Darling, We Must Act Now

More renowned for his eyebrows than economic competence

Alistair Darling writes in today's Times...

"Can the eurozone survive in its present form? Not if its members carry on the way they have over the past year. Hoping that something will turn up won’t do. If we have learnt anything from the economic crisis for the past three years, it’s that if you have a problem, you need to fix it now."

Did he really learn that lesson? There's not much evidence on the deficit front from the time he was chancellor. Although, at least he planned to get round to doing something about it after the 2010 general election (if Brown/Balls had allowed him, and, indeed, if he were kept on as chancellor at all). But his replacement as shadow chancellor wasn't and isn't so keen on fixing the deficit problem "now" or even then or after that for that matter.

Such a statement is a bit rich coming from a key player in the creation of the deficit disaster, and in no way reflects his real actions while in government or his successor's intentions now.

The Spending Cuts In Context And The North/South Divide

A report by the Centre for Economics and Business Research (CEBR) tomorrow will expose the true extent of the Coalition's cuts.

It will point out that analysis of figures from the OECD reveal that the UK is cutting public spending LESS than the European average over the next 2 years. And this despite the fact that public spending increased far more sharply in this country than other major economies during the recession years.


This report is just further evidence of the myth being propagated that this country is being put through some kind of especially draconian state spending squeeze. Fraser Nelson's Coffee House blog analysis further proves the point. Fraser demonstrates with the graph below how Osborne isn't even cutting as hard or as quickly as Labour did the time they bankrupted the economy before last.


Indeed, projected spending in most departments is expected to increase by 2014/15 compared with 2009/10.


Worryingly, the CEBR report highlights that the economy in regions like the northwest, northeast, Wales and Northern Ireland will still be dominated by the public sector where it will still account for over 50% in 2015, after the spending cuts have been implemented. So we will still have large parts of our country where the sector of the economy that contributes tax income is smaller than the part that consumes it.


Of course, Ed Balls, seeing a report that undermines his economic "master plan", has already begun to spin it in his favour. It is obvious that public spending cuts will affect areas with the highest public spending the most. But rather than address the questions this report raises about his economic strategy, he prefers to point to the obvious fact that proportionately, northern areas dominated by the public sector will see bigger affects of the cuts. He ignores the government's plans to assist private enterprise in these areas so they can take up the slack and instead claims the government is attempting to exacerbate the north/south divide.

Expect a lot more of this kind of spin from Labour and the left generally. Attempts to revitalise regions of the UK to make them less dependent on the dead hand of the state will be portrayed as typical Tory attacks on traditional Labour voting areas. Labour's fear being that once freed from the employ of and dependancy on the state people there will take a more independent view when they vote. God forbid.

On The Hour - Council to Evict The Old To Teach Government A Lesson

On The Hour, Chris Morris' spoof radio news series and forerunner to the excellent The Day Today included a story about how a fictitious Labour council was evicting old people from their homes and making them sleep on the streets in boxes to prove a point to central government...



That was back in 1992. Now the Conservatives are back in government, we see Labour councils living up to their old reputations. This time it's about the governments attempts balance the nations books and asking councils to do their part by reducing what has been burgeoning spending on their part over many years.

We've seen the stories put out by (mostly) Labour councils - child protection services to be cut, sure start centres to close, all library services to be disbanded, even worse treatment of the elderly in council run homes etc. It seems Labour (and indeed some LD and even Tory) councillors would rather this than make long overdue efficiencies in the way they run their services and better prioritising those services most needed by the communities they serve.

They would rather cut front line services in the hope voters will blame central government than their historic profligacy, inefficiency and waste.

You've got to laugh.

Ed Miliband's Credibility Deficit

"Watch my nose grow out to here when I talk about the deficit"

Ed Miliband writes in Thursday's Times newspaper that the deficit that the Government (or Conservative-led government as he insists on spinning it, in a pathetic and transparent attempt to alienate Lib Dems) is grappling with, is not the fault of the last Labour mis-led government.

