Endemic Corruption in the UK?

Summary: South Africa has been plagued by corruption for about the same time that the UK has been plagued by austerity imposed on the poor by our right-wing governments. We don’t need to look for corruption as they find it in South Africa. Our system makes it very easy to transfer large sums of money from the public sector into private hands because of the way that our company laws are structured. Shareholders and Directors are able to walk away with large sums of money leaving pension deficits for the state to cope with. Combined with the widespread use of tax havens, many under British jurisdiction, the net effect is that the UK is effectively a highly corrupt country.

The resignation of Jacob Zuma as President of the Republic of South Africa promises a much better economic and social future for that country. Emerging economies in Africa are achieving growth rates in excess of 4% yet the RSA has been running at about one third of that level. In South Africa there growth is only slightly ahead of Zimbabwe, a widely acknowledged economic basket-case. Unemployment stands at an amazing 27%. As a country, it has considerable natural resources, including gold and diamonds as well as a large area with good agricultural potential. Yet the poor have been suffering dreadfully.

The remarkably poor economic performance of the RSA in lifting the poor, largely black population out of poverty has been very poor indeed. Much of this is attributed to a deep, embedded corruption masterminded by Jacob Zuma and probably involving the extremely wealthy Gupta family. Within South Africa it is believed that such interests have essentially captured the state economy for their own benefit.

At about the same time that Jacob Zuma became President of the RSA the Conservative/LibDem coalition came to power. That government and the subsequent Tory government instituted one of the harshest programs of austerity in the world. Since then the British economy has grown significantly less rapidly than the rest of the European Union. Indeed the growth rates most recently experienced by the EU are the highest for a decade at 2.8%. The effect of austerity has been to keep the UK growth rate substantially lower. Some hard-core Brexiteers claim this is a consequence of the UK being held back by the constraints of being part of the EU. They ignore that it doesn’t seem to have done any harm at all other EU member countries.

After the Brexit vote, the value of sterling collapse by about 15%. That had been predicted to provide a significant boost for growth in the UK. This has not materialised and it continues to be very much lower than the rest of the EU at about 1.4%.

This much poorer performance in the UK cannot be blamed on corruption of the same sort we clearly have in South Africa. In the UK it is generally accepted that large sums of money are not passed overtly between the government and major commercial organisations. In the UK there is no need to use illegal methods of becoming much richer. This is because the systems in the UK are already well designed to enable already wealthy and powerful people substantially richer.

To understand this we only need to look at the fiasco with Carillion. This company has just declared bankruptcy because of unrealistic estimates for major construction contracts. Very large debts have been left behind and the Pension Funds are underfunded by in excess of £1 billion. Only one fund out of the dozens that there are is in surplus. Unsurprisingly it is the fund that provides the pensions of Directors.

Very substantial sums of money were passed to shareholders and to the directors in the form of vast bonuses. The default of the company means that the state Pension Protection Fund will have to make up the very substantial difference. The net effect is that very large sums of money are being transferred to the private sector in the form of shareholders and company directors. Suppliers to these companies have virtually no chance of receiving any payments.

This is how corruption works in the UK. It effectively keeps down any growth and encourages austerity. Money which could have been invested in the growth of the UK has been diverted. Corruption in the UK is further compounded by the widespread use of tax havens to launder profits and keep ownership secret. The government have undertaken to sort this out and largely eliminate tax havens, many of which are directly under British control. The right-wing Tory government of course have very little interest on that and so surprise, surprise nothing has happened. The corruption that the use of these tax havens essentially is permitting continues unabated.

The NHS and a Web of Deceit.

Summary: the NHS and our social care services are under extraordinary pressure. The government continues to claim that the NHS is “safe in their hands”. It is not at all. They claim the NHS is the best in the world yet a report suggests that amongst the top 12 economies, the NHS is the second poorest in terms of preventing, detecting and treating illness. So many wrong decisions have been made about so many aspects of doing the right thing for the NHS it is difficult to know where Labour might start if they get into power. So many of government claims are simply being “economical with the truth”. They must be resisted at every turn.

The NHS is the best health service in the world. True. Or at least it was when Labour handed responsibility for it first to the coalition and then to the Tories. We were all greatly reassured by David Cameron many years ago claiming “the NHS is safe in our hands”. He repeated that in his first major speech after 2015 election and said “a 7-day NHS, safe in our hands, for every generation to come”. Theresa May has continued to parrot that phrase, oblivious to the reality faced by anyone who goes near an NHS hospital in 2018.

So how come we see television pieces and read in the news media daily about one disaster after another? Ambulances queueing to pass individuals in need of urgent treatment.  Stressed nurses working in overloaded A&E departments around the country. Patients waiting on chairs or trolleys in corridors, unable to be admitted because of other patients stuck in A&E. Patients stuck in A&E because other patients capable of being discharged from wards have nowhere to go since the social care system has been damaged even more than the NHS by real cuts.

We have an ageing population, a growing population and a rapidly growing increase in demand. A system that is as grossly overloaded as it is simply cannot cope with any additional pressure from winter flu or any kind of disaster. It takes so long now to get treatment in A&E that many patients are left much worse because they have not been treated in time.

Staff are under an intolerable pressure. Shortage of nurses (currently around 40,000) and doctors (about 9000) add to the strain. Application for a nursing position in the NHS requires passing a complex English language test intended for academics that includes a significant essay question. This causes many who speak perfectly adequate functional English to fail. Applications from nurses from the EU have dropped enormously, by a factor of more than 20, because of the risks around the insanity of Brexit that the nurses may simply be arbitrarily repatriated. Doctors appointed to NHS hospitals from overseas currently cannot get visas because the quota has been exceeded.

Nurse training now requires fees and accommodation to be paid for by the trainee nurse and not by the NHS who used to provide bursaries and subsidised accommodation. The idea that any young person might wish to become a nurse given the current TV coverage of the awful stress they will experience seems quite unlikely. 4/5 NHS nursing directors say their hospitals rely on the goodwill of staff to keep things running. There is more here: http://outsidethebubble.net/2017/02/02/government-driving-up-non-eu-immigration-intentionally/ .

What is causing this chaos? Surprise, surprise it’s all about money and the Tory obsession with austerity! It all started when Thatcher introduced the internal market, splitting the purchaser (health authorities) and the provider (hospitals) that were contracted to provide services. Labour opposed this strongly until they got into power then embraced it with enthusiasm. Tony Blair went much further, making the structure much more complex as well as getting into Private Finance Initiatives which to this day continue to drain money from the NHS. At least during the Labour years money continued to grow for the NHS. Not now, under the Tories.

When the Tories got their hands on the whole business the decided to trim every aspect of the health and social services in the UK (efficiency savings, of course), and further cuts are planned (yes, seriously). The Bank of England managed to print nearly £500 billion of new money in recent years to keep the banks afloat. When it came to health and social services, cuts were the order of the day. Income tax on the wealthy, increased to 50% in 2010, was reduced to 45% a couple of years later.

Over the last 10 years funding for the NHS and in particular the social services has lagged well behind inflation. The increase in demand and the size and age of the population continue to be simply ignored. The Tories insisted that the extra demand was simply because of large scale immigration from the EU. The right-wing media seized on that and the effect on demand of the (almost non-existent, in reality) scroungers.

Public funding for healthcare is forecast to fall from 7.6% of the GDP in 2009/10 to 6.8% by 2019/20. The rates in France are just under 9%, and Germany just over 9% of GDP.  Increases in the NHS will average only 1.1% per annum through that period, very far from keeping up with the increasing demand or the increase in the cost from improved treatment procedures.

The recent announcement of a very small increase in the NHS budget in the 2017 budget is tiny and will have very little effect on the current multiplicity of crises. Estimates from The King’s Fund suggest that funding is currently running at least £4 billion lower in real terms than required.

Less than a year ago Theresa May again claimed the NHS was the best in the world, and absolutely safe in Tory hands. In fact the NHS was rated the second poorest out of 11 rich countries in healthcare outcomes assessed on the prevention, detection and treatment of illnesses. The pay cap on many including nurses in the NHS has been lifted yet no new money provided to fund increases.

Yet there is worse still. Social care funding has dropped over the last eight years in real terms of over 8%. As a consequence the availability of places for convalescence, essential to help unblock the bed occupancy in hospitals is even poorer than it ever was. Only by providing such space is it possible to unblock the appalling logjam that is a typical NHS hospital today.

Only today the Children’s Commissioner for England, Anne Longfield, reports that the provision for children’s health in England is much poorer than in Scotland, Northern Ireland or Wales. In Scotland they have just passed an ambitious act to reduce child poverty and develop a new mental health strategy. The Tory government seems to see children as a burden on society. Austerity means we now have 72,000 children in care. The Tories made this worse by introducing a two child limit for family credit. This shows just how much they value children and how happy they must be to make the lives of poor families even more difficult.

Child obesity now runs at about 20% in year 6 (ages 10-11), and up to 26% in children from disadvantaged backgrounds. An obese child has an 80% chance of becoming an obese adult, with a life expectancy shortened by between 10 and 20 years. The Tories claim to have a world-leading plan to deal with child obesity. It is probably as complete as their Brexit Impact assessments (i.e. doesn’t exist).  Legal action is again being taken against the government for their failure to deal with the High Court judgement against their inadequate plans to improve the quality of the very toxic air in our cities.

Where will the money come from? Assuming that the government are not prepared to get the Bank of England to print perhaps 1% of the money they printed for the banks over recent years, the idea of increasing tax on the very wealthy is totally dismissed by the Tories. Today we also have the news from the Tax Justice network that the Treasury have instructed HMRC not to worry about Amazon’s non-payment of tax. Another source of money that would make such a difference to the NHS but instead going to multi-billionaires overseas.

It is clear that the NHS really is NOT safe in their hands. Those hands are pretty lethal in reality. Labour will have to work so hard to unscramble this mess that is so bad that even 70% of Tory supporters are very concerned about the NHS, and fewer than 40% think Jeremy, the Health Secretary, should keep his job.

Don’t Conflate Brexit with Party Politics.

Summary: Brexit is not a party political issue. The increasing pressures on Labour to come out against Brexit must be resisted. Labour must get into power. A second referendum, becoming increasingly likely with Nigel Farage supporting it, is the only way it could be reversed if our democracy is going to retain any element of respect. All Labour need to do is to say they will bide by the outcome of whatever referendum result stands. They need to concentrate on gaining power not by risking their fragile majority. They have the policies and an energetic and enthusiastic party base. Even if Brexit does come to pass, one managed by Labour would be so much better for the country as a whole.

Brexit is not a party political issue. That may seem a strange thing to say. Yes, referendum was a consequence of political machinations at that time and, yes, the Brexit negotiations are being handled, albeit badly, by politicians. The conventional political party lines were crossed by very many voters because the political parties provided little helpful guidance. The vote to Leave was not driven by one party or another.

The campaign before the referendum was deeply flawed but the result was one arrived at democratically. Let there be no doubt that the only way respect for democracy can be maintained is if a second referendum is held, hopefully with much more detail of what the Deal might be. No political party could possibly reverse Brexit if they came to power without the support of a second referendum. It would be seen as a further example of the power of the establishment to try to reverse Brexit without it.

Labour are being advised by many to come out against Brexit. For many months, Labour has consistently avoided stating what their view of Brexit actually is. However the most important thing that Labour has to achieve is to become the next government with a reasonable majority. Nothing, including Brexit, should be allowed to distract from that goal. So far Labour have managed sitting on the fence. As soon as they declare one way or the other significant numbers of voters would leave the Party and no doubt others would join.

The demographics of Remain or Leave voters are complicated and transcend conventional party political lines. It is difficult to see what benefit there might be for Labour in declaring one way or the other for Brexit. A second referendum is becoming increasingly likely particularly as Nigel Farage has come out today in support of such a referendum. He is convinced that the majority for Leave would increase. In a sense any second referendum, no matter what the result, would be progress as it might give a bigger majority for one side or the other. That would perhaps clear up the ambiguities for a considerable period.

The Brexit battles will continue but there is no particular need for these arguments to affect Labour’s policies. Indeed there are relatively few of their policies that would be dramatically affected by Leaving or Remaining, apart from the economic impacts of leaving which would be pretty serious. Those in favour of Remaining should organise themselves as best they can independent of party loyalties and let the parties get on with politics and running the country.

At present, the Tories are so preoccupied with every aspect of Brexit that they have little energy left over to run the country. The current shambles with the NHS, social care, education, defence, you name it, is all because the Tories have run out of new ideas and, because of Brexit, do not want to upset anyone. This is exactly the environment that Labour should be capitalising on now. Labour have strong policies which are in many cases well worked out. These really should appeal to those living in areas that voted strongly for Leave. Nothing should be done to risk losing these potential voters. Labour have to manage an important communications program to reach the communities most affected by austerity. But don’t talk about Brexit!

All that Labour need to do as far as Brexit is concerned is to make it clear that they wish to support the democratic will of the people. If their democratic will is found to have changed after a second referendum, well that’s fine. And if it hasn’t changed we just have to live with it sadly. Those like me who want to Remain must make the case clearly and in a way that reaches those who had voted to Leave but we must not conflate Brexit arguments with Labour party policy, nor should we pretend that Labour strongly support one side or the other. If we do then Labour will simply lose votes. Opinion polls do not suggest a very strong lead for Labour. We must not become complacent and take risks. Only one thing matters. Getting Labour into power. Brexit can sort itself out.

Owen Jones in his recent piece for the Guardian (see: https://www.theguardian.com/commentisfree/2018/jan/03/stop-brexit-campaign-vote-leave-populist) has made the matter unnecessarily complicated by failing to separate Brexit from day-to-day party politics. That is why the strongly anti-Brexit Lib Dems have garnered almost no additional support by their policy. He is right, however, that a Labour-managed Brexit would be preferable to one being run by the hard right of the Tory party. That can only be done if Labour win power. Nothing else will do.

Labour Must Rethink Its Brexit Strategy.

Summary: Labour’s policy on Brexit is far too poorly defined. We don’t need to come out for or against Brexit nor for or against a second referendum. The shambles of the Tory Brexit negotiations will continue and probably get worse. Decisions by Labour about its approach can be left until later in the year. Tony Blair has produced an interesting commentary suggesting that Labour should be much more proactive in its relationship with Brexit. Just because he is so unpopular with the left we must not ignore everything he says. What he says makes a lot of sense. Shoot the messenger if you must but read the message first.

In the 1930s and 40s there was a lot of excellent scientific evidence that smoking was a major cause of lung cancer. It was ignored and dismissed by tobacco companies and politicians because that research had been done in Nazi Germany. The research was repeated and came to the same conclusions. The 10 year delay in taking action caused millions of deaths worldwide. My own mother, advised to smoke for her nerves when pregnant with me, died early with lung disease. Nobody liked the messenger then so the message was ignored. We mustn’t make the same mistake again.

Tony Blair has produced a lengthy piece about Labour’s strategy surrounding Brexit (see: https://institute.global/news/brexit-what-we-now-know , and summarised on LabourList at: https://labourlist.org/2018/01/tony-blair-this-is-our-last-chance-brexit-and-the-fate-of-britain-will-be-decided-in-2018/ ). Like many on the left I’m pretty allergic to him and his ghastly legacy. Another case of a disliked messenger yet that is no reason not to listen carefully to what he says. In fact many of his views make a lot of sense, and it should be considered seriously and without prejudice. There is no doubt that Labour policy on Brexit is at best ambiguous. The Tory government is making a complete hash of the Brexit negotiations. Labour really do not need to mouth the foolish “cake and eat it” phraseology beloved of the Tories. We can’t be outside the single market while being in “a single market” as John McDonnell seems to believe. We need to restructure Labour’s approach to maximise its effect on the electorate. If Labour hope to become a government it must learn to develop strategies and articulate them.

I think Tony Blair is wrong that Labour should become anti-Brexit wholeheartedly, nor should they declare themselves for or against another referendum. By maintaining that aspect of their ambiguity they are protected from attack from both Leavers and Remainers. The Tories can be left to continue tearing themselves to pieces. But Labour must not continue doing and saying nothing about it. It dominates a great deal of what is going on in the UK today. We mustn’t take the “don’t talk about the war” approach indefinitely with Brexit.

What Labour must do is to focus on what is happening in the Brexit negotiations and making it clear just how badly these are being managed and just how unrealistic Brexiteer ambitions actually are. There is a lot of evidence that those who voted to Leave were socially conservative and that conservatism was more important than their concerns about the economy. The emphasis of the Labour criticism of the Tories must be to point out just how badly wrong the Brexit process is going. The deals being discussed will not be in any way socially conservative. They will be revolutionary in a way that will also be deeply damaging, in the worst possible way. Labour has to explain just what the Tory approach will do to the country and to those already damaged so much by Tory policies.

Tony Blair is right that Labour must make certain that Brexit is understood to be a pure Tory Brexit. Tory interests will be looked after (big business, finance, the City and the wealthy). The left behind will continue to be left behind only now more so. The economic uncertainties will force bigger and more widespread cuts than we have seen so far. Every aspect of our social fabric will be further damaged. At a time of crisis in the NHS, the social services and many other aspects of what matters to so many of us has to be deeply damaging. The Tories must be blamed for that unambiguously.

We cannot be sure of a chance for a general election during 2018. Again Tony Blair is right about that. The most likely scenario is that the Brexit Deal produced by the Tory government will be patchy, contain many uncertainties and attempts to postpone detailed negotiation until the transition period. After the exit date in March 2019 we will indeed be out of the EU and many of the options we might otherwise have may be closed off. Labour must ensure that a vote on the Deal takes place during 2018. Only then should Labour make it clear that if public opinion has turned against Brexit then another referendum should be held and the Brexit process paused if not terminated.

A Tsunami is Coming This Way!

Summary: With unemployment in the UK so low it is easy to ignore some radical changes that are likely to make the employment of humans much less attractive in the not-too-distant future. British productivity will grow mainly by investment in advanced machines. Important developments in robotics and artificial intelligence will drive this forward at increasing speed. Some countries are already planning to normalise much shorter working weeks. A broad interest in Universal Basic Income will make part-time working more attractive. That would help to create a fairer society to improve the work-life balance for those today shackled to a system requiring long working hours, low pay and with little prospect of advancement. These changes are already happening. We cannot ignore them or imagine for a moment we will be insulated from them in the UK.

It may seem strange when UK unemployment is at a 42 year low to be concerned about the near future prospects for jobs. Our low unemployment rate disguises the fact that there is a lot of slack in the labour market with people employed part-time or on jobs that are highly repetitive and boring. The economy is growing very slowly indeed. The rise in Bank of England interest rates might make you think the corner has been turned but it’s still not looking good at all

Once the present Brexit/Tory shambles is sorted out we can expect significant increases in investment in the economy partly by government but particularly by business. Labour are keen to invest in infrastructure development. The worryingly low level of productivity in the UK will be boosted by investment in new machines and assembly and manufacturing techniques. In other countries this has gone ahead quite strongly while the UK lags. By starting late we will be investing in more advanced machines than other countries. Yet investment doesn’t imply massive increases in employment. Nissan are investing £100 million in their facility in Sunderland but will only increase jobs by just over 100. That’s all the jobs you get these days for £100 million investment

Car production lines are highly automated largely staffed by robots who work tirelessly, uncomplainingly, 24/7, don’t need bathroom or lunch breaks or an HR Department to keep them happy. Outside vast production lines robots are becoming increasingly entrenched. Their capabilities are improving daily. Have a look at this movie from Boston Dynamics (see here: https://www.youtube.com/watch?v=-7xvqQeoA8c ). Robots are under development in the UK that will repair potholes in roads (big market there clearly). Autonomous aircraft and ships and vehicles are under active development worldwide for military use (see: http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/ ). The rate of improvement in robot capability is dramatic. Tasks which were thought impossible a few years ago are now managed routinely.

The one area where humans have a distinct advantage is where skills are important and have to be learned with training taking months or years to complete. Think here of drivers, pilots and even surgeons. Humans need to be trained to carry out skilled tasks. The training principally involves the learner being helped to absorb the experience of others who are already skilled. Artificial intelligence (AI) is able to use the human experience to process datasets of all sorts that are too extensive for the intellect of individual humans. However recent progress in self training systems has been most impressive.

Google achieved a major milestone in October 2017 at their facility in central London. For some years they had been training computer systems to play the ancient Chinese game of Go, widely believed to be more difficult to master than chess. These trained systems had achieved very high levels of performance. However, the extraordinary new achievement, explained in a Nature paper (https://www.nature.com/articles/nature24270.pdf ) was to use a specialist computer system to teach itself Go without any external training. It was simply given the rules of the game and told to get on with it.

It started by simply playing Go against itself. It played a very large number of games, around 30 million, but by the end of that time had reached a level of expertise at Go that no human has ever achieved. Playing against the previous version of the machine which had already beaten all human players, it won 100-0.

Human players don’t ever play 30 million games but they do learn from many others who have honed their skills by building on the experience of yet more individuals. That is how we humans can learn very quickly. Yet the idea for the first time that a machine can be told what is needed and can train itself to achieve that goal so quickly has enormous implications for most other kinds of mechanical and intellectual challenges. The consequence must be that the number of jobs available for humans will decline and probably decline rather rapidly.

Another interesting announcement this week was that there are moves within Germany to make the standard working week only 28 hours long. At present, Germans work much shorter weeks than we do in the UK (it averaged 32.3 hours in the UK while in Germany they averaged 26.4 hours in 2014). At the same time, German workers have some of the highest levels of GDP per person in the world. 28.8 hour weeks were actually agreed within Volkswagen as far back as 1993 in negotiation with unions concerned that the reduction in demand for cars would lead to a massive redundancy in the main VW facility of over 30,000 jobs.

What is happening now is that German workers want a fair share of the benefits of Germany’s growing economy. They want to improve their work-life balance as well as achieving better hourly pay. They anticipate that the national demand for hours worked will continue declining and want the hours available to be shared as equitably as possible. They do not suggest stopping people working longer weeks but they want to ensure that someone working 28 hours per week will have a good standard of living.

The reducing demand for worked hours will mean that more and more people will be working at best part-time. The economics of this for employers becomes complicated and many countries are considering introducing a Universal Basic Income (UBI). Trials have already been carried out in Finland with great success and are about to start in part of Canada.

In Finland one region with 2000 unemployed individuals were given £500 per month with no strings attached. They didn’t have to pass any test or give any undertaking on how it might be spent. The results, however, were remarkable. Individuals receiving the UBI payments felt that the implicit security of this basic income gave them more confidence to take on additional, part-time jobs that might of themselves not give a big enough income. They also felt emboldened to try setting up their own small businesses that would never be profitable enough in the short-term to live on but with their lives being underpinned by UBI they felt it was something worth trying.

A scheme such as UBI at the right level could eliminate unemployment benefit, basic state pension, child benefit and many other payments already made to individuals. In fact, in a way, such payments are made to all of us already.

We have a tax-free allowance on our income, a way of supporting people on low income. A full UBI implementation would provide the same level of payment to everyone irrespective of their income. It would be added to that income and taxed accordingly but for the poor no tax would be payable until they had a decent income from other sources.

It is inconceivable that a Tory government would ever willingly give money to the poor with no strings attached. However Labour have been much more receptive to the idea and shadow chancellor, John McDonnell, has called UBI “an idea whose time may well have come” (see here: https://www.newstatesman.com/politics/economy/2017/07/could-labour-implement-universal-basic-income ).

The conclusion that we must face up to is that we shouldn’t expect the British full employment averaging 32 hours per week will continue for long. Robots and Systems which can teach themselves the skills that most of us have will increasingly make the employment of humans relatively unattractive. We must position ourselves to implement a revolution in employment before the tsunami overtakes us. We will all be surprised and shocked just how quickly it is upon us.

You Need to Balance Your Own Budget but the Government Doesn’t and Shouldn’t.

Summary: The Tory obsession with reducing the deficit with a programme of accelerating austerity is causing increasing harm to the great majority of working people in the UK. By refusing to borrow to invest in infrastructure and housing they continue to demonstrate they simply don’t understand basic economics. Much of the Brexit Leave campaign blamed immigration for depressing wages and standards of living. In reality it was a deliberate strategy of a Tory government wanting to transfer wealth from the poor to those already wealthy. Increasingly people accept that immigration is critical in providing workers for so many of the jobs that just need to be done. That message must be projected to the electorate if Labour are ever to regain the support of the poor working class. It is austerity and not immigration that is at the root of our problems.

The Institute for Fiscal Studies projects the number of children living in poverty will soar to around 5.2 million in the next five years because of the Tory austerity programme. All the progress made over the last 20 years in reducing childhood poverty will be reversed. The government and in particular Philip Hammond, the Chancellor of the Exchequer, continues to insist that we must balance our national income and expenditure. Only in that way, they say, can we get rid of the deficit. Sadly this seriously misunderstands economics and where money comes from.

We all know that if you or I want to buy anything, from a loaf of bread to a new car, we need first to have enough money to be able to afford it. When you run out of money you can buy nothing. That’s pretty well all you need to know about home economics. You cannot print money yourself and so you have to earn it one way or another. It may be from a pension, a salary, even income from an investment but if you don’t have some income you can’t have any expenditure.

When we look at the economy of a nation-state such as the UK things are very different. To understand this start with a £10 note. Signed by the Chief Cashier of the Bank of England it says “I promise to pay the bearer on demand the sum of £10”. If you go to the Bank of England and ask for your £10 you will simply be given a replacement £10 note. There’s nothing else. Many years ago there was a lot of gold in the basement of the Bank of England but that has long since gone.

So where did this £10 note come from? Well basically it was printed by the Bank of England. And who said they could do that? They simply decided themselves that that was a good thing to do. In this way the amount of money in circulation in the UK has increased over the years, currently over £43 billion and rising.

The Bank of England can print pretty well what it thinks fit. After the financial crash in 2008 they started printing money on a very large scale. Over the last 10 years the total is in the region of £500 billion. Virtually all that money effectively went to banks to improve their balance sheets. There are limits to what the Bank of England can print. If they printed so much that our overseas trading partners began to feel that the pound was not as valuable as it should be they would treat the pound accordingly. So printing too much doesn’t work but apparently printing £50 billion a year for the banks is fine.

