Archive for July, 2012

Osborne’s AAA.

Saturday, July 28th, 2012

The heat threatening to fry George Osborne’s chancellorship will ease following the thumbs up from Standard and Poor’s. Nevertheless he must use the respite to set his political house in order.

The budget was the biggest PR disaster since Geoffrey Howe’s extra dose of Thatcherism in the early eighties. Howe was attacked for dogma, but Osborne’s problem has been credibility. This is said to be because he has two jobs. Whether this is true or not, lack of attention to detail and its consequences led to the mess up of Budget 2012. Moreover it is easy for opponents  to say his plan is not working. It is now important to separate man and plan.

Osborne himself must get a grip of detail at the Treasury and give up being a kind of third prime minister. We already have two, which is plenty. If he does that, in spite of rude barbs from his tormentors, he can yet succeed. He must do that by joining up his various measures to create a narrative which informs a strategy. Without this the country as a whole will not buy into the plan.

The plan is relatively sound. Whatever Ed Balls says, you cannot borrow your way out of debt any more than you can towel yourself dry while still under the shower. You cannot continuously outspend your tax revenue on the daily running costs of a bloated state. You may have to borrow in the short term to cover the costs of re-balancing the economy and you may have to endure flat lining growth while these changes are happening. You may have to use more quantitative easing to fire up infrastructure renewal, business financing and new home construction. So long as you make sure that the government’s payroll is shrinking and its commitments to future growth of government spending reigned in, progress will be made and growth, when it comes, will be on a sounder footing.

That essentially is what is happening in a muddled incoherent way. Standard and Poor’s can work this out. This is why they are willing to let the UK keep its AAA rating. Osborne needs to present his programme in a joined up way we can all understand, with a clear view of where we are headed, expressed in values to motivate ordinary people. The likes of S&P will then take care of the markets.

Maths: Now The Reckoning

Tuesday, July 24th, 2012

Nearly two decades ago my youngest daughter was at primary school when her mother and I became concerned with her having difficulty with arithmetic. She did not appear to know or be taught either her tables or simple long division. We went to see the Headmistress.

We were told over coffee that our ideas were ‘old fashioned’ and now maths were being taught with a ‘new method’ called ‘new maths’ which was concerned with the ‘philosophy of number’. We blinked. We thanked her and left. Her mother said in the car that what she had heard was nonsense and she would herself teach our daughter  all the basics she needed to know including her tables. At school the child became something of a star among her peers and was described by her maths teacher (new maths of course) as ‘a gifted mathematician’.

The chickens of this barmy experiment, driven by crackpot academics unable to tell folly from wisdom, are now coming home to roost. In a frightening report the Lords Science and Technology Committee highlights the shocking deficiency in mathematical skills even among the brightest students arriving at the best universities. Indeed we lag behind every other country in Europe.

This is the pickle into which the drivel about ‘new maths’ has got us. It is a monstrous failure of duty to the young and gifted. It will have a serious economic impact on our nation until it is put right. Maths is maths. It is neither new nor old. It is timeless. It is time it was taught properly again from the earliest age in all our schools.

Syria’s Agony: US and UK Foreign Policy.

Monday, July 23rd, 2012

There have been some encouraging shifts in both US and UK foreign policy under both Obama and the Coalition, which have generally improved the international standing of both countries since the Bush/Blair era. However this trend for improvement has been reversed over the Syria issue. Here the fault lies not so much in the hostility to Assad or the backing of the insurgents, although a less partisan approach would be better. The biggest problem is the natural instinct of both the State Department and the Foreign Office to be antagonistic to  Russia and China.

Both in my book (2010 A Blueprint For Change) and on this Blog, I have continuously argued for a more engaged policy with these two great world powers, which recognises that the foundation of the relationship should be common interests rather than individual differences.  Neither power played any role in the decisions to launch the wars in Afghanistan and Iraq. What both see as a consequence of those Anglo American led initiatives is a military quagmire, a foreign policy shambles and broken countries rent by never ending violence. Today’s news is a further eighty plus killed in Iraqi bombings.