In continuing his attempts to convince voters, who he clearly thinks are as gullible as 4 year olds, that this is the case, he is demonstrating what a poor leader he is and how he hasn't a clue about creating a credible narrative for his party that could return the credibility required to make them electable again.

In attempting to sell the lie that the deficit was caused by a "global economic crisis" he merely invites Coalition supporters to remind everyone, as if they needed reminding (sorry), that it is the structural deficit that is being addressed. In other words, the difference between what is spent from and earned in taxes after the economic cycle is taken into account.

The deficit wasn't created by the evil bankers, as some would have us believe. The bail outs of the banks, something Labour and Gordon Brown are quick to claim were part of their "save the world" strategy, certainly have added to the overall debt levels but not to the yearly structural overspend (a better word for deficit in my opinion). Eventually, those banks will be sold off (presumably just before the next election) and the taxpayers money spent on buying them out will be returned with interest. So, even the bank bail outs are only temporarily inflating the debt level that is being added to by the tune of £150bn a year, currently.

It is the £150bn overspend that needs eliminating if we are to start to tackle to frightening level of debt already racked up. The overspend has been caused by reckless and politically motivated structural spending increases that were unaffordable and now have to be brought back under control.

If you cast your minds back just a few years, you will remember a time when the word "cuts" was political poison. Labour's electoral strategy (something Ed Miliband was heavily involved in) was to keep spending more and more and then dare their opponents to suggest spending was too high. If they did, as the Tories had done in previous elections, the cry of "cuts in hospitals, nurses, doctors, police, schools, teachers, etc etc" would go out and voters were duly repelled. It was a successful strategy until the growing recession hit the banks and sparked the banking crisis. After that, people looked to government to spend more on supporting the economy and on social welfare for those cast into economic difficulty. But they saw a Government that had spent all the money during the good times and now had to rack up enormous debts to act to support an economy during, what was an inevitable downturn. We, the electorate, have to take some of the blame for being taken in by Labour's strategy and
the Tories learnt they had to avoid talking about cuts if they were to "detoxify" their brand.

So, the one thing Little Miliband gets right in his Times article was this lack of political clarity from Labour's opponents back then. That is regrettable but not an excuse to ignore the crisis now, as he proposes. His approach would leave us continuing to add to the £4.8 trillion debt mountain that is already a millstone around our childrens' necks.

2011 will be a testing year for the Coalition. It's on the right economic path but it starts getting rocky and is uphill for most of the rest of the Parliament. Let's hope it can keep itself together during the coming dark days of unpopularity and political tests, like the forthcoming AV referendum. The only way a clown like Ed Miliband will get elected is if the Coalition drops the ball in the middle of the game. The inbuilt electoral bias will return a Labour government with them just a few points ahead (or even possibly one or two points behind) the Tories. So, it's time for Tory and Lib Dem politicians and supporters to gird their loins and battle through the next couple of years while doing everything they can to counter the deceits put out by Labour such as "the deficit wasn't our fault"

The Great Fairness Debate

The reaction to the Comprehensive Spending Review (CSR) has been nothing if not wholly predictable. Leftists popping up all over the shop to denounce the cuts as savage, regressive and unfair. But what does constitute fairness?

Matthew Parris writes on the subject in The Times yesterday (behind a pay wall). He makes the point that fairness is more than some arithmetic calculation of who loses most or whether the cuts are "progressive" or not...

"The essential point about the word “fair” is that it doesn’t add anything to words like “right”, “just”, “reasonable” or “ought”. “Fair” doesn’t (contrary to what the IFS assumes) imply a number, a quantity, a mathematical relationship between two different portions. It doesn’t (contrary to what the Labour Party thinks) imply equality: of outcome, opportunity, pain, gain, or anything else. When a speaker says “fair” he appeals to his hearer’s sense of what people do or don’t deserve.
Without this sense of deserving, any analysis of mere numbers is sterile. The raw, unprocessed arithmetic of financial gain or loss makes no impact on the moral imagination of the public unless illustrated by real cases of real groups about whom we may have an opinion — I stress: opinion — on each group’s moral claim on welfare. Accountants’ formulae for deeming cuts “progressive” or “regressive” are counterfeit, unless weighted by moral judgment.