The total value of goods and services produced in the UK, the Gross Domestic Product (GDP) is about £2 trillion per annum. The amount owed by the government is currently in the region of £1.6 trillion total or 90% of annual GDP. Other countries have much higher levels of debt (the US at 105%, Japan at 240%, 100% in France and hundred and 35% in Italy). In the UK the GDP generates approximately £720 billion in taxation. Government expenditure, however, is around £50 billion more than that per annum. This £50 billion leads to an increase in the deficit, the difference between income and expenditure. Compared with GDP this is very small indeed.

Why should this be a worry? Well it doesn’t need to be at all. At present a significant amount of the government expenditure is treated as essentially wasted in the sense of producing nothing of value to the nation whereas in fact a great deal of it is invested in a variety of assets with a long lifetime and a considerable value to the nation. Money used to build houses which will last hundred years is not in any way wasted. Building hospitals, schools, bridges, roads, railways etc produces assets that improve the value of the country, and its ability to grow and thrive (something it is clearly not doing now). Assuming that all such money spent on infrastructure simply adds to the deficit is fundamentally wrong.

The view that the deficit has to be reduced is therefore preposterous. Few other countries have a fully balanced budget. The battle to reduce the deficit is directly responsible for the austerity that has worsened the lot of the great majority of the less well-off members of our society. The Tories say we must continue pushing to reduce the deficit and this is likely to lead the Chancellor to continue with austerity in his November budget.

In practice austerity cuts the real standards of living of relatively poor people in the UK while allowing the wealthier to get even richer. Most people are worse off than they were 10 years ago. Unfortunately the Tories flatly refuse to contemplate increasing the tax take on the better off having shelved Labour’s proposal to increase the top tax rate to 50%. That is something that Labour would reinstate as well as rebalancing corporation tax and making a number of changes to make our economic system fairer, particularly with the taxation of multinationals.

Labour will also borrow money (essentially asking the Bank of England to print money) so that it can invest in a major programme of infrastructure development and in order to regenerate the housing stock in the country. Labour must increasingly emphasise that austerity is a Tory policy which hurts the great majority to the benefit of the wealthy. It allows the real decline in living standards to be blamed on immigrants and benefit scroungers whereas it all should be blamed on Tory austerity in support of the rich.

The View from Catatonia*: Don’t Talk about the War!

Summary: The problems within the Tory party are growing. The key battle in parliament now is the outcome of the Brexit Bill. A significant number of Tory MPs want important changes to the bill, changes that the Labour Party are keen to see as well. However the risk that hard right Brexiteers in the Tory party begin to project such disloyalty, as they would see it, as supporting Jeremy Corbyn is a potential source of trouble. If that becomes a widely held view then the support of those Remain Tory MPs could easily evaporate. Labour needs to sit quietly and absolutely avoid talking about the war.

No, not Catalonia but Catatonia*. This is an infectious epidemic whose symptoms are rampaging through the Tory party and particularly the Tory cabinet. Theresa May’s death spiral continues (see: http://outsidethebubble.net/2017/10/11/the-wheels-are-coming-off/ ) and Labour glee abounds.

However, for once, Labour really needs to be very, very quiet indeed about Brexit. In particular, many Tory party members view John McDonnell as a bigger threat than Jeremy Corbyn. It is undoubtedly true that John McDonnell has more fire in his belly and is somewhat to the left of Jeremy Corbyn. That is why both Corbyn and McDonnell must hide themselves away, plotting in secret!

Even more important than bringing Labour to power is restoring the authority of Parliament to make decisions about the future of the country. Labour are working with Tory Remainers to ensure that key components of the Tory Brexit Bill are modified to guarantee that Parliament will be the ultimate authority in making a decision on whatever has or has not been negotiated with the EU.

The one thing that has the potential to scupper these moves which are dependent on Tory Remain MPs voting against their own government’s bill is if the hard-core Brexiteers, a noisy, distinctly rabid bunch, start to claim that disloyal (as they would see it) MPs are simply voting with and for Jeremy Corbyn. This will be easy to claim and difficult to disprove. However any suggestion from Labour that there is the slightest whiff of truth in that and all those Tory Remainers will run back to Mummy. The vote will go with the government.

Getting these changes in the Brexit Bill are absolutely vital. The Tories are completely capable of ditching Theresa May and appointing a hard right such as Jacob Rees Mogg. Don’t forget that the Tories got within a whisker of appointing Andrea Leadsom, one of the longest surviving brain donors in the Tory party,  as Prime Minister. Fortunately Theresa May manage to ease her onto the hard shoulder in time. Unless Parliament has the authority to disagree with the Prime Minister there might be serious problems ahead.

Labour should be concentrating on the fractures that are appearing in the always dodgy relationship between the Tory non-majority and the DUP. The DUP are calling for the replacement of Philip Hammond as Chancellor. Whatever you might think of him he is at least one of the slightly more stable members of the Cabinet. He can actually add up. If he was replaced by Michael Gove, one of the names popular amongst Brexiteers for Chancellor, what little confidence remains in the UK government would evaporate completely.

Michael Gove is one of these older grey men (even when much younger than his present 50 he seemed terribly old) that seem to run the Tory party these days. To listen to him is wonderful. He is amazingly plausible, very articulate, very neat and tidy while all the time speaking incredible nonsense. While secretary of education he made an incredible mess of revising school curricula. He created creationist schools and introduce secondary level reforms that one expert claimed would “just wreck the English education system”. His pronouncements as Secretary of State for Environment Food and Rural Affairs further demonstrate his remarkable lack of grip of what is actually happening to the country or to farming. To think of the chaos he could cause as Chancellor is simply the stuff of nightmares.

So what should Labour do now? It is increasingly clear that the DUP favour a hard Brexit even though the majority of Northern Ireland voters were for Remain. The threat of a hard border between North and South, something that the DUP would prefer is particularly unpopular in Northern Ireland. The practical difficulties in managing such a border would be immense. However it undoubtedly would go right against the spirit and the letter of the Good Friday agreement that brought the Troubles to an end. It might well be illegal as an international agreement.

Labour should be using all its influence in Northern Ireland to keep drawing attention to the unpopularity of the DUP because of its role in Brexit. The DUP have been sliding in popularity within Northern Ireland for some time. You can read more about that here: http://outsidethebubble.net/2017/09/05/might-northern-ireland-trigger-another-british-general-election/ .

In particular Labour have amassed quite a lot of credit over the years in their more balanced support for left-wing Northern Ireland political parties and in particular Sinn Fein. Labour would certainly not want to undermine the Good Friday agreement, but now is the time to call in some of the debts. As soon the DUP start to distance themselves from the Tory party the current government will start to crumble. But this must not happen before the Brexit Bill is amended. That is why Labour must keep very quiet for a while. Their time will come.

These are some of the most worrying times for the UK we have ever faced. The potential damage to everything that this country has achieved over the last century is at risk.  Everybody keep quiet please. DO NOT TALK ABOUT THE WAR!

*Catatonia: defined on Google as “abnormality of movement and behaviour arising from a disturbed mental state (typically schizophrenia). It may involve repetitive or purposeless overactivity, or catalepsy, resistance to passive movement, and negativism.” Also as a state of immobility and stupor.

 

It seems to describe what is happening in the Tory party now to perfection

The Wheels Are Coming off!

Summary: The Tory party seem to be in advanced state of chaos. Theresa May can barely hold the Cabinet together. Increasingly senior people in business and government are realising that the worst predictions of the Remain campaign are coming true. Our economy is in a dreadful state now, growing more slowly than all but one G20 country. Normal government in the UK has virtually ceased. Decisions that should be being made are left to flounder and be ignored by the civil servants preoccupied with the Brexit negotiations. The DUP are under extreme pressure within Northern Ireland to sort out the Bombardier problem with 4000 jobs under threat. The Northern Ireland border with the South is still a major problem and the DUP have not been able to find a satisfactory solution with their Tory masters.

Everything seems to be going wrong for Theresa May. We won’t dwell on her disastrous speech at the Conservative party conference. Unfortunately the content of the speech was very thin and said little about what she would actually do both domestically and about Brexit.

She now has major problems both with the Brexit negotiations which are clearly deadlocked. She cannot risk bringing the Brexit Bill back to the Commons because of the number of Tories supporting seriously critical amendments, virtually guaranteeing defeat if not changed.

Grant Schapps may have been seen off but the speculation about Theresa May’s future is, if anything, gathering pace. Increasingly senior politicians in the UK are agreeing with George Osborne who said “If the British government wanted to withdraw its application to leave the EU I think it would be accepted across Europe”.

What is also becoming clear is that all the dire predictions of the Remain campaign about economic disaster are becoming true, though much later than predicted. Growth in the UK is the now the second lowest of any country in the G 20. Inflation is rising and productivity remains flat.

Companies increasingly are reporting serious problems recruiting. Many are realising that hard Brexit and the consequences for the movement of goods between the UK and Europe will be catastrophic. There are also now reports of European countries preferring to source important supplies from other parts of the EU rather than relying on the uncertainties of dealing with the UK.

There has been a noticeable whiff of the decay of her premiership that became stronger yesterday evening. She was interviewed on LBC and avoided a straight answer on the question “would you vote for Brexit if the EU referendum was held now”. She refused to say. Other cabinet members are much clearer. Damien Green’s answer to the same question was that he would again have voted Remain as he did last time.

Jeremy Hunt has announced the ending of the public service pay cap. He then went on to make it clear that there wouldn’t actually be any more money for the NHS. Any pay increase would have to be funded from cuts elsewhere. This wonderful announcement has, like most other Tory promises, turned to dust.

The inevitable winding down of the Eurofighter production line at BAE has been greeted with a great deal of concern for the future of the 2000 employees who will lose their jobs. Much less concern has been expressed about the 4000 employees whose jobs are at serious risk with Bombardier. They make the wings for an aircraft being assembled in Canada which is now subject to 300% tariffs for sales into the US.

The factory that builds the wings is in the heart of DUP territory, yet Theresa May seems to be able to do nothing to help. The close relationship with the US that will help nurture an exciting and promising trade deal following Brexit is not looking very strong. This is worsened by Boris Johnson’s (entirely reasonable) criticism of the US administration’s threats to abandon the Iranian nuclear treaty signed by many countries including China, the UK, Russia and others. The DUP will soon start wondering whether a Labour government might be more productive for the future of Northern Ireland. Certainly the Tories are not cutting it!

It is the support of the DUP that is critical to the Tory majority in parliament. This is the time surely for Labour to use their influence on the unions in Belfast to put the squeeze on the DUP. The £1 billion promised has yet to materialise and already there is a concern that it may never do so. In addition, the DUP have come out in favour of a hard border between North and South, something that is very unpopular within Northern Ireland.

Even Tory MPs are rebelling against the speed of the Universal Credit introduction and in particular against the six-week wait before money is actually paid to benefit recipients.

Philip Hammond’s reluctance to fund anything to do with the “no-deal” Brexit has further emphasised the drift of the Cabinet away from hard-core Brexit. The majority now favour a more nuanced, gradual Brexit with a nice long transition period where everything pretty well goes on as before. Including the European Court of Justice.

Now there is increasing evidence that the three Brexiteers (Boris Johnson, David Davis and Liam Fox) have been doing a fairly dreadful job in negotiating Brexit. There are even suggestions that they want the negotiations to fail so that a hard Brexit becomes the only option. Increasingly, however, demands for a second referendum if a parliament vote goes against the deal arranged are becoming stronger. Concerns about the EU are widespread but concerns about a post-Brexit UK are becoming even stronger than that.

Labour Must Keep Calm and Leave the Tories To Self-Destruct.

Summary: There is a big potential danger in the levels of confidence exuded by the Labour Party these days. Labour must be very careful making statements that might alienate their core supporters and particularly the young activists who were so key to the recent electoral success. The poll lead for Labour is not as big as the wildly optimistic feelings of so many of their supporters. Jeremy Corbyn’s ambiguity about Brexit is something that is best to maintain. Labour has done well in being ambiguous and nuanced about its position on Brexit and it really must maintain that.

There is a great deal of optimism and confidence in the Labour Party following their near-win at the last election. The danger is over-confidence. We must remember that the Tories will regroup, they will come up with policies that are much more moderate particularly when they change their leader. That change is likely to come relatively soon.

We can be confident that the right-wing media will continue their overt and intentional distortion of reality to support the Tories as well as an extreme form of Brexit. Only today, Theresa May tried to pour scorn on many Labour policies which in fact are very popular. The days of neoliberalism are gone (see here for a children’s guide: http://outsidethebubble.net/2016/09/22/neoliberalism-a-beginners-guide/).

We should be under no illusions that the next election battle will be tough. Labour made very effective use of the burgeoning younger membership of the party who understood social media so much better than the Tories. Next time round the Tories will no doubt make a better fist of things given the resources they have. In the meantime it is critical that Labour does nothing to alienate their young activists. The younger generations are generally very pro-Europe, pro-Remain.

This means that Labour and Jeremy Corbyn really must avoid unnecessarily rigid, inflexible statements about Labour’s policy on Europe and Brexit. The mood of the country is increasingly turning away from Brexit. It can be left to go further in a short-term without any nudging from Labour. The Tories are managing to do everything that Labour might want to make Brexit the disaster that so many of us think it will be.

Once Labour leads a government it will become responsible for the Brexit negotiations. There will be a great deal of goodwill from the European side given the extraordinarily incompetent way that the Tories have managed the business of negotiating Brexit so far. Many European countries would welcome changes within the EU and a pragmatic and thoughtful Labour-driven Brexit discussions may well be able to help articulating changes that would be more popular than simply providing for an adequate Brexit. Keeping that flexibility alive now will be very important in the future.

Maintaining that flexibility will also undoubtedly improve Labour’s appeal to its many young activists. These activists must be kept energised and enthusiastic right up to beyond the next election. They must not be taken for granted or be marginalised because of the overconfidence that seems to be rampant within the Labour Party today.

May-hem In the Housing Market.

Summary: Theresa May has given a Leader’s speech that has left her more fragile and at risk than ever. The money she promised to put into housing is far too little to make any significant difference. We need to deal with this on a much larger scale. Only by borrowing to invest in our housing stock can we start to deal effectively with the enormous backlog of nearly 2 million people on the social housing waiting register in England alone. We don’t have the manpower to do this in theory. The key is to invest in large-scale modular building factories that can produce houses with much less manpower than currently needed to build a house.

It takes a lot for me to feel sorry for Theresa May. Her Leader’s speech today at the Tory party conference was an unmitigated disaster. She came in to the whole to a seriously out of date pop song, kept talking while the letter “F” fell off the screen behind her (jokes of F-off will surely be along soon), a prankster delivered a P45 apparently signed by Boris Johnson and she began to cough almost uncontrollably.

At first sight one of the most trailed offers to the young and the poor was £2 billion for the housing market to enable more affordable houses to be built. This was in addition to the £7 billion already allocated, and a further £10 billion in loans for the Help to Buy scheme. For the first time in a generation councils will be encouraged to get back into the business of building houses, at least some of them for social rent (well below market level).

It will be easier to get planning permission yet that is not currently a problem. There is already planning permission granted for about 600,000 houses. A further 320,000 planning applications were approved last year as well. A reasonable number of these are for multiple units of accommodation. Despite the protestations of the building industry there is no shortage of approved sites for new homes.

The total available for building affordable houses of £7 billion might, with a bit of luck, pay for 35,000 homes over several years (we don’t know over how many in fact but it won’t be in one year for sure). Most agree we need to build around 250,000 new homes a year simply to keep up with demand, and more if we are to begin to catch up on the dreadful backlog that has accumulated by years of neglect from a Tory government.

In the year to June 2016 only 139,000 new homes were completed. Most of these were built by private developers and a negligible fraction were “affordable”.  In the 1970s there were years in which over 350,000 houses were completed, nearly half of them built by local councils. We must borrow much larger sums of money to have any hope of achieving such a target. We don’t need to borrow the money for all these houses because as soon as some are built they may be sold privately at market value while others are retained by local authorities to rent at affordable and social levels.

The other challenge is physically building that number of houses. You can read more about this here: http://outsidethebubble.net/2017/06/22/solving-the-housing-crisis-a-fairer-deal-for-all/. Current statistics show it takes about 6.6 construction workers one year to build one house. If we rely on conventional construction methods we can simply forget building at the rates we need. We simply don’t have the people in the job market today to do it and, should Brexit substantially reduce inward migration of skilled craftsmen this will be even more acute.

What we must look at much more seriously is the use of modular homes. They will be somewhat cheaper than conventional build homes but most importantly they require much less manpower to build and install on-site. The name “prefabricated homes” tends to send a chill through many older people who remember the prefabs built to provide urgent accommodation for a nation laid low by many years of war. Modern modular homes are built to an extremely high standard, indeed much better than many homes built today in Britain.

Some of the more successful companies are Scandinavian and German where winters are colder and summers are hotter than in the UK. Their installation and standards of construction are extraordinarily high and they really do have the potential to revolutionise the British housing industry.

The UK would need to license the technology from those companies and have their help in establishing major fabrication facilities in the UK to meet demand. This would allow a major house building programme without as big an increase in the people needed to deliver for the dreams of so many of the 1.8 million people waiting today on the social housing register in England.

Mt Theresa Close to Eruption.

Summary: A dreadful eruption is close! Mt Teresa has become very unstable yet many of the inhabitants of the mountain are refusing to leave. It is thought that all may be destroyed when it goes off.

There is increasing evidence that Mt Theresa is close to experiencing a serious eruption. In Bali, worries about Mt Agung have led to the evacuation of more than 130,000 people. In Manchester, in contrast there are apparently some who still cluster around the desperately unstable mountain. The smaller creatures are unsure whether to run or stay but the bigger beasts continue to hope they might survive the eruption and take over the commanding heights of whatever remains after the eruption.

By nice coincidence it is exactly 50 years since Dan McKenzie from Cambridge published his theory of plate tectonics, now widely accepted. He showed that the movements of the surface of the earth cause dreadful damage when the plates intersect. This is what is happening now in Manchester. Groups of creatures called “Hard-Brexiteers” are battling against “Soft-Brexiteers” with occasional mutterings from the “No Ruddy Brexit at all-eers”.

It is feared that many will perish. The Labour Party, traditionally strongly against blood sports, seem remarkably sanguine having set up remote terraces from which to view the impending bloodbath. They have decided that this is the time to keep quiet and enjoy the spectacle which should be most impressive.

When the wrath of the gods threatens it is traditional for some to try appeasement, refusal to countenance that the status quo might not go on forever. Today we have James Brokenshire trying to placate a strange subset of the local population thought to have short-term magical powers. They are known as the DUP and are being threatened with having a budget set for them if they don’t sort out their problems. With a bit of luck, the DUP might go up with Mt Theresa.

One large rather fluffy animal, the Boris, tries to assert his capacity to maintain the mountain intact if he is allowed to climb to the top. Others, particularly amongst the younger creatures of the party are distrustful of his motives. They understand him to be the buffoon he proves himself whenever he goes overseas where he delights in annoying all he meets. Many say he should be thrown off the mountain to his doom. Another, less well nourished, is called Chancellor. In a delicious example of “pot calling frying pan black”, he has just accused Labour leaders of being dinosaurs. However it is believed that the extinction of dinosaurs was a consequence of not realising they were dinosaurs in the first place.

However almost all the bigger animals are finding it very hard to get any traction on the slippery slopes of the Mt Teresa. Her certainty she is in control is increasingly difficult to sustain. Labour believes most will be consumed in the flames and that the Tories will have to wait for a generation before their tribe grows and gains strength for the future.

Songs from the Viper’s Nest.

Summary: The Tory party are in total disarray about Brexit. The Cabinet will try to cobble together some kind of view of the way forward that is ambiguous and quite inadequate to allow progress with the EU negotiations. The lack of coherent government is damaging the UK. Labour will have considerable difficulty in managing the mess they leave behind. The longer this shambles goes on the worse it will be ultimately.

Boris Johnson’s description of the Cabinet as being “a nest of singing birds” is laughable until you realise the Cabinet is actually a nest of vipers. The fundamental problem with the Tories has been the same for years. A sizeable minority of Tory MPs and Tory party members are frankly xenophobic. They have never liked the EU and any of its institutions and manifestations. They have been happy to blame so many things that are wrong with the UK on EU intrusion into British matters. You don’t see signs acknowledging EU money going to infrastructure projects in the UK because our government has forbidden them. In every other European country you see these signs everywhere and people have a much clearer understanding of the importance of the EU to what goes on in the country.

On one side in the Cabinet you have the soft Brexiteers such as Philip Hammond and Amber Rudd who are open to belonging to the single market and maintaining substantially freedom of movement. On the other side we have the hard-core Brexiteers like Boris Johnson, Michael Gove, David Davis and Liam Fox. They have been pursuing a concept of the UK outside Europe that is largely fantasy. Economic arguments, the views of business and unions are of little concern. The people have spoken. The “will” of the people must be respected. They know they must not permit another referendum or even a significant vote in parliament because that would almost certainly terminate the Brexit process.

Boris Johnson’s piece in the Telegraph just a few days ago shows how totally deluded he is about the most basic economics. By dredging up the widely derided claim for the money to be repatriated to the NHS he has made it clear just how much he is at variance with the Cabinet at present. Yet Theresa May dare not fire him. His capacity for casual remarks that are damaging within the UK and overseas has been demonstrated now very well indeed.

Political parties must find a way forward by managing conflicting views on policy. Broadly speaking the Tories have managed that reasonably well but when it comes to Europe they are totally unable to reach a compromise. Years ago John Major described the strong Eurosceptics in his party as “bastards”. Brexit means that division is right at the surface and Theresa May’s impotence after her disastrous election and lack of a majority in parliament has undermined her authority dreadfully.

No doubt the Cabinet will be able to pull together for a few hours around the Prime Minister when she makes the speech in Florence on Friday 22 September. Nobody thinks it will really be a game changer. The divisions at the heart of the Tory cabinet and of the Tory party will remain and as the Brexit process staggers onwards without much issue the forces simmering within the party will eventually explode. The earthquake that follows will lead to the fall of the government and on to the next election. The Tories are terrified that this might happen and that will help to restrain most but not all of them. But Labour will be delighted.

The obsession with Brexit in the Cabinet means that normal government has all but ceased. Almost nothing apart from Brexit is planned at Westminster and the Westminster hothouse continues to bubble with the foetid air surrounding Brexit. The economy appears to be doing reasonably well. However this is only because of the massive amount of personal debt being racked up. Unwinding that is going to be very difficult and indeed one of the biggest challenges a Labour government must face. Yet the Tories simply don’t even recognise there is a problem.

The conference season is upon us. Labour first and then the Tories. Aficionados of extreme blood sports are looking forward particularly to the Tory conference. It will feel like watching the London Olympics except that all the losers will be British. Traditionally this is how the Tory party undergoes a gravitational collapse. Warring factions fight one another and ignore the opposition. It’s going to be déjà vu all over again.

Boris and His Bucket Bomb.

Summary: Boris has again lumbered into view to complicate further the Tory party’s view of what might happen because of Brexit. After checking that the Parsons Green bucket bomb had not killed anyone he decided to let his long piece in the Saturday Telegraph run. Boris was once for Remain and changed to Leave because he could see his political chances were much better there. If the DUP supported a hard Brexit they would be badly damaged within Northern Ireland were a soft or non-existent border with the south is widely demanded. By playing this card again he risks bringing down the Tory government. He would not be forgiven very easily by so many of his colleagues.

When Boris Johnson dropped his bombshell on 15 September, most were surprised that he had resurrected the most derided claim of the Leave campaign, that leaving would repatriate £350 million per week which could be used for the NHS. That claim was again laughed out of court yet again although Boris, predictably, claimed he had been misrepresented. If you read that article (see here: http://www.telegraph.co.uk/news/2017/09/15/boris-johnson-vision-bold-thriving-britain-enabled-brexit/)you can see wasn’t misrepresented at all.

His piece in the Telegraph argued for a much harder Brexit. Recently the Tory cabinet had been sliding towards a softer Brexit. Coming as it did, less than a week before Theresa May’s speech in Florence, Boris’s move was widely understood as an attempt to steer the Tory party to the right. That would stop Theresa May from simply making the speech she had promised, developing on the Lancaster House themes, probably moving the Brexit path further towards the centre.

Many see this as Boris on manoeuvres. The fame he had achieved during the Brexit campaign had faded. You might have thought him too busy in the Foreign Office, worrying about North Korea/Putin/Trump/Iran/Syria/Yemen. Despite his notorious laziness he still managed to find time to write 4000 words, emphasising patriotism. He had forgotten that Samuel Johnson had said “patriotism is the last refuge of the scoundrel”.

Yet this is much more than simply about Boris wanting to raise his profile and reposition himself as the leader of the right of the Tory party. With Theresa May under siege with her flaky majority things are very difficult for her. Her position is much like her being locked in the toilet on the last train home while the carriage is full of rowdy drunken hooligans (i.e. Tory MPs). Boris is shamelessly trying to exploit Theresa May’s weakness to his own advantage.

Boris’s approach to Brexit has a lot of support on the right of the Tory party. He may or may not have the support of Michael Gove (this appears to change daily). Given Michael’s enthusiasm for political long knives Boris probably can’t rely on it!

She daren’t sack Boris because that could easily lead to an outright attack on her leadership. Yet she dare not let the Tory party lurch towards hard Brexit because she would never get that through Parliament. The Tories are only in government because of the support of the DUP.

Within Northern Ireland DUP support has been declining progressively in recent years (see: http://outsidethebubble.net/2017/09/05/might-northern-ireland-trigger-another-british-general-election/). A hard Brexit deal would lead to a hard border between North and South in Ireland. If this was a consequence of DUP support for that policy they would be decimated in the polls and they know it.

The DUP understand that they are not really that important at Westminster. Their power base is entirely in Northern Ireland. Their extreme right-wing views on same-sex marriage and abortion as well as other things have meant their support is slipping anyway. Amongst the young the historical tribalism of Unionism and Nationalism is much less important. Unionists increasingly see Sinn Fein as being a forward-looking party for the young.

If Theresa May in Florence goes back on her intentions to reset the Brexit negotiations presumably in a way that reflects the view of the Tory cabinet then the future of the support the DUP offers her government will become increasingly problematic. That would lead to a General Election, and very probably a Labour majority. That would be easier for Labour as their will be no time to get a new Tory leader in place, particularly as there are few senior Tories who command much support. They know they cannot let Theresa May lead the party into another election given how badly it has gone for the Tories ever since.

Why Allowing the Henry VIII Provisions to Pass Would Be a Disaster.