Russia and China muttered and abstained over Libya, which looks a better project, though it could still unravel. When it came to Syria they dug in and said no. They did so with good reason. Syria may have been governed by a despotic minority of long standing, but it was relatively prosperous and stable. Even the Israelis could cope with Assad. Better the devil you know and all that. If the uprising had produced a clear leader or leaders, with a defined programme or aim, whose identity could be established beyond all doubt and whose strategic goals could be supported without anxiety, it could be argued that the Russia/Chinese position was that of the spoiler.

But none of that is so. It is far from clear who all the people in the insurgency are, what they stand for, whether they could agree on anything when and if Assad goes. Nobody knows whether they could deliver a benign Syria rebuild to the family of nations, or whether the outcome will be the endless violence of a broken state on the style of Iraq, which also looks on the cards for Afghanistan. The Russians and Chinese, of which Russia is the driver, say peace by reconciliation from within is better and more likely to work than regime change driven by arms and influence from without. There is nothing daft or obdurate about that; it may be wrong, or yet it may even be a better way.

There can be no good outcome without Russia and China participating. For this reason the public hectoring by Hague and Clinton of their position over Syria is neither appropriate nor constructive. It prolongs the violence and the suffering. It is immature and incompetent, because sooner or later a deal will have to be struck and most fools know that you cannot expect to persuade people of the wisdom of your argument if you first throw mud in their faces. This blog agrees with this view, expressed a good deal more elegantly by Zbigniew Brzezinski. Formerly President Jimmy Carter’s national Security Adviser, he remains a formidable world authority on strategic thinking.

Leadership: Is It In Decline?

Wednesday, July 18th, 2012

There has been an interesting thread running through the various high profile interrogations by Parliamentary Select Committees as well as the appearances at the Leveson Inquiry, which leads always to the same place. It is not a good place. It is the place of third rate leadership. It matters little whether it is a newspaper tycoon, a bank boss, a security company CEO or even a government minister. At worst they come across as little better than scoundrels and at best untrustworthy. There are some worthy souls such as the Bank Governor and the Head of the FSA, but they appear almost bemused by the scale of duplicity and incompetence among those supposed to be cream of the City.

This is all alarming. We now know that the economic theories underpinning the belief that free markets always find equilibrium are flawed. We also know that globalisation based upon those theories leads to unsustainable imbalances. We know that markets are easily rigged and that excessive financial rewards drive the wrong people forward into positions of command. We know that the Anglo-Saxon economic model sucks resource from the poor into the coffers of the rich and fails in return to create new wealth. We know that the whole western economic model is crippled by debt.

Yet when those thought hitherto to be the great and the good appear in public to explain, they fall far short. They do not appear either charismatic or clever. Whether it is security guards, LIBOR, phone hacking or whatever their answers and explanations are neither convincing nor complete. Denial is the state in which all seem to live. It used to be argued that to get the best people you had to pay more. At least we know now that the more you pay them, the worse they get. Ministers, who feed their egos not on money but on power, have become utterly detached from responsibility for the cock ups of their departments, to the point where they are little short of brazen.

We cannot go on like this. We need a new generation of leaders who are neither greedy nor selfish, who are not just clever but are also informed, who are creative and inspiring, who have worked out what needs to be done and what its effect will be, who have the conviction to support their plans and who have the leadership qualities to inspire us all.

Where are they?

Olympic Security

Monday, July 16th, 2012

For several days this story has had wings and more recently we have seen footage of groups of people undergoing some form of training before taking up their duties of guarding Olympic venues. G4S has suffered a public relations calamity, its Chairman refuses to back its Chief Executive, the Home Office is again in the firing line with the feisty May on the defensive and the hapless Hunt is once more doing the media round making excuses.

This blog is unable to understand how ten thousand random people, most  without experience in  public order enforcement, employed at short notice for this temporary purpose and given minimal training, can possibly ‘guarantee’ security at the Olympic venues.The answer is they cannot and it was never intended that they should. There has clearly been a fault at G4S. There has also been a fault by the Games organisers with their terminology and explanations.

Security in real terms for this world event was, is and will continue to be in the hands of the armed forces, the inteligence services and the police. This is evidenced by ground to air missile batteries sprouting up across East London and warships on the Thames. What G4S is contracted to provide is stewarding, handbag searches and crowd control. Originally they were asked to provide around two thousand people for this purpose. LOCOG then upped this to ten thousand. If anyone had stopped to think about it, they would have seen that this was unrealistic. To achieve the outcome would have required extraordinary organisational input from the contractor, G4S. This they failed to set up.