A crude example: many people would think that, in a queue for an expensive lung operation, it would be “unfair” to put a penniless, jobless and incorrigible chain-smoker ahead of a hard-working young mother who had never smoked — although on the IFS calculation the decision would be “progressive” because it redistributes income from a richer citizen to a poorer one."

This is an important point and, as Parris suggests in his article, not one the coalition is making very effectively. The debate needs to move on from the "progressive" / "reactive" terms, that the left have managed to keep the focus on for decades, and start thinking about what truly is "fair".

The coalition has made a rod for its back by insisting on referring to its plans to reign in Labour's budget overspend as being "progressive". This term means, to most people, that the rich pay more (not just in absolute terms but proportionately) than the poor. Surely, that is fair?

Redistribution of wealth is not, in of itself, fair. Taking from the "haves" and giving to the "have nots" may have a Robin Hoodesque romantic appeal but it doesn't follow that it is fair in all circumstances. When choosing what to cut and what to spare the Chancellor had to made many individual decisions on what was fair and what wasn't.

This is where we see the fundamental difference between the Tory and Labour approach to fairness. Leftists think the main objective should be to redistribute wealth from the better off to the poor. Thus they hope to alleviate poverty and create a more equal society. This, they tell us, is "progressive". For them it would be enough to be able to prove statistically that they were taking more from the better off than the worse off. That's fairness in their book.

Osborne's starting point was more specific; that it wasn't fair to run up unsustainable debt levels for our children's generation to pay off at great expense. In truth Labour already had, but his point is still valid. We should not continue to grow that debt level by continuing to spend more than we can afford for years and years to come. Remember, all the government is proposing is to stop adding to the national debt, they're not planning on paying any of it back before the end of this Parliament at least.

From there the Chancellor had to make a number of fairness judgements. Inevitably these judgements are influenced by the values of the people making them (which, these being politicians who want to be reelected, in turn are influenced by the broad consensus in the country). Matthew Parris describes the kind of judgements he would make and they clearly tally with the Chancellors'...

"Here are mine; and I wouldn’t trouble you with them if I wasn’t convinced they are shared by tens of millions in our country.
I say it isn’t “fair”, if you’re only on an average wage, to have something approaching half your earnings confiscated through income, council, excise, fuel and spending taxes, and redistributed, even though it was your efforts that earned the money.

It isn’t “fair” that people housed by the State at your expense should be given homes for life, rather than only for so long as they cannot afford to pay market rates.

It isn’t “fair” — from the viewpoint of those who would expect their own grown-up children to rent a room if they lacked the funds to buy a house — that a person assessed as being in housing need, once he passes the age of 25, gets a right to a home of his own rather than just a place in shared accommodation.

It isn’t “fair” that the benefits system provides an incentive to jobless people with a medical condition to claim, and stay on, incapacity living allowance, even if they have a partner in work who can support them; and it isn’t “fair” that the costs and numbers of such claimants have swelled so enormously in recent years, without any evidence that the nation has become more ill or disabled.

It isn’t “fair” that workers in the public sector — whose jobs have been safer and whose salaries have risen faster than those in the private sector — should enjoy pension provisions so much more generous than what the rest of the country gets, paid for partly from the taxes of people in less secure jobs with inferior pension rights.

In every one of the five examples I’ve just cited, I’d bet that a shift in resources away from the recipients of state welfare would be seen by a majority in Britain as “fair”. But any fiscal calculation of the “progressive” versus “regressive” effect of the shift would conclude that the cut was “regressive”."

So, fairness is in the eyes of the beholder. To my eyes the CSR has got it about right. There will be a lot more controversy to come as the details pan out over time. Hopefully the coalition can get their fairness narrative sorted before long, otherwise they'll struggle to convince people to accept the pain being inflicted.

And when you hear those leftist politicians, celebrities and journalists berating the government for their actions it would be worth remembering the glee with which many of them welcomed the recession The First Post reminds us. Follow the link and have read if you time. They were happy to accept hard times for the poor, as long as it was framed in anti-consumption, environmentalist terms.