Summary: The Great Repeal Bill relies extensively on the use of secondary legislation to bypass parliamentary scrutiny of the great majority of laws being repatriated. On the most cursory reading of that Bill it will be disastrous for Parliamentary democracy. It will bypass Parliament almost entirely in a way that Henry VIII (and indeed Jacob Rees Mogg as leading candidate to replace Theresa May) would heartily approve of.

The Great Repeal Bill relies heavily on use of the so-called Henry VIII powers to bypass parliamentary scrutiny. It basically allows government ministers to decide when any law can be changed in a whimsical way without Parliament’s approval. Think about George Osborne changing substantially the tax credit rules.

Even Tory MPs are up in arms about this. Dominic Grieve, the Tory MP noted in the Evening Standard “Worryingly, it seeks to confer powers on the government to carry out Brexit in breach of our constitutional principles, in a manner that no sovereign Parliament should allow.” The Government wants us to trust them to get it right! Given that we don’t trust them to get anything right what chance here?

How will this actually work? Let’s start with the very first clause of the Repeal Bill. It says “The European Communities Act 1972 is repealed on exit day.” We will find in the Bill that “exit” is defined as “such day as a Minister of the Crown may by regulations appoint.”

This means that what is being proposed is that a minister simply gets to decide when our membership of the EU ends. There will be no way that Parliament could interfere with this. It simply needs a Minister of the Crown to make the decision. It is difficult to imagine any proposal which is so diametrically opposed to the promise of “taking back control” which was so prominent in the Leave campaign.

In fact it is probably worse than you imagine. In 18 months time most people believe that Theresa May will have been replaced as PM. On the basis of current popularity polls amongst Tory party members the most likely PM then would be Jacob Rees Mogg, the MP for the 18th-century. As a very hard Brexit supporter, and if the negotiations have got where most people believe (i.e. nowhere), Jacob simply has to say “we are out”. That will be that!

There are many thousands of pieces of legislation that are being moved under the Great Repeal Bill. In practice most of the changes that will be made by “ministers” will actually be made by civil servants and many of those will be in the Home Office. This is the same Home Office that produced the extraordinarily nasty immigration proposals that were leaked a few days ago to the Guardian.

These same civil servants will still be there in the Home Office making decisions, passing them to ministers for rubberstamping. The Home Office has for many years developed a reputation as being one of the nastier departments. Under Theresa May is became particularly vindictive and controlling. Do we really think it is safe to leave the government to do as it likes with our laws? Dominic Grieve is absolutely right in saying that secondary legislation could be carried out “in a manner that no sovereign Parliament should allow”.

Another Folly for Fallon!

Summary: The movie “Dunkirk” showed how easy it is for small old-fashioned propeller aircraft with a single small bomb to sink substantial Navy ships. Yet we hear that our brave Defence Secretary, tasked with saving £20 billion from the MoD budget is going to build another five frigates. For many years the MoD has been working hard to equip itself to fight the last war. This new program simply adds to the problems that our defences are trying to cope with.

Did you see the movie “Dunkirk”? Men who were there say it was very realistic. Did you notice that Stuka dive bombers were able to drop single bombs on fairly large Navy ships and sink them quickly and efficiently? This was all nearly 80 years ago. The Stuka was a propeller aircraft with a dive speed of only 350 miles an hour. The bomb it dropped was a maximum of 250 kg, tiny by modern standards. That was all that was needed to sink a fairly substantial ship.

Today, Defence Secretary Michael Fallon announced that the Ministry of defence was to build a batch of five Type 31e frigates. The cost will be capped at about £250 million each. No doubt our Defence Secretary will insist that they are well protected against dive bombers but any naval expert will tell you that it is virtually impossible to do that reliably. Surface capital ships are easy targets in the 21st-century with hypersonic missiles and fast torpedoes used widely.

The claim that the costs will be capped is fairly implausible. Once the contract is placed it is traditional for the MoD to ask that significant changes are made, all of which will increase the cost. The MoD is currently trying to save around £20 billion so exactly how this relatively open-ended commitment of at least £1.25 billion will help that is far from clear.

A wide range of weapons procurement programs for the MoD have already gone disastrously wrong. We have no submarines at sea because of problems. The Type 45 destroyers have serious engine problems that makes them unusable in warm seas such as the Mediterranean or the Gulf. Many other programs including the spanking new aircraft carriers is already greatly flawed and largely inappropriate for the 21st-century.

You can read more about this here: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/.  What we really should be doing now to make us safe in the future has been discussed here: http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/.

Yet again the British military are arming frantically to fight the last war. They are devoting vast sums of money to weapon systems that are seriously inappropriate for the 21st-century. When will they wake up and realise just how ineffective and wasteful these programs really are?

Might Northern Ireland Trigger Another British General Election?

Summary: The politics of Northern Ireland are complicated and made more so by Brexit negotiations that are not taking Northern Irish concerns about the border and trade with the South. The biggest party, the DUP, has lost support over the last year both in Assembly and general (Westminster) elections. The DUP are finding their enthusiasm for Leave out of step with general opinion in Northern Ireland. Their support for a Tory party apparently insensitive to the Northern Irish concerns will stop the DUP supporting the Tories. Labour needs to rub salt in those wounds to help the Tory/DUP alliance fall apart.

If you think English politics is complicated, it is much worse in Northern Ireland. For many years the view from the mainland of Northern Ireland politics is to simply to let them get on with it. It is far too complicated to understand. However, the larger Northern Ireland party, the DUP, is critical in supporting the Conservative party in Westminster. In the recent general election DUP won 10 seats and Sinn Fein won 7.

For many years Sinn Fein have refused to take their seats in Westminster at least in part because to do so would require taking an oath of allegiance to the Queen. That is a step too far for them. However for many years Jeremy Corbyn and Labour has been very supportive of the Nationalist cause in Ireland. This may be the time to start calling in those debts.

There is more. And election for the Northern Ireland Assembly was held on 2 March 2017. That went very badly for the DUP and rather well for Sinn Fein. They now have almost identical numbers of seats in the NI Assembly (28 versus 27). Another 35 seats are shared amongst a variety of parties. The SDLP with 12 seats, the UUP with 10 seats, the alliance party with eight seats and two seats for the Greens.

The smaller parties are increasingly unhappy with the carve up of Northern Ireland politics between hard-core Protestant Unionism and hard-core nationalist sentiment. They are in a much stronger position to flex their 35 out of 90-seat  muscle and this is what they are now doing.

For many years the DUP had a clear majority of the votes and were able to take the position of First Minister with Sinn Fein providing the deputy First Minister. With the substantial reduction in DUP support Sinn Fein are no longer prepared to accept a DUP first Minister in Arlene Foster. She is implicated in the “cash for ash” scandal that has created a £500 million black hole in the Northern Ireland budget.

Sinn Fein are particularly keen that Arlene Foster should not be restored as First Minister as she was central to the scandal. They have also made it clear that they are not prepared to go on as before and want to renegotiate.

The DUP are a pretty hard right evangelical Protestant party, against gay marriage and abortion. The Unionist vote in the referendum was clearly to Leave whereas the nationalist vote was even more clearly to remain. Overall the Northern Irish vote was strongly to remain (56% against 44% to leave).

No doubt a significant part of this result was because of the highly integrated economies and sociology of Northern Ireland and Eire. There are serious concerns that re-establishing a hard North-South border would have a variety of negative consequences.

The harder versions of Brexit would make cross-border trade and cross-border travel very much more complicated. It would also bring back memories of the very hard border that was fought over during the Troubles, brought to an end by the Good Friday Agreement.

However a version of Brexit that would let the present border function much as it does today would have major ramifications. Free movement of people beyond Northern Ireland would then have to be blocked  to stop further movement into the remainder of the UK. This is something that the Unionist parties would oppose very strongly.

The social and cultural ties of Northern Ireland are much more strongly and deeply felt with Scotland than they are with England. Again, any suggestion that that relationship might be harmed or blocked by the Brexit arrangements would be also very damaging to the DUP.

As is traditional with Northern Ireland issues the Tories in Westminster are not taking their concerns seriously. In contrast the EU negotiators see the Northern Ireland question as being one of the most difficult they have to deal with. They have already said that the British approach to this is long on fantasy and very short on reality. For the EU the Northern Ireland issue is much more central to the Brexit negotiations than the British side seem to appreciate.

There is no doubt that within Northern Ireland a very soft Brexit is just about all that would be tolerated. The British government, however, are basically telling the EU that it can do what it likes with the Irish border and they would blame the EU if the border becomes hard. As long as the British government continue to pursue a relatively hard version of Brexit then they simply cannot rely on the support of the Northern Irish.

The bribe for the DUP to support the Tories of £1 billion has not yet materialised. There is increasing realisation that it’s not going to come forward any time soon and that is very concerning in Northern Ireland. The DUP in particular do not want to risk another election in Northern Ireland given that DUP support has gone down so significantly. The general political climate in Northern Ireland becomes much less extreme with support for gay marriage and abortion increasing.

The lack of an agreement on power-sharing makes it highly likely that Westminster will assume control over the Northern Irish economy. Under the power-sharing agreement of the Good Friday agreement the Westminster government must act in an even-handed way. Given that the Tories depend critically on the DUP for support that becomes increasingly difficult to maintain.

What is key, therefore, is that the DUP are currently supporting a Tory government that is pushing a version of Brexit that is likely to cause significant damage to Northern Ireland and be particularly unpopular there.

It is here that Labour has an opportunity to unravel the DUP support for the Tories. By drawing attention particularly to the Tory approach to the Northern Ireland border problem they will make it clear that the DUP are supporting policies that are likely to cause further political damage to their party. Only by distancing themselves from the Tories are they likely to gain any credibility with the Northern Irish electorate.

Once that happens, the Tories will find it virtually impossible to govern. Theresa May will have to resign or lead the Tories reluctantly into another general election. This is the way that Labour is currently most likely to have a chance to form the next government. For Labour concentrating on Brexit as seen from Northern Ireland problem is absolutely essential.

Summer Is Over: Back to the Salt Mine.

Summary: Summer is over with little prospect of warm weather in September. The schools are back and the party conference season approaches. What passes for life is returning to the British political system as the UK continues its losing battle with EU negotiators about Brexit. In the UK growth and business confidence are slumping rapidly. Austerity continues unabated and student loan interest rates are now about 24 times the Bank of England base rate. In Northern Ireland disagreements between Sinn Fein and the DUP are starting up again. The Equinox approaches and Christmas is not too far away. Maybe it’s time for a tax on football transfers.

It is less than a month since the last piece was posted on Outsidethebubble.net but it seems an age. What has been happening? The UK government is completely swamped by Brexit. Other business is so marginalised that little is actually happening. Austerity continues to bite and the cuts are having increasingly damaging effects on many individuals. Lowest paid workers are about to face a fourfold increase in their pension contributions from April. Students are now being charged an extortionate 6.1% interest on their loans. Even some Tory MPs think this may be excessive.

The economy continues to falter. Lloyds barometer of business confidence has dropped seven points to 38%, lowest level since 2012. Economic optimism has fallen 10 points to just 18%, The always excellent mainly macro blog (see: https://mainlymacro.blogspot.co.uk/) has a piece on 31 August 2017 pointing out that the worsening exchange rate against the Europe might have been expected to increase exports but in fact they are unchanged.

British companies are maintaining their overseas prices and pocketing their increased profits. Unsurprisingly those new profits are not being passed to the workers. Wage growth continues to stagnate. GDP growth is now way below that of the Eurozone, the US, Japan and many other countries. The British economy is now one of the worst performing of the G 20 nations.

Three months after a disastrous general election Theresa May remains Prime Minister. She has declared she will go on and on in a way so reminiscent of Margaret Thatcher before she was defenestrated. She looks a worrying combination of tired and defiant, but the defiance is that of a naughty schoolgirl being interrogated by the headmistress.

George Osborne continues to crouch on his eagles nest at the top of the London Evening Standard building. At every opportunity he drips acid onto Theresa May. Revenge is sweet against the woman who dismissed him from government so cruelly. He has just written a damning editorial that likened her premiership to the “living dead” in a “second rate horror film”.

The Tory party have no appetite now for a leadership battle. That would make an early general election difficult to resist. However the main problem for the Tory party is that the principal contenders look increasingly unattractive.

Boris Johnson has been widely criticised for his performance as Foreign Secretary and now appears to have the international clout of a second hand cotton bud. Boris has been very quiet over the summer. Yet George Osborne always has a little acid left for Boris. Boris’s only chance of becoming PM is by keeping very quiet and behaving himself but it seems unlikely he can keep quiet enough.

David Davis, the British Brexit Secretary, has been described by Dominic Cummings, the Campaign Director of the successful Vote Leave campaign, as “thick as mince, lazy as a toad and as vain as Narcissus”. As the Brexit negotiations progress (or more precisely don’t progress) that view of Davies looks increasingly apposite. He is no longer seen as a plausible candidate for PM.

The Tory party have always done a good job at producing grey men. Philip Hammond is currently the greyest in the Cabinet. Spreadsheet Phil as he is known continues to show the damaging effects of his charisma bypass operation. Again there is not much support for him from Tory MPs. Difficult to think of him leading the Tories to electoral victory.

One of the problems with the Tory party is that it routinely crucifies the first MP to challenge a Prime Minister (think of Michael Heseltine). Younger Tory MPs are sitting on their thumbs waiting to see what might happen at the Tory party conference which starts on 1 October. Perhaps the party delegates are crazy enough to abandon Theresa May in favour of some completely implausible candidate such as Jacob Rees-Mogg or Andrea Leadsom. That might give the Tory party the jolt to choose someone much younger and less contaminated by the seven years of failed economic policies.

Labour are unsure about their short-term strategy. They feel confident of doing even better at the next election yet the opinion polls suggest there may not be such a big margin after all between them and the Tories. The Labour Party conference starting 24 September may help to focus the minds of the party on the not inconsiderable mountain they still have to climb.

If Labour wanted to force a general election there is a major problem in actually doing it. The Tories are unlikely to vote against their own government and, with the help of the DUP, don’t actually need to resign even if they lose significant votes in the Commons. Forcing a general election would be tricky for Labour therefore.

Brexit is everywhere. Keir Starmer who leads the Labour Brexit team has convinced the shadow cabinet to back a much softer version of Brexit. He wants to keep the UK in the single market and allow substantial mobility for people. If Labour were to be in government the direction of the Brexit negotiations would change radically.

At present the Tory-led Brexit negotiations are running rapidly into the sand. European negotiators are deeply frustrated with the lack of specificity in the British position papers and want to substantially finalise the position of European workers in the UK after Brexit, the Northern Irish border, and the financial settlement with the EU.

There are increasing calls to hold a second referendum. This is resisted strongly by the Leave side who claim that the people have spoken and their will must be respected. Given how vague the original referendum subject was it is difficult to resist a second referendum to establish that their will is indeed to leave the EU on the terms negotiated by the Brexit Secretary. There is a growing feeling in the country that we may not, after all, actually leave the EU at all.

In summary, the next few months look to be very interesting if you happen to be interested in politics in the UK. Should be fun!

A Spot of Serious Collateral Damage?

Summary: The war of words between the US and North Korea could easily spill over into military action. A full global conflagration is relatively unlikely. What is much more possible would be a limited strike by the US against North Korea followed by a tit-for-tat response by North Korea against South Korea. This could seriously damage the supply of computer memory chips which are critical for a vast range of digital equipment. That would have a major effect on the world economy and should not be underestimated in its importance.

The Korean War started in 1950 when North Korea invaded South Korea. The UN with the US as the principal force came to the aid of South Korea while China and the Soviet Union backed North Korea. In 1953 an armistice was signed creating the Korean demilitarised zone (DMZ) to separate North and South Korea but no peace treaty was ever signed and technically the two Koreas are still at war.

With the election of Donald Trump and the increasingly bellicose pronouncements from the leader of North Korea, Kim Jong-un, worldwide concern has increased. There is a worry that this might lead to a global conflagration. I believe that these concerns are exaggerated.

The recent military parade in Pyongyang showed intercontinental ballistic missiles that were subsequently shown to be wooden models. They have, however, demonstrated long-range missiles successfully and so there undoubtedly will be growing concern within the US. The North Korean regime has exploded nuclear devices but so far these have not been particularly powerful or impressive. They are probably some way away from developing viable nuclear weapons rather than experimental explosions.  Although missiles have been launched, many have not performed properly and those that have are limited in range.

Nevertheless, the American Administration is undoubtedly concerned about the prospect of North Korea being able to attack the US. What is much more likely than an all-out war is some much more limited military action by the US intended to hinder substantially North Korean military progress. That in turn would not lead to a nuclear response from North Korea (if only because that response is not something they could give now).

Much more likely would be a more limited attack on South Korea since US assets are largely unreachable by North Korea’s weaponry. Within easy reach of the DMZ is the heartland of South Korea’s technological explosion. Such an attack could have a major effect on the South Korean economy. It would also have a devastating effect on the world.

When viewed from right-wing US perspective that might be dismissed as being too bad. South Korea is a long way away and they should be able to stand up to themselves. Who cares if a number of foreigners in a distant country are killed? The US is able to brush that aside remarkably easily throughout the Middle East. But if there was even limited military action by North Korea against South Korea it could have a devastating effect on a major part of the world economy which depends on South Korea for critical electronic components.

One type of memory semiconductor known as dynamic random-access memory (DRAMs) is critical for cell phones, desktop computers, global positioning systems (GPS), smart phones, tablets as well as a wide range of consumer electronics such as digital cameras, set-top boxes, smart TVs etc. They are also key components in networking devices.

Without these memory chips it would simply stop being possible to manufacture almost any of the above devices that we depend on so much today.  About 75% of the DRAMs manufactured worldwide are made in South Korea and most of those within 100 km of the heavily armed DMZ. The two biggest companies that make these devices are Samsung and  SK Hynix. Both are based near Seoul. South Korea is the second largest global semiconductor manufacturer and, in memory chips completely dominates the supply.

The manufacture of these critical devices is a particularly tricky business requiring extraordinarily expensive fabrication plants. Recent estimates of the typical capital expenditure needed for a new fab facility are in the range of $4 billion-$10 billion depending on the type of memory to be manufactured. Any damage to such a facility would be extremely expensive to repair but above all would take a very long time to undertake as the manufacture of the machines needed is a particularly difficult process in itself. Delivery times on new fab facilities are measured in years.

The conditions needed for the manufacture of state-of-the-art memory components are also very demanding. A single speck of dust can completely destroy a device and any chemical contamination can bring the entire production facility to a halt. An attack by North Korea using conventional weapons even if they do not directly hit a semiconductor manufacturing facility could easily produce enough ground percussion to dislodge dust in the vicinity of the fab line. They would have to be closed immediately and fully checked and, if necessary,  decontaminated before restarting even if they experienced no direct damage.

However, if the memory manufacturing facilities around Seoul are affected in any way then a major part of the world’s supplies of memory devices could be halted for a significant length of time. The manufacture of new mobile phones, computers, Internet storage devices and systems etc. would come to a halt no matter where those units were manufactured. If there are no memory chips then none of them can be made. If the memory supply dries up the effect on our modern economy would be relatively rapid and very severe.

A few years ago semiconductor production in Thailand was affected by flooding and that caused a significant shortage of disk drives used for bulk storage in computer systems. Eventually that got back online. Anything like this happening in South Korea to the DRAM supply would be much harder on the world economy. It would be an easy hit for North Korea, not likely to produce a much more intense reaction from the West and therefore very tempting for the North Korean leader who seems to believe his own extraordinary rhetoric.

Can Jeremy Corbyn Walk Upon the Water?

Summary: There is a big potential danger in the levels of confidence exuded by the Labour Party these days. Labour must be very careful making statements that might alienate their core supporters and particularly the young activists who were so key to the recent electoral success. The poll lead for Labour is not as big as the wildly optimistic feelings of so many of their supporters. Jeremy Corbyn’s ambiguity about Brexit is something that is best to maintain. Labour has done well in being ambiguous and nuanced about its position on Brexit and it really must maintain that.

There is a great deal of optimism and confidence in the Labour Party following their near-win at the last election. The danger is over-confidence. We must remember that the Tories will regroup, they will come up with policies that are much more moderate particularly when they change their leader. That change is likely to come relatively soon.

We can be confident that the right-wing media will continue their overt and intentional distortion of reality to support the Tories as well as an extreme form of Brexit. Only today, Theresa May tried to pour scorn on many Labour policies which in fact are very popular. The days of neoliberalism are gone (see here for a children’s guide: http://outsidethebubble.net/2016/09/22/neoliberalism-a-beginners-guide/).

We should be under no illusions that the next election battle will be tough. Labour made very effective use of the burgeoning younger membership of the party who understood social media so much better than the Tories. Next time round the Tories will no doubt make a better fist of things given the resources they have. In the meantime it is critical that Labour does nothing to alienate their young activists. The younger generations are generally very pro-Europe, pro-Remain.

This means that Labour and Jeremy Corbyn really must avoid unnecessarily rigid, inflexible statements about Labour’s policy on Europe and Brexit. The mood of the country is increasingly turning away from Brexit. It can be left to go further in a short-term without any nudging from Labour. The Tories are managing to do everything that Labour might want to make Brexit the disaster that so many of us think it will be.

Once Labour leads a government it will become responsible for the Brexit negotiations. There will be a great deal of goodwill from the European side given the extraordinarily incompetent way that the Tories have managed the business of negotiating Brexit so far. Many European countries would welcome changes within the EU and a pragmatic and thoughtful Labour-driven Brexit discussions may well be able to help articulating changes that would be more popular than simply providing for an adequate Brexit. Keeping that flexibility alive now will be very important in the future.

Maintaining that flexibility will also undoubtedly improve Labour’s appeal to its many young activists. These activists must be kept energised and enthusiastic right up to beyond the next election. They must not be taken for granted or be marginalised because of the overconfidence that seems to be rampant within the Labour Party today. It seems unlikely that Jeremy Corbyn can, in fact, walk upon the water.

Fallon’s Folly

Operations room in HMS Queen Elizabeth.

Summary: The computer hardware, software and infrastructure on Britain’s latest aircraft carrier, HMS Queen Elizabeth is quite inappropriate and completely out of date already. It is another example of just how wasteful the Ministry of Defence is in purchasing armaments to fight the last war, remaining blissfully unaware that warfare in the 21st-century will be very different. Aircraft carriers and other capital ships will survive for the shortest amount of time given modern anti-ship weapon systems. The fact that our aircraft carriers will be so out of date technically before they even enter service is very concerning.

The pride of the British Navy has just sailed out from Rosyth dockyard in Scotland. Like so many of the MoD procurement programmes , this spanking new aircraft carrier is already greatly flawed and largely inappropriate for the 21st-century. You can read more about this here: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/. What we really should be doing now to make us safe in the future has been discussed here: http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/.  However this piece is principally about the on-board computer hardware and software and the way it is worryingly insecure.

Our Defence Secretary, Michael Fallon, is very bullish about his lovely new aircraft carrier but many experts have been surprised to discover that it is using Windows XP as an operating system on some of the on-board computers.

Windows XP was released in 2001 and by the time that HMS Queen Elizabeth is in service Windows XP will be 20 years old. Mr Fallon assures us that it is a very secure system and one might be forgiven for thinking that because it is on board a ship it will be very easy to protect. Sadly that completely misunderstands where cyber insecurity comes from. It is seldom from hardware, much more often a consequence of what has been done by real people.

Windows XP works fine and is even reasonably fast for many operations. Michael Fallon probably understands computer security being that outside cyber attacks will be blocked. It may indeed not be easy to hack into the system from outside but of course there are to be 1600 individuals on board.

Each of them may well have been security vetted but what has happened to them since that vetting? Has any of them got into some kind of trouble, debt or perhaps having an affair outside marriage? Surely these are the sort of things that could lead to an individual being blackmailed into compromising security on board.

All we need is an agent of a potential enemy to find one of the 1600 servicemen on board who can be “persuaded” just pop something into the computer for a moment. No visible damage will be done, no clues will be left.

The worst sort of cyber attacks are not the ones that have brought down the National Health Service in recent weeks (also because they were using Windows XP-based computers). The much more worrying cyber attacks come from the Stuxnet type computer worm. These are injected into a computer and sit quietly, in principle for years, before they are activated. All they do is replace a small piece of operating system code which may be activated on a specific date or when certain events happen such as loading a live guided missile into its launching tube.

All one needs to do is to place into a computer port a simple, apparently innocuous variant on the USB stick that most of us have. The picture above shows computers with their USB ports visible. Anybody with any degree of access to that area could carry this out. Modern operating systems like Windows 10 have very substantial capacity to block unauthorised USB-type hardware and that is why it is so important for most organisations to get rid of Windows XP as a matter of urgency. It would only take a minute for the necessary software to be downloaded into the machine and embed itself invisibly for future use.

At some time in the future that downloaded malicious virus can be activated which could cause the ship simply to stop, or to sail at full speed in a circle or in reverse. Or it could be driven onto the rocks not much can be done about it.

The Ministry of Defence’s claimed that the software systems in HMS Queen Elizabeth are fully protected is simply preposterous. The final worrying statement is that there will be a computer refit within a decade implies that hardware and software will be nearly a quarter of a century old. Does anybody remember just how dreadful and slow computer hardware was 25 years ago? This wouldn’t be Windows XP or Windows 95 but equivalent to us running Windows 3.1 today. The MoD should be planning a computer refit right now to bring the hardware and the software up-to-date. Computer technology is advancing at an ever increasing speed. The difference between Windows XP and the latest software in 10 years time will be like night and day.

Attempting to upgrade systems after such a long period of time is anyway very difficult and likely to be expensive. Hardware becomes incompatible and software very difficult to maintain because old languages and operating system commands are no longer being developed and maintained. The amount of effort will be substantial particularly as the key hardware is that which connects the computers to the various systems on board. Even getting hardware compatibility starts to become a real problem.

Today, 17 July 2017, it is revealed that the data networks within the carrier are also very slow, and are capable of running at only 8 Mb a second. We must remember that modern weapon systems generate very large amounts of data because it takes a lot of data to describe a rapidly changing battle environment. And don’t forget that 8 MB/sec is not available for everyone simultaneously. In reality it is available for one task at one moment and another task has to wait until data bandwidth is available. 8 MB per second is barely fast enough to watch a DVD and yet a £3 billion aircraft carrier has got to make do with that! This is and inadequate speed for a cottage in the Lake District or North Norfolk but not in a state-of-the-art fighting machine for the 21st-century

Domestic bandwidths are these days up to 300 Mb per second. Gigabit bandwidth is now commonplace in commercial environments in the UK and overseas. The report in today’s Times newspaper explains that the obscenely expensive jets that are being purchased for the UK simply cannot communicate data back to other aircraft and to the surface support ships adequately without revealing the position of those jets.