With the intervention of the army, the shortfall will be made up. Meanwhile a blame game is afoot. Fingers are being pointed at Whitehall officials and their Ministers for being behind the curve and late to act. There is nothing new in that.

Funding For Lending: Good or Bad?

Saturday, July 14th, 2012

The new lending scheme initiated by the government through the Bank of England is imaginative and offers the kind of initiative which, properly used, will help the economy. The key phrase is ‘properly used.’

We know that there is mounting anxiety that the crisis in the euro zone is stifling the recovery in the U.K. This blog is not convinced of this entirely, but it is the current political mantra. Other parts of the world are doing better and if you aim at these, there is good opportunity; witness our booming foreign owned car industry. Underlying all the economic issues of the West is the crisis of debt. Overhanging the UK is the second largest total debt in the whole world, second only to the US. In the US total national debt is about 1x GDP. In the UK it is x4 of GDP. In money the figure is a little short of $ 9 trillion. In comparison it is twice as high as the next highest, Germany.

This grotesque debt overhang includes both private, public and corporate debt and at some point has to be repaid. Meanwhile it has to be serviced. Set against this background, economic stimulus based upon more borrowing is little short of silly. Unfortunately modern adherence to the free market, a concept seriously dented in several places, gives the banks the money and they do the lending. In earlier times, which in retrospect were more successful than perhaps we thought then, there were often significant restrictions on to whom banks could lend and for what purpose. These always formed a key element of the Budget.

Politicians, including Osborne  (what a busted flush the Chancellor is becoming) are slow to grasp that easy loans and cheaper mortgages are the path to calamity. This new money must not on any account contribute to the inflation of static assets and it must on all accounts stimulate production and employment. Thus, businesses making things which can expand and take on people, infrastructure projects, plant and machinery, re-tooling, research and so forth should be where this money goes.

Under no circumstances should it get into the housing chain. We are just beginning to see signs (not in the South East) that house prices have at last fallen to the point where first timers can have a go. The value ratio is now 4x income. It is still too high. Until it drops to 3x, sustained recovery is impossible and until it drops to 2.5x, the economy will be unable to take off. Until it does take off the chances of paying back $9trillion are slim.

Northern Ireland : Must They March?

Friday, July 13th, 2012

Once again violence has flared as the so called ‘marching season’ gets under way. These protestant marches are all part of a ‘marching tradition’ we are told. Maybe so. This does not make it right.

On a recent visit to Ulster I was struck by the sense of hope and engagement at every level and from every faith. I talked to Catholics and Protestants and found that among the ordinary people they had hope of a decent future for the first time in generations, built on the principle of accept and forgive. The Ulster emerging is not quite what either side had planned, but it is a worthy place nonetheless, in which its people  take increasing pride.

Marching with drums beating and colours flying is one of the most stirring spectacles in which any grouping can engage and none can witness it without a profound sense of pride on the one hand or hate on the other. The Protestant so called tradition of marching through Catholic areas to rub the noses of the locals into their subjugation by the protestant ascendancy, following the defeat of James II at the Battle of the Boyne three hundred and twenty two years ago, must end. It is out of date, out of order, out of place, out of fashion and out of step with the whole peace process which has finally delivered a future to a people obsessed with their past.

Politicians in London must draw to the attention of their colleagues in Ulster that in the United Kingdom as a whole such provocative and inflammatory spectacles are forbidden and for the Protestants of Ulster no exception can be made. Parade yes, but not in a fashion or along a route chosen to insult  your Catholic neighbours and fellow countrymen.

Coalition Cracks: Will It Collapse?

Wednesday, July 11th, 2012

The test of any government is whether it can get its legislation through its parliament. For a coalition government this test is fundamental to its survival. The Coalition led by the Tories, with the Lib Dems enjoying the taste of real power for the first time in nearly a century, has just failed that test. No longer does the government look a sure thing until 2015. It is now much more likely to move, if it does survive its term, to a menu style programme, with each item separately negotiated and agreed; a slow and fractious process. It will, before 2015, in order to allow the parties to re-establish their independence in advance of appealing to voters, move to a Confidence and Supply basis. Senior Liberal Democrats are now hinting this in public and planning it in private.