Further to the progressive/fairness debate, I see Guido has an excellent post on the same subject that is worth a read.

Ed's First Blow

The IMF has issued a report praising the coalition government's economic strategy to reduce the deficit, calling it "strong and credible" and "essential to ensure debt sustainability".

“The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery. Fiscal tightening will dampen short-term growth but not stop it as other sectors of the economy emerge as drivers of recovery, supported by continued monetary stimulus.”

This really couldn't have come at a worse time for new Labour leader, Ed "better than my brother" Miliband. Deficit denial may have been a position that got him the backing of the Unions and therefore the leadership, but it's looking increasingly delusional and he must now be able to see that it's an untenable position to maintain any longer.

Look out for a humiliating climb down over the next few weeks/months. If he gifts the Shadow Chancellorship to his brother he can at least make it look like a concession to his defeated sibling, in the name of party unity. But it's by no means certain brother David will accept the offer.

Surely now, Ed Balls has no chance of replacing poor old Alistair Darling. Darling's plans were woefully inadequate, leaving the government spending at a level that continued to add to the already enormous mountain of debt wracked up by Labour, even after a whole parliament. But the Eds (Balls & Miliband) seem to think even Darling was too prudent. Why not draw down a few more £100 millions on the old over-draught, if it means a few extra votes?

But Ed is not stupid. He did what he had to do to beat his brother and get elected, now he has to face up to the real world. It's difficult to see how he can change course without looking chameleonesque - saying one the to Labour and the Unions and another the the general public, but not changing his mind is worse in the long run. Unless, that is, the global downturn we've seen evidence of recently in the US and Ireland, leads the UK into another recession (no matter how short). Even though such an event would have happened regardless of government, Labour will portray it as the result of cutting public expenditure. Because for them public spending = the economy.

The IMF believe a double dip recession is very unlikely but point out that the global economy can be unpredictable.

Unless he changes course on the economy, Ed Miliband must hope the unlikely double dip comes to pass and that the British electorate will be gullible enough to believe his diagnosis of the cause. Otherwise, at the next election, he'll continue to look as irrelevant as he and his party does today.

Silly Dunt... Deficit Deniers, The Holocaust & PR

Ian Dunt writes on politics.co.uk that the use of the phrase "deficit denier" is unacceptable. Of course, we're used to being told what words we can and can't use by those on the left. But it's worth looking at this argument as there is, at least partial, truth in what he says.

Dunt gives two main reasons for not using the "deficit deniers" phrase, the first of which we can dismiss out of hand. He refers to it having "overtones of the Holocaust", because it is a derivation from the phrase "Holocaust denier". Again, a typically silly over appliance of political correctness to address some perceived offence that could be causes by a phrase used by political opponents that you'd expect from the mind of someone on the left.

Now, as it happens, I've not been using the phrase a lot myself but there is nothing offensive about it. To my mind, and others who share the view that there are those in the Labour party who want to continue the reckless and unsustainable spending of the previous government, the phrase sums up their delusional view of the world. The deficit exists, fact. The Holocaust happened, fact. As such the phrases are comparable. Using the phrase "deficit denier" doesn't suggest they are comparable to Nazis, as Dunt seems to think it does. Merely, that they are as deluded as those that deny the truth of the Holocaust. Indeed, not all Holocaust deniers are Nazis, necessarily. Some are just hopeless conspiracy theorists. Use of the phrase does not imply an equality of seriousness either. No one is suggesting the deficit run up by Labour is as horrific as the systematic murder of millions of people, that is, surely, obvious. But, this is not his main point. His second argument has (slightly) more substance to it, in my opinion.

He points out that Coalition politicians are using the phrase to discredit and suppress any alternative argument on how to manage the economy through the next few years.

Of course his main concern is that the phrase accurately and effectively sums up some left wingers' position of public spending and is being picked up by the media and public as it chimes with their own views on the subject. In reality this makes the Coalition's opponents feel uncomfortable as the arguments they'd like to see winning the debate are not gaining traction partly because this phrase so concisely sums up the alternative's argument as delusional and allows the idea to be transmitted easily. He knows the phrase effectively undermines the left's position and he'd prefer it be struck off the list of acceptable phrases.