Sadly this is another example of massive procurement incompetence at the Ministry of Defence. Vast sums of money are being wasted on things simply couldn’t survive a 21st-century war and are therefore an extraordinary waste of money.

 

Dealing with the Brexit Fraud.

It doesn’t matter how Brexiteers spin things. We were lied to in order to achieve a very marginal result.

I was unsure about buying a new TV, but told it would pick up all the channels in beautiful full-colour. However I found it wouldn’t get any BBC channels and the picture was black-and-white. The shop said they hoped all these channels would work and in colour but these weren’t guarantees, only aspirations. They said that I had to live with it because that was what I had chosen.

This is what the Leave campaign want us to accept about the Brexit referendum result. We now know most of their promises were what we used to call “lies”. However they claim this is the “Democratic Will of the People”, despite all their lies.

For anything else I might buy this would simply be illegal and probably fraud. As a minimum we need to guarantee a rerun of the referendum once we know what sort of deal has been arranged. Nothing less will do.

More at: http://outsidethebubble.net/2017/06/21/democratic-lies/

Solving The Housing Crisis: A Fairer Deal For All

Summary: Successive governments have been grossly negligent in their approach to providing adequate levels of housing within the UK. A radical programme of investment in new housing managed by local government will allow us to catch up with the backlog. It would involve training and employing many new skilled construction workers. We must plan to use advanced construction techniques wherever possible such as the widespread use of high quality, modern prefabricated buildings. As a major infrastructure programme this will have an important role in boosting activity rapidly in the British economy.

The collapse in British housebuilding since 2008 exacerbated the shortages that had already accumulated by then. Since 2010 the number of social rent homes being built has dropped by 97%. Affordable home completions in the current year are running at around half that of the previous year. One of the big problems in building affordable homes is that many developers accept a requirement from the planners of a good percentage of affordable homes. These might typically be around 40%. However it is almost routine that the developers go back to the planners and ask for a reduction in the affordable home percentage. In the Cambridge area recently 40% requirement was reduced to around 6%. Shortly afterwards the developers marketed these properties energetically in China.

Most agree that we need to build about 250,000 new homes each year just to keep up with demand. Annual completions are running at under half that level. Approximately 80% of completions (about 90,000 per annum) come from the private sector which is dominated by eight or nine big housebuilders who currently hold enough land for about 600,000 new homes.

They deny they are hoarding land to allow scarcity to keep prices high but they do have enough land for over six years supply at their present building rate. The rate of granting detailed planning permission is currently running in excess of 250,000 homes per annum so at more than twice the current construction rate. Since 2008 the number of small builders has dropped substantially.

Claims that planning delays are limiting construction seem to be greatly exaggerated. Indeed an increased housing programme would probably need boosting the size of planning departments to keep delays to a minimum in future. In order to accelerate a housebuilding programme it may be necessary to acquire land with planning permission on a “use it or lose it” basis. An appropriate valuation might be at the time the most recent planning permission was granted.

Since Margaret Thatcher introduced the right-to-buy over 30 years ago around 2 million social houses have been sold by local authorities who are currently forbidden from replacing them. Most new social housing is provided by Housing Associations, and their rate of construction would increase radically if the regulation of Housing Associations was relaxed.

There are over 200,000 homes in England empty for more than six months (the usual definition of an empty home). This does not count second homes or holiday homes. First-time buyers are finding it increasingly difficult to get on the housing ladder. In the past, house price inflation was made more manageable as salaries rose but median salary increases are running way below median house price increases.

A typical first-time buyer today who cannot afford to get on the housing ladder will be even further from achieving that next year. The construction of low-cost affordable housing is now down at very low levels indeed. In essence, if you cannot afford to buy a house today you will be even less able to afford it tomorrow. That has gone on now for nearly 10 years and is a direct consequence of austerity and public sector pay squeezes.

It is estimated that there are 1.8 million people today on the social housing waiting register in England. In order to catch up with the backlog as well as keeping up with demand we need to target a building rate of between 350,000 and 400,000 new homes per annum. This is an enormous increase on current rate of about 120,000 per annum and will be difficult to achieve without a substantial effort.

There are genuine problems in simply turning on such a dramatic increase in building rate. Simply scaling present construction methods will require a tripling of brick production, difficult as many brick factories were mothballed following 2008 and the collapse in the construction industry. It is thought that many of these mothballed factories would be too decayed and inefficient to restart.

Current statistics show that it takes about 6.6 construction workers one year to build one house. Hundreds of thousands of new skilled bricklayers, plumbers, carpenters and even architects would need to be trained. Finding such people to train will be difficult particularly as the demand for new housing is concentrated in the relatively low unemployment areas in the south of England.

And then there is the small matter of funding. The obsession of the Cameron government with austerity would make this funding impossible but most economists agree that housebuilding is a genuine investment in infrastructure that must be accounted for outside the day-to-day economy. Now that George Osborne has been deposed even the Conservative government seems to accept that rampant austerity is fundamentally damaging to the whole of our economy.

The British government can borrow money at present at ridiculously low interest rates for long periods. So raising the funds for an ambitious programme is practical in the present economic climate. This would best be done by the Local Authorities who would be required to manage this dramatic increase in housebuilding. Clearly a number of radical changes in our approach to housebuilding will be needed for this to be achievable.

It does seem odd in the 21st-century that most houses in the UK are still built by taking tens of thousands of bricks, mixing up cement and sticking them altogether. In much of Europe many buildings are prefabricated, built in modular form such as walls with windows, doors, electricity and plumbing already built in that can be assembled in just a few days.

The construction site must be prepared in advance but this is a relatively quick procedure compared with the business of conventional house construction in the UK. Modern European prefabricated houses are designed and built to a high standard, often much better than conventional low-cost UK housing standards.  Prefabricated designs and construction procedures are well established and could be duplicated in the UK leading to substantial employment opportunities that could easily be in unemployment blackspots in the UK.

The cost of these properties are, if anything, cheaper than conventional houses and dramatically quicker to construct. Above all they would reduce greatly the need to train as many skilled individuals close to where the houses are needed, though many would still be required.

The extraordinary cost of houses in many parts of the country is a very poor guide to the actual cost of building a new property.  There is no such thing as a standard house. The needs of single people right through to those of large families need to be addressed. One of the most helpful metrics is the typical floor area per person that we find in modern houses today. Our standards must not be the minimum but provide for appropriate storage space and space for the equipment and facilities most of us would take for granted.

In the UK, typical house floor areas work out to be approximately 33 m² per head although this is on the low side when compared with houses in the rest of Europe (40 m² for Sweden, 43 m² for France and 55 m² in Germany). Conventional construction works out at about £1200/ m² in Greater London, £1050 in the south-east of England and perhaps £900 in the Midlands. Building to a high standard would add between £150 and £200 per square metre to this cost.

This makes conventional construction roughly at the £120,000 level for four people in three bedrooms and to which must be added the cost of land. Most developments try to get to about 12 houses per acre which adds between £30,000 and £60,000 to the cost for a single property for land already zoned for residential development in our close to urban areas. In rural areas land prices can be significantly less particularly for land currently used for farming on the margins of existing developments. So even for a good quality three-bedroom house construction costs are well under £200,000.

How much do prefabricated houses actually cost? We are not thinking here of the sort of prefabs that were built after the second war as emergency short-term accommodation. Modern prefabricated houses are designed to last, to provide high standards of comfort and to be in no way inferior to houses built with thousands of bricks and buckets of cement. Good examples of high quality prefabricated homes come from SvenskHomes come out to be almost identical to conventional construction costs.

In practice, setting up major facilities in the UK to carry out the prefabrication would lead to highly significant economies. Prefabrication does not mean every house the same. Prefabrication uses modular components which are combined in different ways to give very different shapes and sizes of properties. They may be tailored to the requirements locally and provide anything from highly affordable properties up to some that would be quite luxurious by any standards.

The mixture on one site can be whatever suits the local requirement. We would need to insist on a wide mix of different styles and sizes of housing within a single development. The creation of ghettos or gated communities would be completely unacceptable! Managing the ground works and site construction as a large site will bring costs down quite markedly.

Each property needs a flat concrete plinth on which it is constructed. The site plan establishes the sizes, orientations and positions of each plinth. The site is developed by creating access roads and pavements with all the utilities in place right up to the individual properties. In planning the site it is important to include community centres, shops, GP surgeries and school as part of the total plan if we are to produce genuine integrated communities rather than anonymous dormitory villages.

And how much are we talking about for this program? It would take time to ramp up such a substantial scheme but it is incremental nature allows a lot to be achieved on relatively short timescales. The funding that would need to be available for this sort of programme would probably be in the range of £40 billion-£60 billion over 10 years, so less than half the cost of Trident over the same period, and unlike Trident we still have most of the money at the end of 10 years.

Remember that as properties are built they are sold to Local Authorities, Housing Associations, private landlords and conventional house-owners in whatever mixture seems appropriate. The sale of these properties would be close to cost of construction for the first two categories but very much what the market might bear for the other two. Funds raised from sales are remitted directly back into the program. Unlike Trident, the programme would produce good quality housing for vast numbers of people desperately in need of accommodation.

There are enormous constraints at present on local government raising funding but they should in future be allowed to raise funds to manage a major increase in building houses in their own area. Each local government area should be allocated a specific number of houses to be built each year over a 10 year forward look. Each area should establish a Local Government Housing Authority (LGHA) to manage the local plan. The LGHA should fund additional planning officers and fund the necessary training programs, free of student fees, at local technical colleges providing trainees with appropriate certification.

They should identify suitable sites and where local opposition is strong, that opposition should be required to locate sites in their area on which their share of new houses should be built. It is always been possible to build on greenbelt sites in special circumstances but it is expected that a significant amount of new houses will need to be built on greenfield sites such as farmland.

Building on greenbelt land is something that must be considered. There are nearly 4 million acres of greenbelt designated land in the UK. Even building 250,000 homes on greenbelt land would only cover under 1% of greenbelt area. It may therefore be necessary to change planning procedures so that these do not become a significant blockage to completing the programme. Every town, village or hamlet must take its share. If any region resorts to nimbyism then they must be left to sort it out if they don’t want it imposed more centrally. If they cannot sort out it will be imposed!

At present housebuilding can be a very profitable business. The LGHA program would combine a good portion of affordable housing, some of it for social rented housing but always intermixed with housing for commercial sale with the profits going back into the scheme. The construction of low-cost ghettos must always be resisted with good attention given to the quality of the development.

All developments would, of course, need to address community issues such as schools, community centres, GP surgeries, access to public transport etc. At the bottom end of the price range, houses could be sold with minimum profit but with clear covenants so that if they were sold within a certain timeframe commercially then a significant part of the profit would return to the LGHA.

Building large numbers of houses priced at the bottom end of the market would have a major effect in slowing the general rise in house prices that is distorting economic growth in much of the UK. Planners should only reduce the agreed percentage of affordable homes in exceptional circumstances. A developer that got a reduced percentage would then be required to accept a larger percentage on any subsequent developments they sponsored.

Such a program would be a very substantial investment in the UK. It would inject a very great boost to the economy, provide opportunities to train young people in valuable skills but above all make a serious attempt to recover the many years lost while governments wrung their hands about the difficulty of building houses.

Most of the efforts by the LGHAs would bypass the current big housebuilders who could be left to get on with building expensive houses for those that can afford them. This scheme would finally offer hope to millions of young and less well-off people in the UK that they might actually be able to find a home to live in and possibly own.

References: a brief list of articles and sources of information that the reader might care to follow-up.

  1. Dwellings by tenure in England, information on number of homes built in England and many other general housing statistics: http://england.shelter.org.uk/campaigns_/why_we_campaign/housing_facts_and_figures/subsection?section=housing_supply
  2. Article in the Guardian newspaper dated 12 January 2015 by Hilary Osborne and Paddy Allen entitled “The Housing Crisis in Charts”. See: https://www.theguardian.com/money/2015/jan/12/the-housing-crisis-in-charts
  3. BBC article on housebuilding entitled “Why Can’t The UK Build 240,000 Houses a Year?”. See: http://www.bbc.co.uk/news/magazine-30776306
  4. Building cost calculator: a number of companies provide this sort of capability that you can worse start with http://www.jewson.co.uk/working-with-you/for-self-builders/preliminary-planning/calculators/build-cost-calculator/
  5. There are many European manufacturers of prefabricated homes. Many of them look absolutely fabulous. Start by looking at: http://houses4you.net/
  6. This is a 4 year-old article about the effect of British planning restrictions on the cost of the average house. See: http://ralphanomics.blogspot.co.uk/2012/07/british-planning-restrictions-boost.html
  7. Guardian article dated 20/12/15 by Graham Ruddick entitled “Revealed: Housebuilders Sitting on 600,000 Plots of Land”. See: https://www.theguardian.com/society/2015/dec/30/revealed-housebuilders-sitting-on-450000-plots-of-undeveloped-land
  8. Guardian article dated 4/1/16 by Dawn Foster entitled “What Will It Take to Build George Osborne’s 400,000 Homes?” It gives a lot of basic statistics about bricks, bricklayers and every other part of the construction chain. See: https://www.theguardian.com/housing-network/2016/jan/04/george-osborne-400000-homes-housebuilding-bricks
  9. Article on Politics Home website, dated 20 June 2017, by Emilio Casalicchio  entitled “Labour fury as new social rent homes plummet by 97%”. See: https://www.politicshome.com/news/uk/communities/housing/news/86856/labour-fury-new-social-rent-homes-plummet-97

 

Democratic Lies.

Summary: We are told repeatedly that the referendum result represents the “Democratic Will of the People”. It does not. A close majority was obtained on the basis of the most outrageous lies. As the Brexit negotiations progress more and more of these lies will be revealed for what they are. We should stop pretending there is any merit in them at all and steel ourselves to say that the UK simply got it wrong and that we should stay in the EU. Yes there will be considerable loss of face, and we have already lost a great deal of respect for the nonsense of the referendum and now for the collapse of the Tory party at the recent election. We’ve screwed up, we should admit it and get on with trying to put the UK back together again.

Imagine you bought a new television set. You have been told in the shop of all the wonderful features it had and you are looking forward to using them. You have just unpacked it and you find that what you have bought is nothing like you were promised. You would be very upset and expect to get a full refund. Indeed, if it was serious enough, you might report them to Trading Standards. Telling lies to get someone to buy something is a crime.

The UK voted to leave the EU on a very narrow 52:48 majority. Increasingly people are realising just how dishonest the whole Leave campaign was and groups such as farmers, business people and many others are turning against Brexit as interpreted by the right-wing, fiercely anti-EU Tories and the right-wing media.

Tom Smith on a Labourlist comment pointed out that vote disenfranchised the more than 1 million Brits living and working in the EU, together with 3 million EU citizens who have lived in the UK in many cases for decades, pay taxes and have an enormous investment in the future of the UK.  The overwhelming majority of these would undoubtedly have voted to Remain.

The British government has just started the Brexit negotiations. Already the tough positioning that Theresa May thought was going to win her a general election has turned to dust. The EU are making it clear that expectations of a brilliant deal from the EU giving us all the advantages and none of the costs of being members is simply make-believe.

We will see over the next few months just how far the Leave campaign’s claims are at variance with the reality. Then we have to address the fundamental problem. The referendum was won for Leave on the basis of lies. We must stop pretending that it is the Democratic Will of the People. It simply is not.

The last election showed just how little trust there is in those Conservative politicians who lied to us so brilliantly during the referendum campaign. Those same politicians are now in charge of negotiating Brexit, negotiations that they are deeply unsuited to carrying out. The Tories are always going to have big problems with the extreme right and no doubt Theresa May hoped she would be able to deal with them given a large majority. She did not get it and the country increasingly realises that so much of what the Tories want is simply increasing the inequality in the country.

We have to keep repeating again and again that we are being led away from EU on the basis of outrageous lies. We should also stop accepting that, notwithstanding those lies, that leaving the EU is the Democratic Will of the People. In fact there is no mandate of any sort for leaving the EU and we should simply stop this nonsense as soon as we can.

The whole business of the referendum has damaged our reputation worldwide and particularly with our EU partners. There will be a considerable loss of face if we do a U-turn. However in this case it is what we should do. Our brilliant democratic system screwed up during the referendum. It did a much better job in the general election and now we must get on with trying to put the UK back together again after the deeply damaging seven years of Tory austerity.

Where Next for Labour?

Summary: The Labour promise to end austerity and to invest in the UK has breached the neoliberal consensus of the last 40 years brilliantly. Labour is in an exceptionally strong position to win another election whenever that might happen. However there are many pitfalls along the way and Labour must not be complacent. The Tories unsuccessful attack agenda will no doubt be reformed and re-targeted for any future election but Labour now has an important opportunity to repair the gaps and weaknesses in its own manifesto in good time for the next election.

It may be true that Labour did not win the June 2017 general election, but it has opened up a critical front in the battle against the neoliberal consensus of the last 40 years (see: http://outsidethebubble.net/2016/09/22/neoliberalism-a-beginners-guide/ ). Along with many others Outsidethebubble.net completely misjudged Jeremy Corbyn’s capacity to lead a remarkably coherent and competent election campaign. Many are now convinced that he would make a credible Prime Minister.

The Tories certainly do not want another general election soon, and unless there is a dramatic change in Theresa May’s management style they will also want a new leader first. Those familiar with her on government over the last seven years think such a change in style most unlikely (see: http://outsidethebubble.net/2017/05/30/theresa-may-exposed-as-a-fraud/ and https://order-order.com/2016/07/02/read-full-article-pulled-telegraph-pressure-may-campaign/ ). Labour are certainly keen to get into power. The prospect for the Tory/DUP coalition are not good. The DUP are probably the most extreme right wing political grouping in the UK today. Many of their MPs have a track record of quite strange and eccentric views!

With a Tory/DUP coalition it is going to be extraordinarily difficult to make any serious progress with the Northern Ireland assembly rebuilding. Indeed the risks of unravelling the progress of the last 20 years since the Good Friday Agreement are very concerning.

Labour shouldn’t imagine that leading a minority government would be easy. The difficulties of that would be exploited mercilessly by a Tory party which has to rebuild if it is to have any prospect of winning back power.

Labour also must have concerns about its capacity to run another general election campaign soon if only because of its financial resources. Donations may well come in now that Corbyn is revealed as being a very promising bet, but Labour simply don’t have access to the deep pockets that have funded the Tories over the years.

The most likely scenario is that there will be a fairly advanced Tory/DUP “coalition of chaos”. The chaos will centre on Brexit and the fact that those closest to Theresa May are at the entire opposite ends of the Brexit spectrum. David Davis is a hard core Brexiteer, while Damien Green, her Deputy Prime Minister, is an enthusiastic Remainer.  David Davis has already signalled that the May government will press ahead with a hard Brexit. To outsiders it is seems that he and she have learned nothing from this election. That will exacerbate tensions within the Tory party further.

Consolidating and Strengthening Labour for the Next Election.

From the Labour point of view it really needs to bring back some of the big hitters from the Labour Party that deserted Jeremy Corbyn, believing he had no chance of leading a successful campaign. Loyalty to those already in the Shadow Cabinet is important but always remember Lyndon Johnson’s quote about J Edgar Hoover. “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in”. People like Chuka Umuuna , Clive Lewis and Yvette Cooper are important and valuable resources of the party. Much better to have them working within the party.

The next few months will see a markedly faster reduction in real wages for most. Inflation today has risen to its highest level for four years (2.9%) while wage stagnation, particularly in the public sector, is rampant. The Tories may well take the brake off their austerity programme but that would take some time to have any noticeable effect. It is highly unlikely the Tories would introduce serious tax increases for the better off while the coalition is such a fragile creature. This would make their claims about ending the deficit within finite time ridiculous.

It seems likely is that another general election will happen in the autumn, most likely in September. That would give Labour a chance to address some of the issues that arose during the campaign which they would now have the capacity to rework.

Strengthening The Labour Manifesto.

The Labour manifesto was generally thought to be rather weak about it support for business. This is important. Building business confidence in the potential of Labour to produce a strongly growing and more forward-looking and expanding economy could be critical for a successful campaign. If Chuka Umunnu was brought back into the inner circle as shadow business secretary he would be well placed to help here. He is undoubtedly a big beast in the Labour firmament, and his return would be very helpful in broadening the appeal of the party more widely.

Defence and security were raised regularly as issues by the Tories. The increasing evidence of under resourcing (as well as marked incompetence) with the security services is already working against the Tories. On defence, Trident was used by the Tories yet Labour managed to get away with their agreed position plus accepting that there is a diversity of view within the party.

However defence is certainly something where the Tories can be attacked. A great deal has made of the fact that the UK spends 2% of its GDP on defence. Unfortunately, the way this is spent is totally laughable. There are major problems with substantial parts of the British military, including the aircraft procurement for its too-short aircraft carriers, the way that all Type 45 destroyers as well as all our attack submarines are currently in port makes us fairly well defenceless (see: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/ and what should be our policies in the future, see: http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/ ).

One Tory attack point was the history Jeremy Corbyn of being prepared to talk with terrorists such as Hamas and the IRA. Corbyn successfully countered by essentially using Churchill’s line that “jaw, jaw is better than war, war”. Otherwise, the rejoinder here is simply a matter of pointing out that Theresa May is now climbing into bed with the DUP, undoubtedly the political wing of the Ulster loyalist paramilitaries. Several of the DUP MPs have met with leaders of these paramilitary groups very recently.

Claims That Sums in the Labour Manifesto Simply Don’t Add up.

Another area that needs to be addressed is the criticism that came from the Institute for Financial Studies about aspects of the Labour manifesto costings. The IFS concentrates very much on taxation and expenditure ignoring macroeconomics almost entirely. In criticising Labour’s spending plans they completely ignore what effect those plans would have on the size of the economy. As the economy grows, receipts from taxation also grow. The IFS simply ignores this and claims that the sums do not add up.

This has been looked at in detail by Simon Wren-Lewis of Oxford University. To quote from his blog dated 30 May 2017 “….according to Larry Elliott, Oxford Economics estimate that “the economy would be 1.9% bigger under the Lib Dem plans and 1% bigger under Labour’s plans than under Conservative plans.” The argument that this cannot be done because it would involve some more borrowing is rightly dismissed as pre-Keynesian nonsense. It is for this reason that the IFS approach of ignoring macro is so helpful for the Conservatives. “ . Labour must find a way of articulating this problem in its manifesto.

The claim often made by Tories during the election campaign is that Labour forever turned to the “Magic Money Tree” to fund their programme. It is essential that the Labour manifesto addresses this head on by explaining that the Tories have already used the same Magic Money Tree that Labour will use. The Tories have used it to the extent of nearly £500 billion, dramatically more than the amount that the Bank of England will generate for Labour’s plans for investment in the UK. There is more about this here: http://outsidethebubble.net/2017/06/13/under-the-shade-of-the-magic-money-tree/ .

Campaign Strategy for the Next General Election.

In planning for the next general election Labour will no doubt build on its experience of recent weeks. One important aspect has been the way that the younger generations were energised by the Labour campaign.

It is critical that Labour must not take this for granted. The young are much less likely to be deluded by spin and simply rehashing what has been done already will not be enough. The young need to see progress and development of ideas which they all can identify with and feel to be good for their own future and the future of the country.

And finally Labour needs to make a very articulate argument for the middle-aged and elderly who voted strongly for the Tories. A very recent poll suggests people in the 35-44 age group voted very strongly Labour against predictions. The older age groups need to be help to feel comfortable that Labour is not, to quote the Economist, the party of the loony-left, but actually is proposing policies which are widely copied from other much more successful and growing Western economies around the world.

Under the Shade of the Magic Money Tree.

Summary: The Tories criticism of the Labour manifesto as depending on a “Magic Money Tree” shows just how little they understand of basic economics. The austerity programme of George Osborne and the Tories has led to unremitting damage to our economy that people are now waking up to. The realisation that money can sensibly be borrowed to invest in the future of the economy is sound. It is this approach that underpins much of the appeal of the Labour election manifesto. It is the Tory lack of understanding of this is why they keep talking about it. However there is no doubt that they just don’t understand these arguments. Most economists are convinced that the Tories are simply wrong on this.

Many spending commitments in Labour’s election manifesto were dismissed by the Tories as depending on a “Magic Money Tree” to pay for all sorts of investments in the UK. This criticism show a remarkable ignorance of basic economics. Most Tories appear to be unaware that they have depended heavily in recent times on the same Magic Money Tree. They have used it over the last seven years to produce nearly £500 billion worth of new money to inject into the economy.

This program was led by the Bank of England and called “Quantitative Easing”. As the British recession advanced, worsened by the Tory austerity programme, spending and investment fell to a degree that there simply wasn’t enough money in circulation to support a strong, growing economy. Too much was being hoarded and spending needed to increase if the economy was ever to grow.

The idea was that if the Bank of England purchased assets from organisations such as pension funds and large companies, those organisations would reinvest it in the UK. In fact it was much less effective than intended because a great deal of that money ended up simply shoring up the balance sheets of the British banks to meet new regulations. Companies hoarded the money rather than use it for investment so again growth was not effectively stimulated.

Much of the apparent growth in the UK economy recently is not a consequence of quantitative easing. It is principally because individuals are allowing their outstanding credit card bills to increase. It is those increases that allow increased spending to make it look as if the economy is growing. Unfortunately all this extra borrowing has to be repaid by individuals. As soon as money becomes tighter there is likely to be a major drop in spending with damaging consequences for personal standards of living as well as for growth.

Labour’s spending plans are in two parts. One is to increase expenditure on things like social services, the NHS and education. Labour propose funding this by increasing taxation on the wealthy and on profitable corporations. The other part involves buying key assets such as the railways and the Royal Mail as well as raising money to invest in infrastructure projects ranging from simple road repairs right up to a nationwide housing programme (see: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/ ).

All these investments will produce a positive return. By borrowing and paying the remarkably low interest rates being charged at present on such borrowings, typically 1.5% on a 30-or 50-year loan, the boost to the economy and to our society would be substantially greater leading to a wise and effective investment. As the economy grows more rapidly, taxation receipts will increase.