Yesterday’s withdrawal of the vote on the timetable of the House of Lords reform bill was a technical defeat, but a blow nonetheless. The bill itself sailed through with an overwhelming majority, so all parties can say they support an elected House of Lords, while a political stunt by Labour and a rebellion against Cameron by Tories, shut off the oxygen supply necessary to give the bill life into law.

There is no political issue which promotes a greater degree of pompous rhetoric nor self righteous commentary among politicians than reform of  the Upper House. All are blind to the core of the problem.  It is this. Ask any leading Judge or Q.C and they will tell you that the quality of the legislation put on the statute books over the last thirty years is very poor. There is too much of it, doing too many things with ambiguity, opaqueness and contradiction. We can recall the paralysis at the Bank of England in the 2008 crash, as it found the left hand of the law demanded of it what the right hand of the law forbade. We need to look at the root cause of these duff products and start at the factory which makes them.

This idea of an elected lower house which has all sovereign power (it doesn’t) and an upper house of appointed or hereditary worthies (they aren’t as worthy as they think) acting as a kind of legislative quality control, sounds lovely. But in the modern world it does not work. Never in our history have we been burdened by so much legislation of so little merit and never  have politicians been held in such low regard. The proof of the pudding, as the saying goes, is in the eating.

That modernisation of the institutions of our democracy is overdue, is obvious. That fewer, better, laws with sharper focus are called for, nobody denies.  Signs that we have a government lacking the authority to fix all this are growing. A factor which has helped the U.K’s triple A rating has been its decisive government willing to do what has to be done. If restive Tory backbenchers continue to stab the Coalition in the back, the Lib Dems will retaliate. This will make harmonious relations in Cabinet difficult. That will worry the ratings Agencies.

Lords Reform

Wednesday, July 4th, 2012

The Liberal Democrats are not doing well on Constitutional Reform. They botched the campaign on the A vote and now are promoting a peculiar notion of an elected House of Lords through the Coalition, of which they remain fractious members. The proposal to elect hundreds of Lords for single fifteen year terms is an unusual form of democracy, with successful candidates looking decidedly mouldy towards the end of their term, with a very weak link to public opinion.

This blog would prefer one Lord for every county in England, Scotland, Wales and Northern Ireland and one for the capitals of each country, London, Belfast, Cardiff and Edinburgh. This would work out at one hundred or so and would leave room for one or two additions. If one third were elected for six year terms every two years, a good compromise between democratic legitimacy and continuity would result.

The bodge on offer at the moment is not what the supporters of the Liberal Democrats thought they would get. Their party’s leadership explains compromise is the price of coalition. If they continue to disappoint their supporters with  flagrantly broken promises or fudged compromises, they will find they will have none left. The Tories have, once again outplayed their Lib Dem partners, by offering a constitutional deal which nobody in their right minds should support.

The Coalition made a very good beginning. It is heading for a sad end. Labour will be the beneficiary.

Government and Select Committees

Wednesday, July 4th, 2012

All the politicians want an inquiry into banking, the form of which is in dispute. This blog will therefore not comment on the specifics, but on the principle.

It has become a feature of modern government that ineptitude is an integral component. This is because the quality of politicians has fallen to such a low ebb. The fall-back for controversy is the Public Inquiry led by a judge, which takes painstaking evidence over months and months. When it has finally sifted through the millions of words, the Report is published and recommendations made. By this time the world and especially the modern digital world, has moved on. For example we still await the findings of Chilcot, although few ordinary folk recall why it was set up.

The government, still in the grip of its mid-term blues, proposes a Parliamentary Inquiry over the LIBOR fallout led by the Chairman of the Treasury Select Committee, but composed of a broader membership, including peers. There is some confusion at Westminster about its status in the wider scheme of parliamentary things. What is needed is a permanent structure for this kind of investigation which is quicker and much less expensive than the quasi courts of the big Public Inquiries. Essentially the requirement is for inquiries in public.

The Parliamentary Select Committees provide the ideal vehicle at reasonable cost. They command increasing respect, are held in public and are largely bi-partisan. What is needed is for them to be able to examine witnesses under oath. Add that and a few minor powers and you have a ready and coherent response to controversy, which is both timely and cost effective. Because all the members of such committees are elected MPs, there is a welcome connection with voters, lacking in so much of our fabric of State.