attracted by the Tories’ social conservativism. The benefit, while a sound principle, needs review. It needs to be and be seen to be a benefit for society and the poor, not the government. Osborne has the chance to make this happen in his upcoming budget. Let’s hope that he agrees with Nick on disabled people.

More details of this campaign can be acquired from the Papworth Trust (http://www.papworthtrust.org.uk/campaigns) and their Facebook page.