This is exactly the same as many of us manage to buy a house. We borrow to provide a mortgage on the property. For most of us this is the only way we could afford to buy our own home. We pay interest on that mortgage and gradually pay back the loan. We end up owning a property, a good investment.

At the same time our day-to-day living expenses are balanced against our income from all sources. That is what we do with our personal finance and Labour is simply proposing doing that with the nation’s finance in exactly the same way.

The big mistake that the Tories, and particularly George Osborne made was to try to pay for things that were genuine investments out of taxation. They obsessively wanted to “balance the budget” because they felt that was the proper thing to do. Within the Eurozone it is an obsession particularly of the German Economics Minister, Wolfgang Schauble,  that pushed countries such as Greece, Ireland and Portugal to the brink of economic collapse and indeed nearly forced Greece out of the Eurozone altogether.

Economists quickly realised obsessive austerity was simply nonsense. Countries that are growing fastest now are the ones that have abandoned austerity if they ever tried to implement it. The UK is one of the last countries still pushing austerity. That is why our growth rates are so moribund. On average people in the UK are less well off in real terms than they were before the recession started nearly 10 years ago.

Fortunately the British public now understand just how inappropriate austerity is and have voted for a change. The change that Labour want to implement will rebalance substantially our economy by increasing taxation on the wealthy, both individuals and corporations, and then using that income to fund the NHS, social services, education, welfare and so many other areas.

Paying for Social Care Or Anything Else. Simply the wrong question!

Summary: We must stop conflating expenditure in one fiscal area with some notional corresponding source of income for the Treasury. We should simply agree what the country needs to spend in various areas and then manage our tax system so that each of us pays what is deemed to be a fair amount. No means tests. Simply an accepted assessment of what each and every individual and company can reasonably be asked to pay in taxation based on their income and wealth.

One of the mantras of the Tory manifesto and their policies for many years is that everything has to be paid for. Amber Rudd on the BBC Debate Last Night (31 May) accused Jeremy Corbyn of relying on a magic money tree to fund the Labour manifesto programme.

There is in fact a magic money tree and it created £435 billion since the financial crash. It was used for quantitative easing (QE). All that money went to the banks and not much of it provided a significant benefit to the wider UK economy. This source of funds (the Bank of England printing money)  can be used as a short-term stimulus to invest in a country such as the UK where investment has fallen grievously behind where it should be. If it is used excessively then it can be damaging to an economy by stoking inflation.

At some level it has to be true that expenditure needs to be balanced at least in the long term by income. What is not true is that the source of income has to be identified each and every time any new expenditure is identified.

The right-wing press justifies the “Dementia Tax” as being a way to make sure that the wealthy do not get away too lightly since they are generally assumed to have lots of money with which they can pay for care in their old age.

We shouldn’t be approaching a subject like this or any other aspect of our economy in this way. The government needs to set a comprehensive budget consisting of expenditure for all the things that it feels it is right and proper for government to provide (money for the NHS, social care, schools, managing immigration, prisons, police, in fact everything).

We do not need to worry about funding privatisation. Here government borrows money to purchase an asset just the way that a private individual would borrow money to purchase a home. The government will have to pay interest on that loan. At present those interest rates are very low indeed (1.5% for a 30 year loan) and so this is a good time to invest. That investment has to be good enough to fund the interest payable. At 1.5% very few of the organisations to be privatised could fail to generate at least that kind of net income.

Government then will look at all the potential sources of income (income tax, VAT, national insurance, corporation tax, asset taxes including taxation of housing, recovery of unpaid avoided and evaded tax, etc). The proportion of money to be extracted from each of these sources should be agreed to be as reasonable and proportionate as the general population feel is fair. The government must make sure it is balanced and does not provide a strong disincentive against growing the economy. Otherwise that is all it needs to do.

Finally the income and expenditure needs to balance approximately. On a year-to-year basis it probably won’t but over the longer term (the economic cycle) then it should be got close to being okay.

We can see how that works for the National Health Service. Rich and poor, everyone gets sick, anyone can suffer from dementia or cancer or disability. We all need looking after and the NHS is the system we use to look after everyone.

However a founding principle of the National Health Service has been that each and every one of us should be provided with satisfactory health services from cradle to grave. This is not an idle slogan. It is a principle that has provided an extraordinary underpinning of security in the lives of everyone in this country. There is absolutely no suggestion that were one to contract cancer that we would not be treated fully, and free of charge. However contracting dementia or finding oneself in need of social care is being treated utterly differently by the Tories.

Governments for many years have pledged to treat medical illnesses and mental illnesses in the same way but have significantly filled to do this. The cost of a proper mental health care system is not great particularly when compared to medical costs. In mental and social health care there are no exotic and expensive scanning machines, no complicated surgical procedures taking many hours with a large theatre staff. Most expenditure is made up of manpower to provide the care that we need, often given by relatively less well-paid people without a great amount of training.

The money to pay for this treatment must come from the various sources of taxation described above. The rich will not have it disproportionately easy nor the poor find it excessively generous. It will be proportionate to the ability to pay. In the same way providing treatment, care, benefits, every aspect of life that requires government involvement is managed in a way that is equitable and above all truly fair to all.

Time for Labour to Park Its Tanks on Theresa’s Lawn!

Summary: Brexit is going to happen and Labour are fully committed to that. The Tories claim that only they can deliver a good Brexit. However Brexit will happen in the context of whichever party governs our country. The Tory track record on delivering a fair and balanced society is dreadful. Their manifesto makes it clear they intend to continue much as they have in the past. The Labour manifesto emphasises fairness to all above everything else. Brexit negotiations managed by a party with that fairness as a priority will produce a Brexit deal that is much fairer to all than anything the Tories could possibly come up with. Labour need to address this head-on in the final week of this campaign.

Brexit is going to happen. Labour are fully committed to that. The Tories want the election conversation to be about Brexit while Labour wants to focus on Tory failings over seven years on a wide range of critical issues that have damaged our society greatly.

Labour need to address this and make the Brexit debate its own. Brexit is not something that will happen in isolation. It will reflect the priorities of the ruling government. If it is Tory it will be a Brexit that favours the few, if it is a Labour Brexit then it will try hard to be fair to all, the key message from Labour’s manifesto.

The Tories in seven years have damaged incredibly badly the NHS, our schools, the care of the elderly, social services, our police and security services, the prisons, removed access to the law for many and cut benefits in a very damaging way. Their manifesto claims that this will all be put right after the election. Does anybody really believe they are going to change? Many of their manifesto commitments have been very lukewarm and non-specific. None are costed and Tory ministers now seldom give interviews about their policies.

Jeremy Hunt has said this morning (31 May) that we need a good Brexit to provide continuing growth in order to fund further investment into the NHS. Unfortunately the track record of Theresa May’s government is dreadful. In the last quarter British growth was exactly 1/6 of the growth in the US, a country that has not been burdened by the cult of austerity.  British growth is now the lowest of the G7 nations.

The prospects for future NHS funding under the Tories look pretty grim. It is clear from the way their manifesto was written that they intend austerity to continue and probably intensify.

Theresa May claims she has a plan for Brexit but she refuses to reveal any of it. She will not say what her negotiating priorities might be. The European Union has produced some fairly uncontentious ideas about starting points for the discussion which she has described as being aggressive. They are not. She simply hopes no one has looked at them!

Brexit needs to be approached in an adult and intelligent way. With a Labour government showing the rest of Europe how countries can be run successfully by rebalancing the economy in a way that is fair to all we should expect a lot of interest in what we are doing and the way we are doing it. The dynamic of the government will set the dynamic of the Brexit negotiations and therefore critical to the success of Brexit.

Brexit is going to happen. Labour are fully committed to that. It is far too important to leave to Theresa May who has a dreadful track record of simply not getting things done (see: http://outsidethebubble.net/2017/05/30/theresa-may-exposed-as-a-fraud/ ). And it won’t just be her. Can you really imagine our Foreign Secretary, Boris Johnson, coming up with a Brexit fair for all? Brexit is something that Labour can only make a much better job of delivering a Brexit fair to all in this country. Labour need to attack Theresa May’s capacity to deliver the best Brexit for all.

Theresa May: Exposed As a Fraud

Summary: Theresa May wants us to believe she is the only one who can deliver a successful Brexit deal. When we look at her track record it is clear that she is utterly unsuited to this. She has a dreadful reputation amongst colleagues as being very hard to work with and completely unable to demonstrate the flexibility that one needs when carrying out any of these negotiations. Her track record as Home Secretary is awful yet she has managed to airbrush so much of that out of existence. But we must make sure that track record is exposed. It is clear that she is a fraud, totally unsuitable for carrying out successful Brexit negotiations.

Theresa May is trying to move the election conversation back onto Brexit because she claims to be the only one who can deliver the best for the UK. Unfortunately, all the evidence suggests she has little chance of succeeding. Her track record as Home Secretary for six years is appalling. Remarkably little was achieved and she managed to deflect blame onto others when things went wrong as they did so often.

Dealing with the EU on Brexit is going to be challenging. Theresa May believes she can simply “make a deal”, a phrase reminiscent of Donald Trump. The EU are treating the negotiations as a chess game with a kaleidoscope of complex and interconnected moves. They can now be sure that if they come across something that they simply cannot accept that she will cave in just as she has done on the Dementia Tax, increasing self-employed national insurance and many other things.

An article in the Daily Telegraph (see: https://order-order.com/2016/07/02/read-full-article-pulled-telegraph-pressure-may-campaign/) was pulled almost at once following pressure from her campaign office but it is remarkably revealing about her approach to power and responsibility. Her reputation amongst Cabinet colleagues is dreadful. In committee she is arrogant and rude and very short on either strong negotiation skills or the ability to win allies. Absolutely the wrong combination to negotiate with the 27 nations of EU, the majority of whom want this all to go well.

The best known failure for Theresa May is her complete inability to make the slightest mark on the immigration numbers over seven years. Those years have had a consistent target of bringing immigration below 100,000. Again she has written this into the Tory manifesto.

Many other failures have been glossed over while Theresa’s reputation has been burnished. The protection of our borders is laughable. Not only are small airfields completely un-regulated and un-controlled. The UK has three vessels patrolling 7700 miles of coastline. Italy has only 4700 miles of coastline but it does have 600 vessels.

Then there was the collapse of the eBorders IT system (cost about £1 billion), her failure to establish exit checks on all the country’s airports and ports (due by March 2015). Nothing much was done in protecting girls from ethnic minorities from FGM and forced marriages. The list of disasters that happened under her watch just goes on and on. Incredibly she has managed to sail past the wreckage of so many initiatives that foundered through her inattention.

This is a manifesto that has not been created in consultation with members of Cabinet, or other Tory politicians with a good ear for what will go down with the voters. There is an extraordinary arrogance in writing this yourself with a couple of close advisers.

And then simply putting virtually not one single number in the manifesto (apart from the Dementia Tax limit) is completely stupid particularly as Tory strategy in fighting Labour is to say “nothing has been costed”. Indeed on the Jeremy Paxman show on Channel 4 on 29 May the audience heckled and jeered her when she said the Labour sums don’t add up. The Tory sums add up just because there aren’t any, not one.

The only thing that does not add up is her ability to carry out sensible Brexit negotiations. She has been described by a cabinet colleague as secretive, rigid, controlling and even vengeful to an extent that colleagues from both parties dreaded meeting with her about anything. That is completely not who should be leading our Brexit negotiations and it is this fraud that she is trying to perpetrate that must be resisted in the run-up to June 8.

Theresa May: Weak, Unstable and Now Unsafe.

Summary: Theresa May wants to be seen as a leader, strong and stable and resolute in dealing with the EU. Her extraordinary U-turn on the “Dementia Tax” and other things gives the lie to that. The awful terrorist attack in Manchester has now shone a spotlight on the fact that as Home Secretary she cut police numbers by nearly 20,000. Police chiefs have said for some time that these cuts are substantially compromising security.

Theresa May is now been revealed in her true colours. The Economist newspaper now calls her “Theresa Maybe”. Not strong and stable and safe in her hands at all. Rather she has proved to be weak and unstable. She has also managed to make our country significantly less safe by cutting police numbers substantially while she was in the Home Office.

Her extraordinary U-turn on her social care policy and the “Dementia Tax” was understandable, given the negativity in the press. However this was compounded by her flat refusal to admit there had been any change. Indeed “the change” in policy she announced has been very ambiguous, only an undertaking to look at it again but it is clear that there is actually no commitment at all for any change. It’s not the first time she has done a U-turn on a major political issue.

The Tory abandonment of the national insurance increase for self-employed, the failure to take 3000 unaccompanied refugee children agreed by the government and only take 350 (and then under great pressure) was disgraceful. Despite considerable opposition from within her own party at as well as from outside she continues to stick with the preposterous policy of reducing net immigration to under 100,000. Even the most hardline Brexiteers appreciate that this is impossible.

This been relatively little coverage about her policy to affect negatively pensioners, the removal of the winter fuel allowance. For millionaire cabinet members a few hundred pounds here or there probably isn’t very important. If you’re a pensioner it can be a very significant amount of money. Pensioners may have done disproportionately well with the triple lock on pension increases but removing the winter fuel allowance will in practice put them back by several years.

Before the dreadful terrorist attack in Manchester there was considerable concern about police numbers. Police sources had made it clear that the drop of nearly 20,000 in the police compliment while Theresa May was Home Secretary (2010-2016) was having a devastating effect on the capacity of police to carry out the sort of duties the public expected of them.

The government claims that crime has been dropping but those statistics ignore the almost 6 million fraud and cyber-crimes committed in that same period. Soon there will be a realisation that the lack of manpower to help tracking “persons of interest” must undoubtedly contribute to a reduced level of security. Winding the official level up to “critical” doesn’t improve things at all.

Our current Home Secretary, Amber Rudd, when challenged about possible further reductions in police numbers made it clear that savings were being sought and refused to rule out further reductions in police numbers.

For many years, Jeremy Corbyn has understood the toxic link between the way Western powers have intervened in the Middle East and the level of threat from terrorists in that region. For many years it has not been politically correct to even suggest there is a link because so many British lives have been lost because of ill-conceived military actions throughout the area.

The great majority of British people are sick and tired of intervening overseas and trying to change regimes so that we end up with situations as we have in Libya, arguably in a much worse situation and I was under Gaddafi. Jeremy Corbyn’s view that military action is something we must be prepared to take only as a last resort is too often ridiculed by the right-wing media as disguised pacifism.

Jeremy Corbyn has been consistent in his views about this and many other aspects of his politics. Theresa May has actually been in power for many years yet has little to show for it (see: http://outsidethebubble.net/2017/04/24/we-need-to-talk-about-theresa/ ). The way she is now seen as weak, unstable and now very unsafe ought to be understood that this is the way she really is.

Its Even Worse Than You Realise, Teresa!

Summary: The figures for those needing care under the Tories new policy are much more worrying than first thought. You can only release up to 35% of the current value of your home.  If your home is worth £150,000 then you can raise £50,000 and get under the £100,000 inheritance limit.  However if your house is more valuable, you cannot release enough capital to get under the £100,000 limit. If your house is worth £180,000 say then raising the maximum £60,000 means the part you own is worth £120,000.  This is over the limit. Once you have spent £60,000 on your care the only way to raise the additional money you need for your care is to sell your house, even if you live in it. This makes you homeless! Anyone with a property worth over £150,000 will be essentially forced to sell it if they are to get the care they may well need. 

Teresa May’s Tories want to introduce a method of making everyone pay for their own care should they need it at home until their total assets, including the value of your house is under £100,000.  Imagine you are a pensioner on the state pension with modest savings.  You need care at home.  You can manage pretty well and want to stay in the home you may have lived in for very many years.  It is expensive, typically £16 – £25 per hour in your own home. One hour morning and night works out at £18,000 per annum, which many people simply don’t have.  You want to raise the money the government insists you provide for your own care, so let us imagine the home you live in is worth more than £150,000 which is true for the vast majority of homes occupied by pensioners.  If your home is worth more than that then things are simply worse for you.

With equity release you can raise only about 35% of the value of your home.  This will give you perhaps £50,000 or a bit more.  Your home will then be worth more than the £100,000 inheritance limit the Tories are insisting on. Once you have spent all the money raised by equity release, what can you do?  You must raise more as your assets are still worth more than £100,000.  All you have is your house, the home you live in.  All you can do is sell it, making yourself homeless.

Essentially, the policy that Teresa May proposes is to throw you onto the street within a few short years (could easily be as short as two years) of you first needing care in your own home.

Not very fair, and rather terrifying for an elderly person with no other help available.

Suppose you are stricken with something like dementia, Parkinsons disease, multiple sclerosis, all conditions likely to need many years of care.  The Tory policy virtually guarantees you are made homeless before you are ill enough to justify residential care, itself in very short and shrinking supply.

That is what Britains pensioners are to be rewarded with after a lifetime of hard work, paying their taxes, struggling to buy their own home and contributing in so many ways to making society work.

Simply not fair at all.

Teresa May wants to create a country fair to all.  This dreadful approach to providing care for the elderly will be a massive, unprescedented stealth tax on your hard earned savings.  Deeply unfair in so many ways.

Labour wants to use a different approach, putting a cap on how much anyone has to pay for their own care. Proposed by an independent review, and much fairer to all.

If the Tories win this election this terrible attack on the elderly will be unstoppable.

Raising Money from the Elderly, Not from the Rich.

Theresa May’s new manifesto will force elderly people to pay a larger part of the costs of their care. By including their home in estimating their assets very many of the elderly will be forced to raise money for their care by releasing the equity in their property as soon as they need any care. Only when their total assets fall below £100,000 will the council consider helping. There is no evidence that the government will make up the present shortfall in social care funding so even that threshold is probably not to be taken too seriously.

Theresa May has delivered her manifesto for the next Tory government. One major change is a new long-term plan for elderly care. The elderly have to pay for their own care no matter how much it costs until their asset value falls below £100,000. All their assets such as savings and income are taken into account and now, for the first time, it includes their home. When they die any money still owing has to be paid for by selling their home.

At present that sale is not enforced if the home is occupied by a spouse or dependent relative. The manifesto makes no mention of the possibility of delaying the sale in future if that home is occupied by a spouse or dependent relative.

Very few properties in the UK are worth less than £100,000. Only in the Outer Hebrides does the median home value approach that. The median value in the UK is just under £250,000.

This means that virtually everyone living in owner occupied (but not rented) accommodation will have to fund their own care from the beginning. Typical residential care costs in the UK are in the region of £40,000 per annum while the cost of home care averages around £8000 per annum. There are 426,000 individuals in residential care and the median time that an individual spends in residential care is about 15 months.

Councils are not obliged to pay for social care. It is very much up to them to decide what they will pay for and indeed any additional funds provided by central government may or may not be used for social care. Consequently, only 20% of older people have their care paid for by the council. They are more likely to provide a loan to pay for social care, to be repaid on death by selling the property.

At present if you have less than £23,250 in assets and you are living in your own home the council will be obliged to help you. For someone living on a state pension with little in the way of savings then the would get help at present. However in future you will  have to pay for this yourself by raising money as best you can. Only one in four of us will actually go into residential care, the rest being looked after at home with, if you’re lucky, some local council support.

These changes are likely to force people to use equity release, something that is a pretty stressful operation for most. When done at short notice the yield can be very poor. Only once the residual value of your assets including your property is below £100,000 will you be eligible for help and even then you’re quite likely not to get any. For most elderly people in need of care it simply isn’t practical to downsize to a smaller property. The stress of doing that could well be fatal.

Some will see this as a right and proper way to force people to pay more towards their care by clawing it back from their estates rather than letting them pass it on to future generations. Very few need long-term residential care although that is something that many worry about. The proposed changes undoubtedly will increase greatly the stress that comes with old age and increasing infirmity.

Some will claim that this is essentially the Death Tax proposed by Labour before the 2010 election. However that was part of a move to generate a universal care system for everybody. This is another Tory policy designed to squeeze money out of the elderly and infirm. It is surprising that the Tories want to penalised pensioners who are their most loyal and enthusiastic voters. Increasingly they are being told that in Tory Britain you are simply on your own.

Parliamentary Reports Side-lined By Snap Election.

Prime Minister David Cameron answers questions in front of the Liaison Select Committee at the House of Commons, London.

Summary: reports of Parliamentary Committees are very important as they try to hold the government to account. The cross parliamentary nature of these committees and the fact that most of the reports are agreed by the great majority of the committee make them much more balanced and less partisan than so many political interventions. With the decision to hold a snap General Election many of these reports (there have been more than thirty since Parliament broke up) are likely to be ignored. We look at a number of those that are particularly important and should be taken seriously.

Now that the election campaign is underway we are braced for series of misleading announcements and claims. One of the better developments in recent years with our parliamentary system has been the increasing importance of parliamentary committees. These are groups of MPs chosen from across the political spectrum and charged with looking at particular issues of concern. They then produce a report which is agreed by the committee as being relatively fair and balanced.

The reports of these committees therefore are important as they are one of the most effective ways of holding the government to account. With essentially no parliamentary opposition, the government has been inclined to ignore reports it didn’t care for. It is important that we do not lose sight of what the latest batch recommend.

The government would dearly like us to forget all about them. We really must not do that.

Here is a selection taken from the more than thirty published since Parliament broke up:

Food Waste in England: this is a report of the Environment, Food and Rural Affairs Committee. The level of food waste in the UK is very high,  running at over £20 billion per year (post-farm-gate). Supermarkets have been a major cause of this waste (the obsession with best before dates rather than use by dates)  and the committee praised Tesco for publishing much more food waste data, and noted that Sainsbury’s is moving in the same general direction. However they expressed concern that other retailers had not followed and that the voluntary approach broadly is not working. They suggest that this should be legislated for and such changes would create much more transparency. They also think it important that schoolchildren are taught about this from an early age. (See: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmenvfru/429/42909.htm#_idTextAnchor060 )

Feeding the Nation: Labour Constraints: there is a widespread concern amongst horticultural and agricultural suppliers about the difficulty in finding labour. The Environment, Food and Rural Affairs Committee expressed great concern that Brexit could make the current bad situation very much worse. They mentioned specifically that the reality of what is already happening on farms around the country is utterly different from the impressions given by the government which appear to be largely ignorant of the current needs of agriculture and certainly of its future needs. Their report is here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmenvfru/1009/100907.htm .

Access to General Practice: this is a report of the Public Accounts Committee looking at the problems with GP access and the consequences for the NHS more widely. Although the government had vowed in 2015 to increase the number of GPs by 5000 over the next five years, the numbers actually fell over the last year. They also noted that patients registered with practices that had shorter core hours opening times (those between 8:00am to 6:30pm) attend A&E departments more often than on average. This report is here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmpubacc/892/89205.htm#_idTextAnchor007

Integrating Health and Social Care: another report from the Public Accounts Committee, this time looking at the Better Care Fund that was intended to provide more funding for social care is described in the report as being “little more than a ruse” to simply transfer money out of the NHS into the social care budget. They find it is simply a highly bureaucratic initiative to disguise the way that local council budgets have been cut. This report may be found here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmpubacc/959/95902.htm

NHS Ambulance Services: another report from the Public Accounts Committee (yes, they have been busy) examined reports that emergency patients are taking far too long to get to hospital by ambulance. There is a target to get patients to the emergency department within 15 minutes. In 2010-11 80% of transfers met that target whereas in 2015-16 that number had dropped to only 58%. The Committee found that the ambulance services had great difficulty in finding labour and that the high sickness absence rates experienced by ambulance services caused by the badly overworked way they are currently operating in is exacerbating these problems. This report can be found here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmpubacc/1035/103505.htm#_idTextAnchor004 .

Strategic Defence and Security Review 2015: Headline Ambitions for the Army. Outsidethebubble.net has posted articles dealing with the desperate problems of the current MoD procurement programme and the remarkable unreliability of so much of the equipment we depend on for our defence (see: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/ and http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/). Now the Defence Committee has expressed its concern about the lack of trained soldiers in the Regular Army. In 2012 the target was lowered from 95,000 to 82,000, but it currently remains stubbornly below 80,000. It expresses considerable concern about the inability of our Army to cope with any significant external aggression. They also expressed concern that the Review has added nearly £25 billion of new commitments to cover an, as yet uncosted, programme for the new Mechanised Infantry Vehicle. This leads to considerable budgetary uncertainties for the future. This report can be found here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmdfence/108/10810.htm#_idTextAnchor082 .

Housing: State of the Nation: the Public Accounts Committee is particularly concerned about the remarkable complacency and lack of urgency in dealing with the matter of homelessness. the Department for Communities and Local Government plan to build a million houses over the next five years but more than 1.4 million are actually required. This is a matter which has also been dealt with on outsidethebubble.net (see: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/ ). This report may be found here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmpubacc/958/95802.htm.

The Structure of the Homebuilding Industry: there is another housing report from the Communities and Local Government Select Committee. In particular, they have been looking at the skills shortage that will be needed to produce a real leap in the supply of housing. They are concerned here about the serious shortage of labour and in particular the supply of labour from the European Union. Already the workforce are beginning to be nervous about the future they might have after Brexit leading to major challenges in finding a big enough labour force to even begin to address the housing crisis. Their report can be found here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmcomloc/46/4611.htm#_idTextAnchor084

Citizens Income: a report from the Work and Pensions Committee is particularly negative about calls for a Citizens Income. The report suggests it is little more than a distraction from serious reform of the welfare system and advises the government not to expend any energy on it. The report may be found here: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmworpen/793/79303.htm#_idTextAnchor003

 

We Need to Talk about Theresa.

Summary: The real Theresa May is very different from the image she would like to project. She is simply not someone who can be trusted on anything she says. She has an appalling record of saying one thing and simply not doing it or indeed doing the opposite. Labour need to shout this from the rooftops.

Theresa May wants to be thought of as a strong and powerful leader, honest and dependable. Sadly she is not. She has changed her mind about waiting until 2020 for the next general election and claimed it is to give her a stable political environment in the UK to negotiate with Europe. In fact it is raw political expediency, capitalising on the woeful showing of Labour in the polls.