Well, actually, he has a point. Not the politically correct one, obviously, but the point about attempting to suppress another argument through clever phraseology and PR. There is a legitimate alternative position to the Coalition's approach to tackling the deficit. To be fair, under Alistair Darling, Labour took it up during the election campaign. That was: Yes, deep cuts are necessary, but with slightly different timing and not quite as much, at first anyway. For those on the Left making that point, the phrase deficit denier is inaccurate and unfair. It doesn't fit well into the "new politics" approach if anyone is trying to portray all opposition politicians in that light. That kind of tactic is too reminiscent of the ruthless and sinister Labour propaganda machine that we all came to hate. The Coalition would do well not to emulate, or be seen to emulate, it.

However, since the election, that more realistic view of the deficit has all but disappeared from our TV screens when we hear Labour spokespersons oppose each and every Government action to reduce the deficit. There has been no mention of it during the Labour leadership campaign and in this respect, there really does seem to be a sense of delusional deficit denial running deeply through Labour at the highest level.



But Coalition politicians do need to be careful not to generalise all Labour people as deficit deniers. Certainly, the likes of Ed Balls should be exposed as an arch denier. He has said himself and it's been confirmed in the auto-biographies, that he opposed Labour's deficit reduction plans before the election. But, Alistair Darling may have planned a woefully inadequate reduction in the deficit, meaning we'd still be adding to our £1 Trillion++ in 4 years time, but at least he understood the deficit needed reducing. In that respect, he and others like him in Labour are not deficit deniers. The Coalition will be better advised to argue their case against these "deficit inadequates" if they are to continue the "new politics" approach that so sharply distinguishes them from their Labour predecessors.

Benefits With The Apple iPhone

I was amused and then slightly outraged (in a Daily Mail kind of a way) when I happened upon this app for the iPhone in the Apple iStore...

It strikes me as somewhat incongruous with the reality of people who are so hard up they need to claim benefits that they would own an iPhone (or iPad and or iTouch) in the first place. These things aren't cheap, usually come with a hefty monthly contract and are hardly staple to surviving on a pittance.

Of course, it is a sign of the times that benefits are not now limited to the hard up. In fact, the comments left by users of this app point to how helpful the app is for assisting in claiming child benefit and tax credit, benefits that are not restricted to the poor.

The (not so) slow creep of benefit dependency, so central to the political strategy of the last government, has led to many in the middle class being eligible for tax credits, universal benefits, child trust funds etc as well as generously funded government programmes like Sure Start. The less well off were supported and encouraged to stay as long as possible on benefits. Can't work or won't work? It matters not. As long as you vote Labour - cause them nasty Tories will take all this away, you know.

So, the ploy was to get people (the poor and well off alike) so accustomed to their "entitlements" that they would flock to the ballot boxes to return Labour time and time again - at least for fear of losing their money for nothing (sadly, there were no chicks for free but it did lead to Dire Straits).

Their strategy didn't work, obviously.

Instead, people saw through the bribery to the serious damage being done to the whole nation's future prospects by the enormous borrowing that was required to support this kind of spending. The challenge the Coalition government has is to start to dismantle this web of benefits for the better off, work shy and down right fraudulent, while supporting the genuinely vulnerable and keeping people focused on the necessity of the mission to save the country from Labour's deficit. It'll be no mean feat as, in politics, a week is a long time, so you can't expect the electorate to remember why they rejected the old lot for this lot when their incomes are being directly affected. But perhaps I'm being patronising. Voters haven't shown any sign of rejecting the governments bitter pill so far. I hope that will continue to be the case when the side effects start to be felt.

Perhaps what we need is an iPhone app that records how much you, as an individual, saved the tax payer by, say supporting a local school or helping with a community project or, perhaps even, not spending that money on a new iPhone but on food for your family instead. But then of course you wouldn't have an iPhone to run the app on. Gosh, this deficit reduction thing isn't as simple as it looks, is it?