  • She simply is not someone who can be trusted. Why should we believe anything she says? If Labour are to make headway against the Tories it is important that we make it clear how unreliable she is.
  • She has broken many other promises already. When she was appointed PM she promised workers on company boards and a crackdown on executive pay. Promises that have evaporated.
  • She also promised a Britain that works for everyone, yet the government has just introduced swingeing cuts to a wide range of benefits that affect many hard-working people.
  • She says you are less likely to reach the top professions if you are state educated rather than educated privately. Yet she is now pushing grammar schools, long derided for being incompatible with enabling aspiration for all.
  • She promised to increase spending on the NHS, social services and education. In fact they have had real cuts for several years which is why they are in such a dire condition.
  • Twenty-four of her MPs are under investigation for fraud. It appears that they have been fiddling their expense returns at their election. No doubt they are all hoping those “oversights” will simply evaporate.
  • She promises to be tough on immigration even though in her seven years in the Home Office in charge of immigration she had no effect on it even though she could have used the standard EU regulations to manage it (see: http://outsidethebubble.net/2016/12/06/massive-negligence-by-theresa-may-when-home-secretary/).
  • She claims to need a bigger majority to give her flexibility in negotiating with the EU. However she wants to write into stone the essential components of a very hard Brexit which, being part of the manifesto, would be become much harder for her to soften even if she wanted to.
  • She has allowed the HMRC to agree sweetheart deals with large overseas companies and to be grossly negligent in not pursuing VAT cheats in the UK already identified by HMRC.
  • She has consistently undermined the BBC and refused to support judges who went against her wishes on a point of law. She has conveniently postponed scrutiny of the Murdoch bid for Sky until after the election. No doubt this ensures a warm, fuzzy coverage for her campaign.
  • She consistently misrepresents the British economy. She claims that “Since the referendum, economic growth has exceeded all expectations”. The reality is that GDP per head has grown much more slowly while the Tories have been in power than it did when Labour were in power. The UK has had the lowest GDP growth per head of any OECD country apart from Greece. Currently it is running at -1% per annum, a remarkable achievement for an economy she rates so highly.
  • She is keen to abandon the Charter of Human Rights, the brainchild of Winston Churchill. This would put the UK into the same category as Russia, Saudi Arabia and South Africa, all enthusiastic deniers of human rights.
  • She is refusing to appear in TV debates, expecting this to give her opponents the oxygen of publicity. She may feel she has the upper hand in parliament with her party braying behind her. However nobody would call her charismatic. In a more balanced studio environment she knows she will not do very well.
  • The Conservative manifesto is increasingly being dictated by her and barely discussed in the Cabinet. She is using Lynton Crosby to decide what it should be and giving little thought to what might be better for the country. He is a man without scruples when it comes to manipulating how an election is managed.

 

Winning Your Seat for Labour.

The game is on, and you need to win back your seat. You are probably being flooded by good advice about what to do next. You can succeed. You did succeed two years ago. So many of your constituents have been badly affected by seven years of Tory rule. You must be able to get them out to vote for you.

What I have collected here are a few critical ideas about what must be done to be successful when Labour are down so badly in the polls. There are many more but this is the start. If you find these points useful please pass them on.

  • You must urgently gain the initiative by setting the agenda within your own constituency. You have to make the political weather yourself in your own district. Do not wait for Central Office to do something for you and do not necessarily plan your campaign by parroting what comes from the Central Office. You know best of all what is important in your constituency. Focus on that all the time! You are not trying to win a general election. You’re trying to win a local constituency election only.
  • Clear the decks socially. Cancel any and every non-critical event you have in your calendar. Modern media need immediate responses and your time is no longer your own for the next weeks.
  • You need to develop rapidly a written campaign plan that you update regularly. You must be prepared to change it as soon as part of it looks unsatisfactory.
  • You must understand exactly what the financial constraints are on your campaign, what you can do and what you’re not allowed to do. The rules can be quite strict.
  • You and what you have done locally is much more important than what is happening in the Labour Party. Jeremy Corbyn’s policies are very popular but he is not. Most candidates will avoid using his picture on their flyers. You have to emphasise your own achievements and only include pictures of senior Labour people if you think they will enhance your position. Avoid pictures of anyone with less positive associations.
  • Identify how you will create contrast between your policies with those of the other candidates. Carefully check what they are saying and claiming, and look for areas where they are weaker.
  • Each constituency will have close to 1000 new members that joined to support more radical left policies. They need to be contacted urgently, including those who have let their subscriptions lapse, and asked to help. Hold a meeting urgently and get them to help you focus on the best policies to emphasise locally.
  • Your local party machine may not be so happy about bringing in large numbers of these new members who they probably don’t trust very much. They are an invaluable resource and you must do everything to engage them in the struggle we are all facing.
  • Identify a handful amongst the new members who can give talks and put in helpful appearances around the constituency. If you don’t you will end up by doing too many yourself and getting exhausted. You must retain enough energy to survive the next few weeks of gruelling and possibly quite nasty electioneering.
  • Try to find individuals who know about printing and can redesign your election materials. Make sure every photograph of a Labour Party member shows individuals neatly dressed, well turned out and looking professional. Look very critically at the printed materials your local party produces now.
  • Think about how you will use social media to boast and support your campaign. Make it easy for electors to follow you, and make sure you provide something for them at very regular intervals. Once you have got people following you you mustn’t let them lose interest. Get help from members who know how to be effective with social media outlets.
  • Encourage the new members to canvas for you in your constituency.
  • Make sure you provide crib cards four canvassers to cover most of the obvious questions they will come across.
  • Make sure canvassers don’t start with “vote for Labour” rather ask what most concerns them about the future and explain how Labour will help with that.
  • Above all, encourage canvassers to let people feel Labour will bring back hope, hope for the future, hope for themselves and hope for their families.
  • Have regular meetings of the faithful to keep them enthusiastic and working together for you and for your election.
  • Emphasise what people have lost in the last seven years, and how much more they will lose. Theresa May promised an end to austerity when appointed Prime Minister but nothing has happened and the cuts have deepened.
  • Try to avoid mentioning “benefits”. Emphasise how the take-home pay in people’s pockets has been cut and cut.

One line answers to questions canvassers will be asked:

Q: Do you support Jeremy Corbyn as Labour leader/Prime Minister?

A: He is the leader. However I will always prioritise the needs of my constituents.

Q: But a Labour government got us into all this mess surely?

A: No, it was the world economic crisis, made even worse by Tory austerity.

Q: Labour is the party of tax-and-spend surely?

A: Labour is the party of tax the rich and spend on the poor, not the other way round as we have under the Tories.

Q: What will you do about the NHS, education, social care?

A: Invest heavily in infrastructure. We will reverse many of the thoughtless cuts they have introduced that damage our society just to save small amounts of money.

Q: And how will you pay for all these new spending commitments?

A: Labour will end austerity and raise money in the same way Tories to privately to help prepare the damage they have done. Borrowing money for investment in infrastructure does not worsen the deficit.

Q: What about immigration? Aren’t Labour soft on immigration?

A: We will only allow enough immigration to fill the jobs we cannot fill locally. We need enough to keep the economy working well for everybody.

Q: What about Brexit?

A: Labour will support Brexit but only a deal that is fair for all, not just fair for big business and the south-east of England.

Q: What will you do about inequality, city bonuses etc?

A: We will restore the inheritance tax on expensive properties, make sure companies pay all the tax they owe and increase the income tax on the wealthiest. Our taxation policies will be much fairer for all.

Q: How will you deal with the housing crisis?

A: Labour will invest in affordable housing in much larger quantity than the Tories have even talked about (and not delivered, of course). They will borrow money to invest in these developments so as not to affect the deficit.

Q:…………….. and there will be lots of local questions about what Labour will do about local worries. These questions need to be articulated when drawing up the crib cards.

What about more detailed questions about Labour’s economic policy. No doubt that will be produced by the Labour central office. You may find many of the possibilities for a left-wing budget here: http://outsidethebubble.net/2017/04/11/outline-radical-centre-left-budget-revision-1/

What will your opponents say and do?

  • They will continue to blame our economic performance on the Labour legacy from seven years ago. The answer is to ask why the Tories haven’t fixed it already, and why is almost everyone is still worse off than they were in 2008.
  • They will want to bring the focus as often as possible onto Jeremy Corbyn who they feel is a Labour Party weak point. Don’t let them do it. Simply say the local candidate is concerned about local priorities and local concerns. Move the topic away from Jeremy Corbyn as quickly as possible.
  • They will say that Labour Party policies don’t add up. Say that simply not true. Increasing taxation on the wealthy in order to pay for our vital local services is what we will do. All the Tories want to do is continue with more and more cuts on everything you value dear.
  • What about the Lib Dems? They were so ineffective in the coalition that we ended up with the shambles we have today.
  • The Tories keep claiming that they are the party of the hard-working families. It simply not true. They are the party of the rich for the rich. The Tory cabinet is one of the wealthiest ever. Most have been to private schools and Oxbridge and have little experience of the real world outside Westminster. We need a government that understands just how badly hard-working families have been hit in the last seven years. Do people really want it to go on for another five years like it has been? Labour will make the best job of Brexit and the best job of running the economy in a way to be fair for all.
  • Be prepared for a fairly nasty bruising campaign. The right-wing are in full cry and totally confident in the ability of Theresa May with the enormous poll advantage she appears to have. Don’t bother attacking her other than pointing out that she hasn’t delivered anything very much in the nearly 12 months she has been Prime Minister. Focus on the inadequacies of the other local candidates. Avoid letting them ever set the agenda.

This campaign will be hard and brutal. If it goes badly Labour will be reduced to an impotent rump. Remember what happened to the Lib Dems in 2015. It needs your energies, efforts and enthusiasm to make sure that doesn’t happen in 2017. Good luck!

Outline Radical Centre-Left Budget: Revision 1.

Summary: This is intended to be a strawman budget appropriate to a Labour government committed to ending austerity and investing in infrastructure and particularly social and affordable housing. The emphasis is very much on fairness, attempting to reduce some of the inequality in the UK. It is important to note that some of these estimates will be inaccurate because of the difficulty in finding appropriate statistical data with which to make these calculations. Readers are strongly encouraged to point out errors wherever they find them. However it projects a real deficit reduction over 5 years.

The underlying principle of this strawman budget is that it should signal an end to austerity and allowing the rebalance of the economy to try to achieve greater fairness. Inevitably this requires a transfer of resources from the wealthy to the middle and poorer sectors of our society.

For many years Labour has been characterised as being the party of “tax-and-spend”. That will not change, instead it will be “tax the wealthy and spend and the poor”. That is the only way that the increasing inequalities in British society can be dealt with. The wealthy will find these proposals hard but they have done disproportionately well over the last 25 years.

This budget will not simply reduce the cuts but by investing in the broad economy in a range of ways re-stimulate it, and enable much improved growth rate to lift the economy out of its present doldrums. There will be a real transfer of assets and resources from those who have done exceptionally well since the financial crash of 2008, to those who have been so badly affected by austerity. It will bring back hope of improvement and encourage aspiration for all, not just the wealthy.

This budget basically consists of reversing the substantial cuts to the NHS, social care, tax credits and education budgets that have happened in recent years. That will be paid for by introducing an infrastructure charge (also known as an Alternative Minimum Corporation Tax) to be paid on all multinational profits in proportion to their turnover within the UK, also by increasing the higher tax rate to 50% for those earning over £100,000 taxable, and cancelling the planned reduction in corporation tax and inheritance tax.

In a separate strand, the grossly inadequate rate at which houses are being built will be tackled by setting up a new UK Housing Authority. It will have the ability to borrow money at the currently very low rates to fund a substantial expansion in housebuilding. These funds and the activity of the UK HA will relieve the extreme pressure on local government budgets allowing many of the petty cutbacks imposed because of extreme austerity on the social fabric of our country.

Each of the line items is in bold followed by a summary of the policy and some indication as to how the yield/cost estimates were obtained. Each line item has a cost estimate for the first five years of a Labour government assuming that it will start relatively soon. Thus each item will have five numbers in billions of pounds following it. The costs that are listed here are relative to the current spend as in the Treasury Redbook. Therefore all the costs are essentially differential rather than absolute. At present the budget suggests that there might even be a gradual reduction in the budget deficit.

Cost of reversing existing cuts to NHS and social care:

The NHS is uniquely important to British citizens. It is currently suffering from a substantial shortfall of between £15 billion and £20 billion. Social care funding also experiences a significant shortfall of probably between £3 billion and £4 billion. A major injection will have a massive effect on the functioning of these services, and on the quality of healthcare and social services delivered in the UK.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -12, -14, -16, -18, -20.

Program to integrate social care and rebuild mental health services:

Significant money must be injected into efforts to integrate the NHS with social care and to develop mental health provision so that it matches the level of provision for physical health. Lip-service has been paid to this for years. Labour will make sure that something is actually done.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -8, -5, -5, -4, -4.

Restore bursaries to fund training of nurses:

One of the most extraordinary decisions of the present government is to remove the funding for nurses during their training and require that they take out loans as do university students in order to complete their studies. We have a desperate shortage of nurses in the UK and simply cannot find the numbers to fill available spaces as it is. There cannot be any sensible economic or healthcare argument for not doing everything to encourage young people to take up nursing as a career. At present the NHS is greatly under stress. The knowledge of the working conditions in British hospitals combined with the new substantial cost to any young person wishing to train as a nurse will ensure that shortage continues and increases rapidly. Labour will restore the bursaries and other funding for student nurses. More details in the last paragraph of: http://outsidethebubble.net/2017/03/03/british-higher-education-system-failing-the-young-and-the-uk/ .

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1, 1, 1, 1, 1.

Cancelling the bedroom tax:

The bedroom tax (under occupancy charge or spare room subsidy) is a reduction to the housing benefit entitlement if you live in a house or council property deemed to have one or more spare bedrooms. Given the great shortage of small houses in the UK this tax is not something that individuals or families are likely to be in a position to take any action about. It is particularly iniquitous because it disproportionately targets disabled people who need additional space to store the equipment etc that they need. Labour will eliminate the bedroom tax.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -0.3, -0.3, -0.3, -0.3, -0.3.

Reversing some of the benefit and tax credit reductions:

Major reductions in the current levels of a number of benefits and tax credit payments have been promised since 2015. They are now about to hit in and the evidence is that the poorest families will be particularly badly hit. Part of this is a consequence of the Universal Tax Credit system simply not being ready and indeed probably not even fit for purpose. It is very important that the poor do not bear the brunt of the current economic slowdown and so we propose to look again at the whole range of benefit and tax credit payments and rebalance those so as not to unfairly penalised poor working families.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -3.75, -3.75, -3.75, -3.75, -3.75.

Increased funding for education:

During the lifetime of the two Conservative governments spending on education will have dropped by more than 7% by 2020 in terms of money allocated per pupil per annum. Between 2010 and 2020 the percentage of GDP spent on education is planned to decline from 6% to 4%. The education budget is currently around £85 billion per annum in 2017. These cuts that disproportionately affect those in state schools must be progressively reversed. Over the lifetime of a parliament it should be increased by between £10 and £13 billion per annum. Private schools are currently classified as charities and exempt from VAT. This VAT exemption should be phased out. This proposal was originally made by former Tory education secretary Michael Gove. He wanted to be able to fund policies that will benefit all children and not just the privileged few.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -10, -12, -12, -13, -13.

Education: other changes proposed:

UK schools are under a very great amount of pressure. Funding per student has been progressively reduced and the demands of central government that schools manage rapidly changing curriculae, a complex and invasive testing regime together with excessive reporting requirements has made our schools places of great stress. Labour will undertake an extensive review of the demands made on schools with a view to simplifying and reducing what they have to do in addition to actually teach children. Competition between A-level/GCSE boards has led to many of the A-level standards being eroded over the years. Labour would require each A-level subject to be offered by a single board. Labour would also review the use of the baccalaureate which appears to provide a broader education for many. This would enable a long-term view about the overall direction of English education. The changes that Labour would make would be to reduce the complexity of the requirements made by central government on schools in order to simplify their lives and allow them to devote more of their energies and resources to teaching and the support of the children in the care.

Housing authority set up and running activities:

Labour should propose to set up a UK wide Housing Authority to work with local authorities to ensure that housing is built where it is needed in the quantities needed to allow effective and efficient growth throughout the country. A piece that can be found here: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/ shows that it is unlikely that the necessary building rate can be achieved without very substantial effort to train craftsmen and tradesmen to carry out this work. It also will be necessary to establish a very substantial programme to develop modular housing systems that allow good quality housing to be built rapidly. This will need the establishment of training centres and creating the environment for the development of centres to manufacture the modular housing components. The centres should be located in regions suffering from deindustrialisation to provide good quality long-term employment in disadvantaged parts of the country. All this would be funded by the UK Housing Authority.

The UK Housing Authority would work with local authorities to ensure that each accept its share of the houses that need to be erected in each region. Land with existing planning permission that has not been used quickly should be purchased compulsorily at a rate corresponding to its value when planning permission was granted. It may be necessary exceptionally to permit building on greenbelt land but only provided other nearby areas may be designated as greenbelt in their places.  The UK Housing Authority would also be responsible for ensuring that Colleges of Further Education were expanded to provide the training and courses necessary to enable a nationwide housing plan to be implemented successfully. There are large numbers of skilled people in these areas who have retired but would greatly welcome the chance for a few hours of employment. They could must be encouraged to provide training under these courses. Their expertise would be particularly valuable as it comes from many years of actual experience.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -1, -2, -2, -1.5, -1.5.

Housing construction by local authority agencies:

Inequality is perceived widely in the UK to be widespread and growing. It is most evident in the housing market where young people with good jobs find that their capacity to buy a house with a mortgage gets less every day as house prices grow well beyond income levels. The key problem is the shortage of housing of all sort but particularly of affordable housing. By affordable housing we mean housing that families on average incomes can actually afford. For many years housing supply in the UK has been running way behind the level needed to keep up with demand far less begin to catch up with the backlog. A more detailed account can be found at: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/.

Local authorities would be empowered to borrow the funds necessary to build these properties. They would be required to have a relatively high proportion of affordable housing, perhaps in excess of 60%, but could sell commercially more expensive properties so as to produce a profit to plough back into the affordable housing programme. Properties built under local authority control would be required to meet minimum standards (space, energy efficiency, general construction quality) which are significantly better than many of the extremely small properties currently under construction.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -0.25, -0.25, -0.25, -0.25, -0.25.

Immigration compensation fund:

Even after Brexit it seems very unlikely that the UK can run its economy satisfactorily without fairly high levels of immigration. Some of the most recent estimates by Brexit supporting politicians are that there may be little change in the net level of migration after Brexit. There are many occupations that are inadequately served by our own training capacity. Nationwide shortages simply require that we import workers with the requisite skills for a wide variety of jobs. Many of these issues are covered here: http://outsidethebubble.net/2016/10/05/labours-elephant-in-the-room-immigration/ . One conclusion from that piece is that one of the biggest objections to immigration is that additional pressures are put on local services, particularly healthcare and education. Although immigrants pay taxes, local services are not compensated for the increase in numbers. The piece referenced suggests that a fund should be set up which automatically transfers £5000 per annum for three years for each migrant to the local authority area where that migrant is resident in the UK.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -1.6, -1.6, -1.6, -1.6, -1.6.

Increased training to reduce need for immigrants in the UK:

Labour will work to reduce levels of immigration by increasing the training in areas where the UK lacks enough skilled workers. Areas such as agriculture, building and construction trades, care assistants and health service professionals such as nurses would all be prioritised. Investing significant funds into further education colleges that offer technical qualifications will further reduce the need to import workers from overseas. The cost of this activity is included in the “Education” section above. Nevertheless we will still need experts from abroad. In time we expect to be able to reduce immigration levels by about 30% from their present level. There is more about changes to the way we educate our young that should provide an increase in the trained working population here: http://outsidethebubble.net/2017/03/03/british-higher-education-system-failing-the-young-and-the-uk/ .

Minimum wage:

The minimum wage will be £7.50 from April and will progressively increase to £9 per hour by 2020. Labour will as a minimum ensure that the minimum wage keeps up with inflation. As economic conditions allow the minimum wage will be increased above inflation towards the level of the living wage.

Cancellation of housing stamp duty land tax, integration into CGT on property sales:

At present stamp duty is a tax payable when you buy property in the UK. It is calculated on a sliding scale that runs for residential properties from 2%-12%. For non-residential property the rates only go up to 5%. You also pay a small percentage when you buy new non-residential or mixed-use leasehold properties of up to 2%. The problem with stamp duty is that it is another thing that makes getting on the housing ladder particularly difficult for young people. Labour propose to abolish stamp duty in its present form and replace it with a capital gains tax payable when a property is sold. By progressively increasing the level of the capital gains tax levied on property, it should be possible in time to substantially slow the rate of increase in property prices by taking capital out of the property market. All property, including ones principal private residence will be included in this. This tax could be levied on the increment above inflation for principal private residences. In all cases, including property sold commercially, the capital gains tax would be payable within 30 days. New build properties would be exempt from this in order to keep the price of affordable and social housing down.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 0, 2, 4, 6, 8.

State pension increments:

State pensions are subject to a triple lock introduced in 2012 that guarantees they rise by the highest of 2.5%, average earnings growth or price inflation. This is meant that state pensions have grown much faster than average earnings for several years. If the triple lock continues pensions will take an increasing fraction of the national budget. We propose to increase state pensions in future only in line with average earnings growth. Additional payment such as winter fuel allowance should be integrated into a single state pension payment.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): -3, -3, -3, -3, -3.

Final salary pension schemes:

Proposals to freeze or otherwise diminish the value of final salary pension schemes must be looked at very carefully. Companies which have failed to put an appropriate amount of money into their schemes while giving generous dividends to shareholders should not be allowed to diminish final salary pension arrangements. Companies in genuine difficulty should be looked at carefully. The interests of shareholders should not be assumed to be more central to the arrangements than the interests of pensioners. Any changes in the rules must not disadvantage pensioners unfairly.

Tightening tax avoidance and evasion:

The principal job of the HMRC is to gather taxes from all sources within the UK. Tax avoidance and evasion are increasingly possible because of cuts to staff at the HMRC. Labour would permit HMRC to hire additional staff provided they can be justified in terms of the increased income the revenue would derive from their activities. A good multiplier test would be to make sure that the gross cost of a new employee led to an increase in the tax taken by 10 times the cost of that employee.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 2, 3, 3, 3, 3.

Tax havens:

There has been lip-service from the recent governments about requiring tax havens to become very much more open. In particular there needs to be full transparency as to the genuine beneficial ownership of companies that hold any assets in overseas territories. More than half the tax havens in the world are territories that the British government is legally and indeed morally responsible for. For many years there has been considerable pressure on changes in countries such as Bermuda. In addition there is a strong case to be made that the UK is indeed a tax haven because non-dom laws allow foreign nationals to live in Britain without paying tax on income derived from overseas.

The amount likely to be yielded by doing this is uncertain and so has not been budgeted in here at this stage.

Council tax: extending the upper band rate:

Council tax is levied on the rateable value of properties. The difference in rate between the least valuable and most valuable properties in England is a factor of three. Properties worth above £320,000 currently pay three times that on properties worth less than £40,000 in the same district. Labour propose property worth more than £320,000 should be subject to a tax in proportion to its value at a rate of 1.0%.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 3, 3, 3, 3, 3.

Business rates:

Business rates currently raise about £28 billion per annum and have recently been revised. The impact of these changes is not yet clear and until they are clear we do not propose any significant changes in business rates at this stage. However there is widespread unhappiness with the system as it is now and Labour will look actively at the way that businesses are taxed to make it fairer for all. One area that should be changed is the consequence for local authorities of having to provide significant amounts of infrastructure when new developments take place. It is proposed that for three years following the completion of a development 100% of the business rates levied should be retained by the local authorities.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 0, 0, 0, 0, 0.

Inheritance tax: scrapping £1 million tax-free allowance on principal residence:

The government has proposed a change to inheritance tax so that couples in £1 million homes will be able to pass them to their children and grandchildren free from inheritance tax. This change largely affects people living in London and the South-East. The number of taxpaying estates would then fall from 63,000 to 37,000 by 2020/21. It is predicted to cost the Treasury around £1 billion although other estimates suggest it might be much larger. Labour would reverse this change so that inheritance tax continue to be paid on assets above £325,000 for individuals.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1, 1, 1, 1, 1.

Infrastructure charge:

One of the big problems with corporation tax has been the ease with which multinational organisations have been able to avoid paying their share. We propose that an infrastructure charge be introduced as follows. Multinational companies produce audited accounts for their shareholders that identify the net profit of the company worldwide. We can calculate the share that each company should be attributing to the profits within the UK by using the fraction of their sales in the UK to give the fraction of the worldwide profits which should be taxed in the UK. The infrastructure charge might be set at 15% (three quarters of the current corporation tax level), predicted to give a yield of over £15 billion per annum. Such a charge could, of course, be set against the profits of the company. Corporation tax would still be chargeable. A more detailed look at this can be found at http://outsidethebubble.net/2016/10/20/fair-taxation-on-corporate-profits-2/ . A similar analysis from Richard Murphy on 30 September 2016 with a link to his article on Bloomberg dated 29 September 2016 entitled “Time for an Alternative Minimum Corporation Tax?” which you can find at: http://tinyurl.com/ho6yy73. It is interesting to note that the United States has a slightly more limited version of an AMCT already in use. Indeed that was the reason that Donald Trump paid as much as £25 million tax in his 2005 returns!

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 15, 17, 19, 20, 21.

British justice: improving legal aid provision and increasing court charges:

Michael Mansfield, QC, has said “access to justice is a much broader concept than access to the courts and litigation. It encompasses a recognition that everyone is entitled to the protection of the law and the rights are meaningless unless they can be enforced. It is about protecting ordinary and vulnerable people and solving their problems.” In 2013 about £350 million was cut from the relatively small £2.2 billion legal aid budget. This has the consequence of making many areas of law inaccessible to those who could not afford their own legal representation. The courts are under considerable pressure and Labour will propose that the courts charge very much greater fees for many cases involving commercial law and company law. The money derived would be used to offset the additional cost of legal aid as well as allowing a range of other actions in areas such as employment law.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 0.5, 0.5, 0.5, 0.5, 0.5.

Income tax changes for the wealthy:

There have been significant tax reductions under the Conservative governments that have disproportionately favoured the wealthy. Labour propose to reinstate the  income tax increase to 50% for those earning over £150,000, cancelled by the Conservative government. This will yield approximately £4 billion per annum. As a temporary measure, Labour would also increase income tax to 50% for those earning between £100,000 and £150,000.That would yield an additional £1.4 billion per annum. Those most affected would be on £150,000 and above who would find their tax bill increased by £5000 per year. That is a very small amount of money for individuals on such a high income.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 7, 7, 7, 7, 7.

Introduction of 25% VAT rate on luxury goods:

Labour would introduce a higher rate of VAT on luxury goods, initially 25%.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1, 1, 1, 1, 1.

Reversing the reduction in corporation tax from 20 to 18%:

Corporation tax has been reduced progressively since 2008 when it was 30% to its present level of 20%. That is not very far out of line with rates in other European countries and we should resist lowering it any further as has been suggested by those wishing to make the UK more attractive for inward investment. Specifically the proposed falls to 19% in 2017-18 and to 17% in 2020-21 will be cancelled. One of the big problems with corporation tax has been the ease with which multinational organisations have been able to avoid paying their share. This concern is dealt with under the “Infrastructure Charge” section above.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1.3, 1.3, 1.3, 1.3, 1.3.

Patent box regulations:

The patent box regulations need to be reviewed and almost certainly tightened up to control inappropriate exploitation of irrelevant patents.

Cancelling the HS2 project, reinvesting in other rail and road schemes:

It is increasingly clear that HS2 is as much a vanity project as anything else. Labour would halt the construction of HS2 and devote a substantial part of the funds thereby released to improving rapid transport infrastructure in the north of England. Some funds would be used to improve the density of rail traffic on the existing north-south lines from London but the principal emphasis would be north of Birmingham. Labour would progressively bring back the privatised railway companies under government control. This is something that public opinion polls have shown to be very popular. It would produce an integrated railway system better matched to the needs of a modern country.

As existing franchises expire each will be purchased using funds generated by government bonds. The prediction is that this will produce a very much more efficient rail service with the capacity to expand its ability to move more and more people off the road and onto public transport.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1, 2, 2, 3, 3.

Prison reform:

The UK has a very large prison population, currently nearly 150 per 100,000 of the population. Cuts to the prison service (staff numbers reduced by 30% since March 2010) have meant an explosion in violence and the rates of self-harm. Prisons have been key in allowing the radicalisation of a small number of Muslim prisoners. Drug use is endemic and a number of prisons are simply out of control. The numbers sentenced to 10 years and more have increased by over 200% in 10 years. 36% of prisoners have a physical or mental disability. Comparison with many European countries shows that prison sentences in the UK are particularly harsh. For many years the running on this has been led by the right, emphasising punishment and not rehabilitation. The conditions in prison make any attempt at training that might lead to successful rehabilitation virtually impossible. Labour will review the sentencing guidelines for the full range of crimes with the intention of bringing it down. Non-custodial sentences need to be used to a much greater extent. Prison staff numbers must be increased to make prisons safe, and to reduce violence and drug use.

Much greater use will be made of intelligent prisoner tags that allow the location of prisoners to be followed in detail to ensure that they stay within the restricted area they are permitted to access. By making this quite restrictive prisoners would be released into the community to maintain their social contacts and continue employment. Such tags could also be used for remand prisoners who account for a significant number of the present prison population (about 13% or around 11,000). For prisoners considered not to be a danger to the community they could be released from prison and tagged after one quarter of their sentence. The tag conditions could be progressively eased as the prisoner demonstrates consistent compliance. The technologies that allow this to be done are already close to being rolled out in volume. The cost of this will be more than compensated by the savings on the cost of prisons.

There is more on how the system might work at: http://outsidethebubble.net/2017/03/15/fair-access-to-the-british-justice-system/

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1.5, 1.5, 1.5, 1.5, 1.5.

Pollution control: Increase in vehicle excise duty on larger, luxury and more polluting vehicles:

Labour will phase out the use of diesel vehicles as soon as possible and preferably within 10 years (private vehicles) and within 20 years (all vehicles needing to access urban areas, including delivery and public transport vehicles). And old vehicle scrappage scheme may be introduced, but manufacturers will be discouraged from marketing diesel vehicles in the UK for any purposes as a matter of urgency. Vehicle excise duty on larger vehicles, luxury vehicles and more polluting vehicles to be introduced on a scale up to £2000 per annum (forecast yield £1.5 billion). Local authorities given the ability to limit vehicle access to central areas on the basis of physical size and the pollution they might generate. Local authority car parks encouraged to provide electric vehicle charging points.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1.5, 1.5, 1.5, 1.5, 1.5.

National insurance changes: increases for self-employed:

The national insurance tax levels on self-employed would be increased to reflect their improved pension provision.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 2, 2, 2, 2, 2.

Increasing stamp duty on sales of shares and bonds:

The stamp duty will be charged on the selling price, not the purchase price in future but at a rate of 1%.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 3, 3, 3, 3, 3.

Removal of exemption of foreign source dividends from corporation tax:

At present foreign sourced dividends from an offshore subsidiary, for example, have been exempt from UK tax. This exemption will be stopped.

Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1, 1, 1, 1, 1.

Accepting British responsibility for UK tax havens:

About half of the top global offshore sectors are British Crown dependencies and overseas territories. These are places where British law is supposed to rule. The existence of these has been tolerated far too long by right-wing British government. Labour will require that they meet standards of openness and integrity irrespective of whether we leave the EU. It is notable that the EU are likely to designate many of these areas as tax havens after Brexit.

Defence: major concern about current procurement programmes being inappropriate 21st-century defence:

At present Labour propose no significant changes in the defence budget. There are, however, major concerns that the present procurement programme is simply inappropriate 21st century defence. Many of the current procurement programs are designed to deliver hardware that is highly vulnerable to the latest developments in missile and surveillance technologies. A longer piece of this may be found here: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/

Total Yield(Costs): years 1, 2, 3, 4, 5 (billion pounds): 1.9, 5.9, 7.9, 10.4, 11.4..

Un-Costed Outstanding Issues:

There are always additional items coming along which need to be addressed. This section briefly mentions them and suggests ways they might be managed.

School repair bill. Current estimates are that the Department for Education needs to spend at least £6.7 billion just to bring all school buildings up to a satisfactory state. At present a very substantial amount of money is being spent in the education sector on setting up free schools and very great expense. Often these schools are not located where they are needed. The expectation is that by shutting down the free school programme and restoring the creation of new schools to the Department for Education budget that much of the funds needed for the repair bill should be accessible to the Department. In addition, the substantial increase in funding for education will take some time to get going and at that stage it should be possible to catch up significantly with the school repair work so urgently needed.

Outstanding road repair bill. The repair of British roads has been neglected for some considerable time. Some estimates are that it will take about £12 billion to repair all the potholes etc. on our roads. In recent years the real cost of fuel has dropped markedly as the oil prices have weakened. A modest increase in fuel duty would pay for the outstanding road bill fairly directly.

Defence. The way that accounting has been done by the Ministry of Defence for a number of years has been rather creative. By postponing delivery into the future and not properly accounting for the increased costs involved in delaying equipment deliveries, a significant shortfall in defence funds has occurred. This is properly in the region of £1 billion per annum and may well be more, as creative accounting may be a continuing problem with the MoD. It may be necessary to cancel some of the capital hardware being purchased (F 35 fighter aircraft at over £100 million each, and 589 light armoured Ajax Scout vehicles). It may be necessary to trim the specification of the Type 26 global combat ships which are heading towards fairly substantial over specification and nearly 50% deadweight increase. For further details of these problems see: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/ .

 

Defence in the 21st-Century.

Summary: The UK military is very poorly equipped at present because of the MoD’s appalling procurement processes. However what they are trying to procure is completely inappropriate for the sort of missions that the MoD needs to be able to manage in the very near future. An earlier piece analysed the problems being generated by existing procurement plans. This piece takes a look at what sort of hardware we need to start investing in as a matter of urgency. Unmanned vehicles in the air, on land and at sea have enormous advantages by not having to take humans with them. They become much lighter and cheaper to make, very much easier to maintain and above all do not put valuable soldiers, sailors and airmen at risk. The rest of the world is already developing these craft and the British MoD must accelerate its work towards using them.

A recent posting on outsidethebubble.net drew attention to the extraordinary lack of serviceable equipment available to the British Armed Forces. We have no aircraft carrier, and no aircraft to fly from it. We expect serious problems in recruiting and training enough pilots in the time available. Our destroyers are non-functional and our submarines are all in port. You can read more here: http://outsidethebubble.net/2017/03/16/britain-defenceless-in-the-21st-century/ . Trident is another significant problem addressed separately here: http://outsidethebubble.net/2016/09/16/trident-the-third-way-make-do-and-mend/ . Following the US strike on Syria with 59 cruise missiles it is interesting to note that the UK could not have taken any part in this. All its cruise missiles are on nuclear submarines and all these are presently in dock for maintenance and repair.

Apart from the horrendous problems with MoD procurement and plans, the most worrying feature of the plans is just how badly suited they are to the likely defence requirements of the UK in the 21st-century. It is often said that across the world, the military equips themselves to fight the last war, and that is clearly the case with the British plans for the future. One of the reasons for the immediate success of Germany at the beginning of the second war was that they had equipped themselves for the war that was going to be fought. We must not be caught again like that.

The UK is building two aircraft carriers for £14.3 billion that could be sunk by a couple of cheap long-range Chinese DF-21 missile with a range of 1100 miles and top speed 10 times that of sound. The new DF-26, often referred to as Beijing’s “carrier-killer” has a range of 2500 miles. They were designed to sink an aircraft carrier, all the aircraft on it and the crew which may be several hundred strong. These are not ballistic missiles that anti-missile systems would be defence against. They fly low and fast and would be almost undetectable until they were too close to avoid.

Then the UK plans to buy 138 F-35 fighter aircraft from the US for both the Navy and the Air Force at a price in excess of $100 million each. Again a single well aimed missile is all that need to destroy that plane, and kill the very expensively trained pilot. The total cost of an aircraft together with the pilot, the training, many years of training flights and associated maintenance, plus all the support systems is probably approaching $250 million each.

Our six Type 45 destroyers, even once their current problems are fixed are also highly vulnerable to the same missiles that would take out our aircraft carrier. The destroyers are so noisy they can be tracked by submarine from over a hundred miles away.

We are also planning Type 26 Global Combat Ships whose specification is still being continually ratcheted up, but are already over £350 million each. Again another of those cheap missiles will do the trick.

The list goes on and on. Apparently what hasn’t occurred to the top brass in the MoD is that future battles and future missions will not be fought like this at all. We all know that road vehicles are close to being genuinely driverless. Modern airliners have very sophisticated autopilots that can also undertake virtually everything needed to fly an aircraft without human intervention. The future is undoubtedly with unmanned vehicles. The way they will be used will be very different and very much more economic than present weapon systems.

Already the UK uses pilotless drones as in the movie “Eye in the Sky” (2015, with Helen Mirren). These systems are known as “man in the loop” vehicles because the drone is controlled remotely by ground crew. However a great deal of research is already underway to produce aircraft that can work semi-autonomously. Each would have a considerable amount of artificial intelligence but need approval or direction before making key decisions. The next stage are fully autonomous vehicles. These have their decisions both navigational and tactical made by pre-programmed software and mission parameters. Such a machine could find and carry out the operation without external direction by human controller, although tests human intervention is always possible as the operator is permanently aware of what is happening with the vehicle.

Many would find this scenario rather scary but that doesn’t stop the development of systems like this by others all round the world. It simply cannot be ignored. The UK traditionally hopes to punch well above its weight in foreign and defence matters so must make sure that its military systems are the most appropriate for the next mission, whatever that might be. We must put aside any thoughts of hero boy pilots as in “Top Gun” and “Star Wars” movies. That is not how future battles will be fought. It will be between computer system and software systems, technologies that the UK has traditionally excelled in. It will make systems dramatically cheaper and yet much more capable. It will give much better performance and capability for the same money.

The key difference with unmanned vehicles of all sorts, in the air, on the ground and at sea is that they don’t have any people on board. This has many advantages, particularly as the public becomes increasingly squeamish about deaths on the battlefield by our soldiers. However there are many further advantages if a vehicle is unmanned.

A great deal of the space and weight of a vehicle is a consequence of having to accommodate real people. There is a limit to what real people can cope with, matter how well they are trained. An aircraft cannot do an incredibly tight turn during a dogfight because of the G-force effects on the human frame. Just having a pilot in an aircraft means providing all the control systems, pressure suit systems, ejector seat etc. plus all the limitations on the engineering of the aircraft needed to keep the aircraft fully operable by a human. Already fighter aircraft can largely fly themselves and it is often said that the pilots job is principally to bring it back safely should it become damaged. In the future it will be the computing systems that will do the work and do a much, much better job. Finally it becomes significantly less critical to return the vehicle at the end of the mission undamaged, particularly if that vehicle is so much cheaper.

The consequence is that an unmanned fighter aircraft with much the same performance as a manned one is predicted to be between 1/5 and 1/10 of the cost. In addition, there will be no need to have practice flight after flight to train the pilot because the craft will be flown by the computer. They can sit in the hangar and be checked from time to time on the ground. They will be operated by ground-based staff that can program its mission and monitor how it carries it out remotely. The total cost is such that it is realistic to expect to be able to buy 10-20 times as many craft for the same price if they are unmanned.

It also appears that the best strategy is for these craft to work in groups, with different craft configured differently with different sensors, weapons for defence and attack and other capabilities. However all would be communicating between one another so each benefits from the capabilities of all the others. With so many eyes on what is happening to the group, defence is much easier to manage and dealing with the target much harder for the enemy to defend against. Craft can spend days flying at much greater altitudes than manned aircraft, flying slowly on patrol because the pilot does not need to get back for dinner and to sleep. A very comprehensive look particularly at unmanned aerial vehicles but also at other aspects of operating unmanned aircraft can be found here: http://tinyurl.com/jyg7jgl .

BAE Systems and the UK MoD have already developed test drones such as the Taranis. Many others are in development around the world and, in the US, conventional fighter aircraft have been retrofitted to make them fully autonomous (a good thing to consider for the U.K.’s Tornado fighters once they approach the end of their planned service lives: they could also be automated and kept running at a tiny fraction of their present cost).

There are similar advantages at sea. Craft can be much smaller, lighter and faster, able to spend long periods away from base and ultimately by being expendable much more capable of managing missions that might otherwise be too dangerous for human crew. An Israeli company is developing a Seagull unmanned surface vessel capable of minesweeping, antisubmarine duties and as support ships. On the ground small tank-like vehicles (Themis Adder) have already been developed by an Estonian company called Milrem that makes ground operations radically different and safer for the troops working with them. More can be found here: http://tinyurl.com/kzrd6wr.

The bottom line for all this is that by moving much more enthusiastically towards the use of unmanned vehicles in the air, on the sea and on land would make the British defence budget go much further but above all be much more capable of carrying out the military missions we need to be able to participate on in the future. At present there is relatively little sign of serious activity by the MoD towards such vehicles.

This must not be thought of a long term development plan. Procuring autonomous unmanned vehicles for use in the air, at sea and on land is now an urgency. Other nations are already moving ahead rapidly on this. We will get much better bang for our buck if we embrace this new generation of technology wholeheartedly.

A great part of those activities are truly defensive, making sure that threats to the UK from rogue nations, great and small, can be managed. The offensive aspect is also important should it come to that. When we recall just how poorly served we are by our present massively dysfunctional military we can see how much still has to be done.

Time for a new political party?

Summary: the increasing dissatisfaction with the direction of drift of the Labour Party is leading to some serious attempts at thinking what really could be done. Focusing on getting rid of Jeremy Corbyn is far too short-term. There needs to be a genuine focal point on which to rebuild a centre-left consensus with wide appeal. Starting a new party might seem attractive but given the time available before an election is completely impracticable. Unless some core centre of gravity of the Labour MPs, Labour Party members and Labour constituency parties can be identified there is little prospect of any real progress.

There are now hints of genuine attempts at finding ways around the impasse at the top of the Labour Party that is stopping any plausible progress towards electoral success. Last week Richard Dawkins wrote an article in The New Statesman arguing for a new party (http://www.newstatesman.com/politics/uk/2017/03/richard-dawkins-we-need-new-party-european-party ).

Richard Murphy in his Tax Research UK blog developed the ideas although not in a particularly supportive way (http://www.taxresearch.org.uk/Blog/2017/04/03/time-for-a-new-political-party/comment-page-1/#comment-776724 ).

In a piece by Toby Helm (3 April 2017), the political editor of the Observer says that a group of more than 75 Labour MPs led by Clive Efford MP have re-launched the centre-left Tribune group (see:  https://www.theguardian.com/politics/2017/apr/01/labour-mps-revamp-centre-left-tribune-group-to-win-back-middle-class-voters / ). However it does look as if this group was actually relaunched about five months ago, at least going from the website which is wonderfully slick and remarkably content free for five months-worth of effort.

When things are going badly it is very tempting just to say “let’s start again”. The only point of a political party is to achieve influence, and that influence has to be great enough to ensure it succeeds in gaining a majority at the next election. Many of the sympathies of Richard Murphy’s piece and in the comments are clearly left of centre.

The Labour Party has on paper an extraordinary level of support. A new party has to be sure of generating a comparable degree of support in the time available. Giving any new party a label that turns of as many of the general public as it turns on is simply not going to work. There are lots of sensible left of centre people in the UK who really have problems with Europe.

To succeed it must have an appeal that is broad enough to bring in a wide range of support. Even the word “Labour” has enough negative connotations to make that name a disadvantage. Words like “Momentum” and “Tribune” are relatively free from this. Their reputations will be generated as a consequence of what they do or do not do.

I am convinced the only way forward is to find a political centre of gravity for the Labour MPs, the broadest Labour membership and the constituency Labour parties. In the UK political parties do indeed have sub-groupings that push more particular agendas. We urgently need a refocusing of what Labour is. It is widely agreed that a new leader will be needed but that must not be the focus of the party now. After 18 months of Corbyn’s leadership we still don’t have anything that might be called “Labour Party policy”. They have just sent around a policy consultation sheet in a simple multiple choice format. Surely there is enough evidence from public opinion polls what actually matters to the general public. Labour desperately need a list of things they will actually do rather than just cataloguing the aspirations of the left.

Momentum sounded promising when it was set up but, like so many political sub- groupings, it is subject to infighting and manoeuvring to the detriment of the principles of that movement and certainly to the traditional principles of the Labour Party. Perhaps Tribune can do better. The Guardian reports today that the new Labour Tribune MPs group has just been launched though the website suggests this actually happened five months ago. Unfortunately the name “Tribune” also suffers from historical baggage though most young people will not be aware of that.

Already that delay is worrying. I thought I was fairly in touch with what was going on with current centre-left thinking. A grouping like Labour Tribune and won’t work without some serious PR. In needs money and a website that is less slick but has more content. Above all it needs full-time people to push it properly. It might be able to make some genuine progress in establishing a foothold in the centre of the Labour Party but it looks at present as if it has some considerable way to go. Without it or something like it I cannot see any prospect of regenerating a centre-left political party in the finite future.

But I’m very clear that there aren’t any other parties around that have a chance, and setting up a new party with a name that starts by polarising the electorate is simply not going to get anywhere.

All I’ve managed to do is put together a blog called outsidethebubble.net, but it is so hard to find any way of moving these things forward otherwise. The next big challenge is to generate a plausible centre left-wing policy document which has clear goals and, above all, clear economic costings. Hard ideas are needed, not a series of aspirational documents with the intellectual texture of a slice of cheap white bread.

Momentum sounded promising when it was set up but, like so many political sub- groupings, it is subject to infighting and manoeuvring to the detriment of the principles of that movement and certainly to the traditional principles of the Labour Party. Perhaps Tribune can do better. The Guardian reports today that the new Labour Tribune MPs group has just been launched though the website suggests this actually happened five months ago.

Already that delay is worrying. I thought I was fairly in touch with what was going on with current centre-left thinking. A grouping like Labour Tribune and won’t work without some serious PR. In needs money and a website that is less slick but has more content. Above all it needs full-time people to push it properly. It might be able to make some genuine progress in establishing a foothold in the centre of the Labour Party but it looks at present as if it has some considerable way to go. Without it or something like it I cannot see any prospect of regenerating a centre-left political party in the finite future.

But I’m very clear that there aren’t any other parties around that have a chance, and setting up a new party with a name that starts by polarising the electorate is simply not going to get anywhere.

All I’ve managed to do is put together a blog called outsidethebubble.net, but it is so hard to find any way of moving these things forward otherwise. The next big challenge is to generate a plausible centre left-wing policy document which has clear goals and, above all, clear economic costings. Hard ideas are needed, not a series of aspirational documents with the intellectual texture of a slice of cheap white bread.

Fighting Brexit: Sowing Doubt amongst Brexiteers

Summary: Fighting Brexit is something that must be encouraged and carried out with enthusiasm and energy. Focusing on loss aversion, whereby individuals are much more concerned with understanding what they might lose that they are about what they might gain should underpin our methods. Emphasising what they have already lost with the current right-wing government and what they will lose increasingly as Brexit gathers pace is key. The promises of the Brexiteers need to be challenged. Those opposing Brexit can point to all the losses that have already been created by the hard right governments we have had in recent years. The battle must be taken to the Brexiteers!

The only way that we can avoid leaving the EU with either no deal at all (hard Brexit) or a weak, unsatisfactory deal is to change the opinion of a significant fraction of the British population who voted to Leave. The vote was close, 52 to 48 and was substantially built on lies and propaganda on both sides intended to obscure the truth. The Government’s hardline approach to Brexit can only be reversed if public opinion turns significantly against Brexit.

There is every indication that this might well happen. Gradually we will find that there are things we have had yet now are losing. The drop in the exchange rate will provide a temporary lift but once the effect of that work through to consumer prices and inflation starts to increase substantially the pain will increase. Inflation tends to lead to rises in interest rates. With the recent growth in the economy fuelled substantially by increasing credit that will cause a significant pain to those least able to tolerate it.

We are also now seeing projections and analysis that make it clear just how much different regions of the country will be affected. A recent report from Demos makes it clear that some of the strongest supporting regions for Brexit, Wales and the North-East, will be particularly hard-hit. Wales exports 60% to the EU.  Much of that is agricultural which will be hit by particularly high tariffs. Wales is also one of the biggest recipients of EU funds which are unlikely to be provided as lavishly by the post-Brexit British government. The East of England will also be badly affected by the difficulty in recruiting agricultural labourers to gather a substantial part of British fruit and vegetable produce.

Daniel Kahneman is a psychologist who was awarded a Nobel Prize in 2002. One of his most important studies was to appreciate how individuals are much more concerned with avoiding the loss of something they have ready have than they are with the prospect of gaining something they don’t yet have. Loss aversion is extremely important at every level and every society. It is an idea that is now accepted as being key in underpinning human motivation. Understanding this can guide our approach to persuading Brexiteers to change their mind.

The key to helping people realise that Brexit might not be good for them after all is to make them understand just how much they will be losing. The Brexiteers promise that we will gain something. Those promises must be challenged and balanced by explaining what we are all likely to lose. The losses will be felt particularly by those who have already suffered badly.

Indeed we can understand partly Labour’s failure to make any political headway during the last two governments because they have not been prepared to point out just how much individuals have lost in recent years because of austerity. Austerity has not been seriously challenged by the left-wing political classes and the best way to do that is not simply to say it is unnecessary but to point out just how much everybody has lost.

There are millions of people in the UK who no longer can afford to take a holiday. There are many millions who are materially worse off than they were before the crash of 2008. These are people who will understand and feel what it is they have already lost. Targeting them and making it as clear as possible that they will lose again and again if Brexit goes ahead.

The Labour Party is in a sorry state now and cannot be relied upon to be much help in this. However wanting the UK to remain in the EU is something that people in all walks of life support so fighting Brexit is something that transcends the usual political boundaries in the UK.

To the barricades!

The Labour Brand Is Becoming Irredeemably Toxic. What Can We Do Now?

Summary: The Labour Party is widely agreed to be in a pretty bad state. The manoeuvrings in the Momentum group are most concerning and indeed any attempt to gain exceptional influence over Labour Party policies from one narrow agenda group is most concerning. Now we hear of the disintegration of the office of Jeremy Corbyn with massive staff losses over the last year. Getting things back on track is an urgent matter and the people at the top of the Labour Party simply don’t seem to understand this. Without action the current death spiral of the Labour Party will end relatively soon. We need to identify leaders that will be supported by Labour Party grassroot members and give them every support to turn things round.

Labour supporters keep hoping that things will improve. Many feel that a change of leader is what is needed but this simply ignores the fact that Labour as a brand (in marketing parlance) is toxic and will be very hard to repair. It isn’t just because of Jeremy Corbyn. It is true that Corbyn has become a figure of ridicule and is misreported pretty widely. But if we think how any other leader might improve things it would still be very difficult to resurrect Labour in a positive way.

The rot was under way many years ago and Labour have failed to keep the brand fresh and interesting. It probably started with Tony Blair and the Iraq war, faltered during the Blair/Brown squabbles and particularly when Labour under Ed Miliband was too timid to resist the nonsense that the British economy was in a dreadful state because of Labour overspending when in fact the British recession simply followed the worldwide recession. Now it doesn’t matter what Labour says and when it says it. The presentation is mediocre and the media have Labour on the run. Labour are currently flogging a dead horse with an uninspiring rider.

When a brand becomes bad it’s very difficult to bring it back to life. Most companies would simply develop a different brand which may well be what they wanted the old brand to be, but it has to be new and fresh and interesting. The problem with reconstructing the Labour party is that there are large numbers of genuine left-wing supporters who want it to work. Many feel very unhappy at the current drift and lack of focus. They may be leaving in pretty large numbers at the moment but they still want a left-wing socialist party to represent their views and the views of the many who have lost out since the start of the Tory recession so very badly. Even now, with the membership under half a million, that is still a very large number that simply cannot be brushed to one side.

The Momentum group was set up to build on the energy and enthusiasm generated by the Jeremy Corbyn for Labour leader campaign. It has over 150 local groups across the UK and a total membership of about 22,000 or about 5% of Labour Party members. This sort of organisation could be an excellent way for Labour to build strength but at present it appears to be moving ever leftwards in ways that the great majority of the Parliamentary Labour Party and general Party members believe will ultimately harm the prospects of success for Labour at a general election. And they are probably right.

The evidence of a leftward drift is very strong. A recent recording of Jon Lansman of Momentum made it clear of his desire to affiliate the Unite union (the biggest in the UK) with the group he founded and become fully integrated with it. At the same time there are moves to change Labour Party rules enabling future candidates to require only 5% of MPs to support them rather than the present 15%. That would make it easier for far left candidates to stand as a future Labour leader.

The significance of all this has been energetically denied by Len McCluskey, the President of Unite but it is pretty implausible that Jon Lansman could be as out of touch with the current reality as Len McCluskey would have you believe. Sadly the presence of Momentum as driven by its present leaders is not a particularly democratic organisation. The constitution of Momentum allows the ruling committees to make pretty well any decision they like without reference to its grassroots members. The way it is run now is certainly exacerbating the divisions within the Labour Party. You don’t even need to be a member of the Labour Party to be an effective presence in Momentum. The rules that require it will not be enforced according to Jon Lansman. Indeed there are senior members of the executive today that are not Labour Party members.

We now have reports from Jeremy Corbyn’s office that yet more aides are leaving the team. The list includes Jayne Fisher, Matt Zarb-Cousin, Nancy Platts, Simon Fletcher, Mike Hatchett, Neale Coleman and Anneliese Midgley. David Prescott, son of the former deputy PM John Prescott is leaving as Mr Corbyn speechwriter barely 3 months after taking up that job. It is clear that the office is in turmoil and is perhaps the strongest evidence of how seriously weak the Labour Party is at present. If the leader’s office is so chaotic, what chance of a credible and successful general election campaign?

It is widely agreed that the fragmentation of Labour continues, and its prospects of electoral success are diminishing by the day. John McDonnell, the Shadow Chancellor, thinks it will take as long as two years to turn things round. He and Jeremy Corbyn have been in charge of the Labour Party now for over 18 months and nothing much seems to have happened. A search online for what might be current Labour Party policy reveals nothing. There just isn’t anything to look at, nothing to get behind and act a rallying cry at a time when the country desperately needs an effective opposition of any sort.

Most of the criticism of the present state of the Labour Party focuses on the leader. However if you think about what Labour would be like with a leader of your choice you will realise that changing the leader will make little difference in the short-term and the weakness of the Labour brand would make regeneration of the Party very hard indeed. Given that there is a possibility of a general election before too long it is clear that even a new leader might be too little and too late.

Unfortunately it’s not enough to catalogue what’s going wrong. We have to work out what must be done to move things forward. The question is therefore: how do we reinvent Labour? For a start nobody really seems to know what Labour’s policies actually are at present. Only three weeks ago Jeremy Corbyn produced a form asking people to say what mattered most to them, 18 months after he was first elected. We have to accept that any policies that Labour might have are, at present, vapourware. Such a policy needs to be articulated then modified and refined to get rid of its rough edges and miscalculations. A satisfactory policy has to include a serious attempt to cost each of the items within it, something that is essential if we are to gain any kind of economic credibility. That has been the great weak point of Labour since 2008 as it was not prepared since to resist Tory accusations that it was the Labour economic incompetence that led to the British recession.

Once there is something that is approximating to an agreed policy we need to find charismatic individuals who can bring the party together. There is an assumption amongst many that the current Labour Party membership is very skewed towards the left and does not represent the views of those who might reasonably vote for Labour. This is difficult to sustain because the Labour Party is the Labour Party we’ve got, not one that we might like to redefine. There is no doubt that the mood in the party is markedly more to the left than the manifesto used by Labour in the 2015 general election. Yet poll after poll makes it clear that left-wing policies continue to be popular amongst Labour Party members and with the general public.

Relatively few Labour MPs are well known. Sadiq Khan is popular but as Mayor of London he is not an MP (though there are ways of fixing that). Others that have been reasonably successful in Parliament or at the Labour Party conference include Keir Starmer (shadow Brexit secretary), Clive Lewis (while shadow defence secretary made probably the best speech of the last party conference) and Chuka Umunna (articulate, charismatic but perceived as too new Labour, too right-wing for many). Rumour has it that Jeremy Corbyn’s office are keen to groom a younger very left-wing replacement for Jeremy. However until they can manipulate the nominating percentage for leadership from 15% to 5% there is little chance that Jeremy will be permitted to resign by those currently pulling the strings.

Then the trouble starts. Can we wait till Jeremy resigns? Will there be enough time to turn things round and reinvent Labour? Will the Parliamentary Labour Party start doing some serious arm-twisting for the good of the party? Or is the whole thing in a hopeless and irredeemable death spiral. Thoughts please, on a postcard!

Britain Defenceless in the 21st-Century.

Summary: The British defence programme is in an extraordinarily bad state. All current procurement programs are running very late and very overbudget. Many of them appear not to fit well with other programs, past or current. Systems that have been specified and over specified thoughtlessly are proving unreliable and inappropriate for defence in the 21st-century. This piece tries to look at the state British defence is in. A serious strategic defence review needs to be carried out since the most recent one published at the end of 2015 seem so impossibly out of touch with reality.

The UK trumpets the fact that it spends around 2% of GDP on defence. That apparently makes everyone in NATO happy. Unfortunately nobody in the UK should be mildly content with that. There is a massive problem with the British military and its approach to procurement. Military chiefs approach procurement like Arab princes going into a supercar showroom. They ask for the best with all the extras you could imagine. If in doubt, a bit more goldplating would be splendid! Like the military through the ages they are keen to arm themselves to fight the last war and have remarkably little idea what the next one might actually be like. Many of the major procurement programs of the British military are remarkably misguided. They clearly have very little idea of what the next war might look like. They are buying capital ships such as aircraft carriers, destroyers and submarines which seem pointless in a 21st-century war. Vast numbers of aircraft are being bought that perform poorly and are eye-wateringly expensive. I will quickly run through the list of the main procurement programs already underway by the Ministry of Defence. At the end of the piece I recommend a book that tries hard to imagine what the next world war might well look like. It is rather scary but strongly to be recommended.

  • Let’s start with the aircraft carriers. When the Tories came to power their obsession with cuts forced the only British aircraft carrier (the Ark Royal) to be scrapped and the Harrier aircraft on it got rid of. Now they are building two more carriers which are well over budget and well behind schedule. They don’t have the capacity to catapult launch a fighter aircraft because the catapult hardware came out to be far too expensive. The programme cost is currently estimated to be £14.3 billion including the aircraft but unfortunately there are not actually enough engineers to get the carriers running properly and anyway they will barely have enough pilots to fly the aircraft before 2026. Each carrier has 24 of the F-35B aircraft. The big problem with aircraft carriers and indeed with many capital ships is that they are now desperately vulnerable to high-performance cruise and ballistic missiles. For example, China is developing the DF-21, a carrier killing ballistic missile with a range of 1100 miles and a top speed 10 times that the sound (2 miles per second). None of our ships have any serious protection against such a weapon. One single hit gets rid of the whole carrier and its aircraft and its crew.
  • Fighter aircraft for the carriers are being purchased from the US. These are the F-35B lightning aircraft capable of near vertical takeoff and landing. They need this because the carriers have no other way of launching aircraft. Although the aircraft carriers only need 48 aircraft we are ordering 138 in total all of which are the short takeoff variant. The remainder are for conventional operations. This variant is unfortunately more expensive, heavier, can carry less load and has a smaller range than the basic F35 aircraft. It is far from clear why all are being purchased in that -B variant. Each aircraft costs about £100 million including engine and avionics. Unfortunately the performance of the F-35 is rather poor. One was recently outperformed in a mock dogfight over the Pacific by a 40-year-old F-16 aircraft. The test pilot described the F-35 is being too slow to hit an enemy plane or dodge gunfire. Not such great value for money after all! Last year major problems were found with the avionics systems with 5 out of 6 of the jets unable to take off during testing because of “immature systems and software”.
  • The next area of concern are the six Type 45 destroyers. In a remarkable oversight it turns out the engines cannot manage being in a warm sea and they breakdown in waters such as the Persian Gulf. All the engines need to be refitted. Another serious problem is that these destroyers are extraordinarily noisy. Any Russian submarine can detect one of the destroyers at a range of over 100 miles. Even the crew of a Type 45 think they are noisy. The former director of operational capability at the MoD claimed that these ships sound like a box of spanners underwater. Very reassuring for those serving on such boats. Even 40 years ago destroyers were made to be as quiet as possible. It is not clear yet whether the new engines will improve things but their replacement will take a very substantial amount of time not to mention being very expensive. It also means these destroyers will be out of service for a long time.
  • A good example of the way that the military top brass likes to gold plate their pet projects is the Type 26 global combat ship. This pretentious name disguises the fact that it is basically a submarine hunter/killer. Navy chiefs insist that it must hold 4 of 39 foot boats, drones or 11 shipping containers and have a deck capable of landing an Apache helicopter for SAS type missions. The basic weight was originally 5400 tons but now, fully loaded, the vessel is expected to weigh more than 8000 tons. The initial cost estimate of £350 million is believed to have been exceeded substantially already. These prices don’t include any significant weapon system for the ships, and that is an expense which does not appear to have been budgeted for.
  • The Royal Navy insists we have a “world-class fleet” of submarines that “continues to meet all of its operational tasking”. This is despite the fact that all seven are currently out of action. Some are apparently on their last legs having been built as recently as 1986. Three built more recently cost nearly £4 billion with construction delayed by more than four years and costs 50% over budget. They are also in dock and likely to remain there for some time.
  • The current Trident submarines continue to plod along perfectly well, although recent missile tests that misfired suggest all may not be well with the Trident missiles themselves. New submarines are to be built at a total cost of about £40 billion. This must surely be a good case for “making do and mending” to cut back on expenditure until everything else is running properly. More on this at: http://outsidethebubble.net/2016/09/16/trident-the-third-way-make-do-and-mend/.
  • Watchkeeper drones were intended to enter service six years ago. The costs have gone up from £700 million to £1.2 billion.
  • Plans to buy a fleet of 50 Apache attack helicopters for the British Army are being delayed because of the collapse of the pound relative to the US dollar by 21% since the EU referendum. The software in these helicopters can only be upgraded by the US because of “military sensitivity”. The UK is increasingly reliant on the US defence industry.
  • The Ajax scout vehicle program will cost about £3.5 billion to deliver 589 of these armoured vehicles which are essentially mini tanks with a Caterpillar tread. Unfortunately they are too heavy to fit into the RAF’s A400M transport planes and have to be taken to bits first before shipping. What on earth 589 of these immovable objects might be needed for is almost impossible to imagine. I suppose they can buzz around on Salisbury Plane blasting clumps of heather to kingdom come.

The overall British defence programme is extraordinarily expensive but above all of little help in defending us. Russian Tu-95 “Bear” bombers approaching UK airspace can fire missiles at London while circling over Moscow. Modern weapons systems are completely different from anything that the UK is really thinking about. We really should be thinking much more creatively about the way that modern lightweight compact weapon systems are likely to completely dominate in the future. Very fast unmanned fighter aircraft will shortly massively outperform any manned aircraft. Already the highest performance drones (unmanned aircraft) cost between $6 and $15 million. They don’t have the capacity in combat of an F-35 but they could have. They would have many advantages over a manned aircraft, be able to tolerate much higher G-forces and be able to fly in zones where increasing risks of being shot down would make the use of a manned aircraft unacceptable. Sophisticated software on board weapon systems will be what makes or breaks a systems effectiveness. Increasingly wars will become a battle between software systems and not between heavy pieces of equipment that are vulnerable so easily to modern attack weapons. This is not something that the Ministry of Defence appear to have thought about at all.

And then there is the whole business of cyber warfare which is beginning to be taken seriously but needs to have very substantial investment. The individuals who are able to take part in this need a very considerable amount of training and are not people that can be simply turned on like a tap. Getting this right is extremely important and a long-term strategy is absolutely essential.

We desperately need to completely rethink what is happening in our military. Most of the systems we are buying and have bought are remarkably inappropriate. There are not really able to fill any useful future military role. We may be using 2% of our GDP to keep our NATO allies happy but we are totally dependent on the defensive shield of the US. US sales us our equipment, give us permission to use it, takes responsibility for upgrading it (at our cost) and trains our people to use it. It is far from clear how much innovative development is going on in the much vaunted British defence industry but it is clear that without the US and the British capacity to manufacture some of these American goods under licence it would be pretty dead.

What is needed now is a Strategic Defence and Security review that actually looks at a realistic concept of what future defence capacity might actually include. The latest one, published at the end of 2015 reads well, sounds plausible and might be satisfactory if we were still fighting the Cold War. But we are not, we are facing rapid technological change across the world and we are simply not keeping up with it. Defence is important and value for money is critical. However we must ask for weapon systems of all sorts that are economic, appropriate for use over the next 20 or 30 years and above all actually work and keep working.

Finally, it may be rather strange to recommend a novel in support of a highly technical factual piece but if you want to get some idea of what the next world war might actually be then the book “Ghost Fleet: A Novel of the Next World War”, by PW Singer and August Cole is well worth a read. What it tries to do is to think through the sort of scenarios that the British MoD are completely unaware of. This was written three years ago before any of the current problems in the South China Seas had developed. Nevertheless it imagines that that might indeed become the flashpoint for a future battle. It only talks about weapon systems and technology that either are in existence or are very close to being completed. The book is full of detailed references to each of the weapon systems discussed. It is very, very scary! But definitely something you should read if you are concerned about our defence in the 21st-century. You can find it here: http://www.ghostfleetbook.com/

Fair Access to the British Justice System.

Summary: The British legal system is in a state of crisis. Legal aid availability has been reduced dramatically. Large numbers of ordinary people have essentially no access to justice in a way unthinkable 50 years ago. At the same time the courts are under increasing pressure and largely fail to charge plaintiffs for hearing cases involving often substantial sums of money. Often the fines used for a wide range of offences are small and cause little inconvenience to the offender. Although there is some flexibility in the way that fines may be set they are generally extremely low and not really much of a deterrent particularly as the likelihood of being caught is so low. This piece makes some suggestions about how the system can be updated and improved to make access to the British justice system much fairer while getting those who can pay to do so. At present those who cannot pay are denied justice they might decently expect. That is something which is fundamentally unfair and unjust.

The Bach commission, set up by Jeremy Corbyn and the Labour Party leadership, produced an important interim report on the standards of access to justice in the UK. The background to the report and its conclusions were covered by Owen Bowcott in the Guardian (see: https://www.theguardian.com/law/2016/nov/25/labour-to-push-for-fairer-access-to-the-justice-system-minimum-standards).

Some newspaper reports have claimed that the UK has the most expensive legal aid system in Europe. This is simply untrue. The amount we spend in the UK is slightly lower than is spent in Germany. Indeed, the legal aid cuts of 2012 have made UK costs even lower.

The interim report concludes that recent cuts have had a dramatic effect on the availability of justice. Those in desperate need of justice find that high court fees make employment tribunals and courts almost inaccessible. The report outlines the core problems with the justice system today. These are loss of legal aid for housing, welfare, debt, immigration, medical negligence and family law cases. The failure of the exceptional case funding scheme, lack of public legal education, mass closures of legal advice centres (60% lost), higher minimum court fees for some types of case, excessive bureaucracy in the Legal Aid Agency and antiquated technology.

Since 2010 the annual legal aid budget has fallen from £2.1 billion to £1.6 billion. The Ministry of Justice is in a state of denial saying “We have a world leading legal system”. We did once, we certainly don’t now. What can be done about it? Obviously, lack of money is a problem in a world where austerity is all that actually matters. Even if we accept that, a lot can be done to improve the income generated by the court system.

Around three quarters of the 900,000 offenders convicted receive a fine. Most of these fines come from Magistrates Courts that have to work with the 400+ page sentencing guidelines. The great majority of fines are categorised into different bands with the fine related to weekly offender income. The three main bands cover 50%, 100% and 150% of an offenders relevant weekly income. Multiple offences and repeat offences can lead to higher fines.

The average spend of a UK household is about £530 per week or around £27,500 per year. These fine bands are typically significantly less than an individual spends on alcohol and tobacco in the year. There must be a strong case for increasing these fines particularly remembering that some of these offences covered by these fines are rather serious. They include driving with excess alcohol (at three times the legal alcohol limit the fine is only 150% of the weekly income) and other forms of dangerous driving.

Driving offences also have points that can lead to disqualification. For most people, however, that only matters with repeat offences and it is the fines that are the principal punishment. Magistrates do have now the authority to impose higher fines but the latest statistics suggest this is not done as often as it might. Too many offences are dealt with relatively light fines that are not much of a deterrent given the relatively low probability of an individual ever been caught. Increasing the level of fines significantly could lead to a marked increase in income from this source.

It is very important to make the courts accessible to those who can least afford it. Court fees are increasingly being used but they are invariably flat rate fees of relatively small amounts. A divorce case involving multi-million pound settlements come with court fees of £550. Such a fee may be appropriate in, for example, a child custody case. However the increasing number of cases from overseas are putting an significant demand on our court system and there is a strong case for making the court fees relate to the sums of money involved.

The same is true for commercial cases although there here there is no fee at all even if the case involves vast sums of money and engages extraordinarily expensive counsel. Again, setting up court fees in a proportionate way will produce no disadvantage to the poor but lead to a substantial increase in income for the Ministry of Justice. Setting fees proportionate to the sums of money involved in the case makes every possible sense. Given that there are approximately 450,000 civil and family cases heard each year in England and Wales this is something that needs to be taken seriously.

The legal system in the UK is under considerable stress. This leads to great delays in making judgements. If an action involving substantial sums of money is not settled by mediation of some sort then the threat of significant court fees will be further encouragement to settle out of court.

There are further inequalities in access to justice. Large organisations such as companies and government departments can bring substantial firepower to their legal representation in court. Legal aid is intended to compensate to some degree, but the threat of very substantial costs awards can further discourage legal action by individuals or small companies and organisations. Capping the award of costs to equal the costs of the plaintiff would be one way of achieving an “equality of arms” (so that both sides are represented comparably in a case).

The income derived from these increased charges would allow most of the legal aid cuts to be restored.

There is one other area of concern with the present justice system and that is the much wider use made in the UK of custodial sentences. The rate of imprisonment in the UK is nearly 3 times that of several other Western European countries. The agenda of many popular newspapers and the right-wing of the Tory party emphasises revenge, punishment and “keeping the public safe” . There is little concern about other aspects such as prisoner education and rehabilitation to minimise subsequent reoffending. The progressive creep in the lengths of prison sentences has led to even greater overcrowding than before. It is important to look again at the sentencing guidelines. Suggestions for how this might be done within the existing sentencing guidelines can be found at: http://outsidethebubble.net/2017/03/14/rethinking-the-british-prison-system-reducing-the-population/, but thinking much more creatively about the sentencing guidelines could be very productive as well.

Rethinking the British Prison System: Reducing the Population

Summary: The UK prison system is in crisis with the highest population ever and cuts in the prison service leading to high levels of violence and self-harm. Drug use is virtually uncontrolled in many prisons and the imprisonment rate in the UK is the highest of any Western European country. Almost all children under the age of 18 are kept on remand even though three quarters are not ultimately given a custodial sentence. One solution that would reduce the prison population dramatically would be to use much more widely the new high-technology tags that allow precision tracking of the location of an individual. Releasing non-violent and nonsexual offenders could be tagged after one third of their sentence. Initially they would have relatively restrictive constraints on their movements. This approach would make it much more likely that many could be reintegrated into the community and stopped from reoffending. Using such tags for individuals that might otherwise be kept in remand would also reduce the prison population markedly.

The UK has a very large prison population, currently nearly 150 per 100,000 of the population giving a total of around 85,000. Cuts to the prison service (staff numbers reduced by 30% since March 2010) have led to an explosion in violence and the rates of self-harm. Drug use is endemic and a number of prisons are simply out of control. The numbers sentenced to 10 years and more have increased by over 200% in 10 years. 36% of prisoners have a physical or mental disability.

Comparison with many European countries shows that prison sentences in the UK are particularly harsh. The number of prisoners in jails here is almost three times the rate in the Netherlands and several other Western European countries. For many years the running on this has been led by the right, emphasising punishment and not rehabilitation. The conditions in prison make any attempt at training that might lead to successful rehabilitation virtually impossible. This in turn leads to very high rates of reoffending, about 45% for adult offenders and particularly high for shorter sentences. A great deal of the reoffending is related to drug and alcohol misuse.

The prison population is significantly larger than it needs to be because of people kept on remand in custody awaiting trial. At any one time the remand population is around 11,000. In one year approximately 50,000 people are remanded into custody, 11,000 were subsequently acquitted and about 14,000 were given non-custodial sentences. On average a remand prisoner spends nine weeks in custody. Amongst under-18-year-olds three quarters are locked up on remand are either acquitted or given a community service. Imprisonment of children can be particularly damaging. Bail applications for under-18-year-olds are almost always refused despite the fact that only one quarter are actually given a custodial sentence. The remand population could be reduced if those likely to face a non-custodial sentence were left in the community and also if the time it takes to bring a remand prisoner to court was reduced.

At present offenders sentenced to less than one year in prison are incarcerated for half that time and then released for the remainder of their sentence on community service with no licence conditions and no supervision. Between one and two years sentence, again only half is served and the remainder given a mixture of post sentence supervision and licence. Pressure on the probation service (also widely agreed to be in a state of crisis) means that many of these relatively short-term prisoners are not followed up on at all seriously unless they reoffend. Prisoners serving sentences between three months and four years are usually granted early release between two weeks and 135 days earlier than their normal release date provided they wear a “tag”. A tag monitor installed in the offender’s home alerts the monitoring centre if the prisoner leaves home during curfew hours. These tags are really quite basic. Any breach of the curfew can result on the offender being returned to court or even sent back into custody. Outside curfew hours released offenders can go where they please.

Offenders as well as those on remand are kept in prison and placed on curfew in order to restrict their liberty. Modern technology allows the location of an individual at any time to be tracked with very great accuracy and stored within a simple device little bigger than a wristwatch. The technology is essentially what everyone has in their smartphone, relying on GPS for precision location detection. The movements of an individual may subsequently be downloaded and checked automatically to ensure that the individual stayed within areas already approved. Contracts to create such intelligent tags have already been placed and are beginning to come into use. These contracts are with four companies to a total cost of nearly £230 million. That does seem remarkably high particularly as the anticipated savings are in the region of £20 million compared with the existing low-tech tag regime.

One approach to reducing prison numbers would be to use these modern tagging technologies much more widely than currently envisaged. An early release offender or an individual on remand could be subject to very clear constraints on where he or she may go and at what times. The individual needs to be supported in maintaining their life, family contacts, capacity for taking on a job or continuing their education while being constrained to a greater or lesser degree as to where they might go. Increasing the numbers tagged in this markedly more restrictive way would make it practical for many more to be tagged.

For example, an individual may be initially constrained to stay at home and only go to specific supermarkets or places of work in specific time windows and then return home. The movements of the individual would be downloaded regularly while the individual is at home with the monitoring unit passing data to the central management organisation. Provided the movements of the individual are consistent with the terms of release those terms may be updated and relaxed somewhat after a period. An individual could be permitted to attend training courses or rehabilitation programs and the tag would give evidence that those were indeed properly taken. Underage children would be able to continue with their school education.

A future development could further increase the utility of these intelligent, high-technology tax. Modern transdermal alcohol sensors allow excessive use of alcohol to be detected and measured. Similar technologies allow the detection of drug consumption. In principal these new technologies could be used to improve the capacity of the intelligent tags to monitor the drug abuse and alcohol abuse that is often a precursor to reoffending.

The prison population could be significantly reduced if the 60% of all prisoners who were sentenced for non-violent crimes or for non-sexual crimes were released after one third of their sentence and tagged with one of these modern tags for the second third of their sentence. Those that consistently violate the terms of their release could be brought back into custody. The effect of this would be to reduce the prison population by about 16,000. Offenders convicted of violence against the person or sexual offences could be released under similar conditions provided it was clear that they no longer posed a threat to the community. This would likely further reduce the prison population by perhaps 4000. Taking the same approach to the great majority of remand prisoners could reduce the prison population by another 5000 perhaps. The overall effect could be to reduce our present prison population from 85,000 to around 60,000.

Such a reduction would have a major effect on the overcrowding in UK prisons. It would allow much more serious work to be undertaken to re-educate and rehabilitate prisoners prior to their release. The tags and the tag monitoring systems would not be particularly expensive and much of the monitoring can be done automatically without human involvement until there is a violation of the tagging conditions.

Extreme Right Group Work for Brexit Breakdown

Summary: The prospects for a rapid breakdown in the Brexit negotiations are worrying. Well organised groups that want them to fail and fail quickly are in the ascendancy. Downing Street is struggling to contain internal squabbles and the inevitable difficulty of the negotiations is likely to accelerate that breakdown. The conditions will be perfect for a far right takeover in the absence of any serious coordination amongst Remainers, and a total absence of an opposition party.

The triggering of Article 50 will start Brexit negotiations with our European partners. Most commentators, both Leave and Remain, think that reaching an agreement will be very hard particularly within the official two-year period. Despite Theresa May wanting to keep everything under her hat, we know that European negotiations leak information brilliantly so we will get a pretty good idea how things are going quickly. We can expect reaction within the UK to those rumours immediately. We can predict that two major stumbling blocks will emerge quickly. These are the size of the payment to the EU on departure, and the linkage of access to the single market with a degree of freedom of movement for EU citizens.

A lot of people don’t want these negotiations to work at all and want the UK simply to walk away from the EU. What must be recognised and taken very seriously is the existence of a well- coordinated group that calls itself the European Research Group, although Extreme Right Group would be a much better description of the ERG. A worrying piece in The Times in mid-February about the ERG may be found at: http://tinyurl.com/h2jz64d.

That piece describes the activities of a group of nearly 60 MPs working hard to ensure that the only Brexit is a full, hard Brexit with the UK leaving the EU without any agreement. The group is understood to be led by Steve Baker, MP for High Wycombe although his rather out of date webpage makes no mention of this activity. The ERG do not want to pay anything to the EU on departure and are adamantly opposed to any single market arrangement that might allow a degree of freedom of movement for EU nationals.  The group appears to be highly disciplined and highly coordinated,  focusing their efforts on agreed targets in a carefully managed way. They have already been able to organise effective attacks on a number of important individuals apparently opposing Brexit. The Remain side at present has virtually no comparable organisation or coordination and therefore the attacks from the ERG go virtually unopposed.

Many of the members of the ERG are indeed on the hard right and were previously thought of as the troublemakers/headbangers that consistently made the life of Conservative Prime Ministers difficult. Downing Street is already in a state of some turmoil at least in part because of the OmNICshambles budget, and the extent to which the Treasury is effectively blocking many of Theresa May’s policies that would ease pressure on the poor and just about managing groups. Austerity continues to roll along undiminished.

The effectiveness of the ERG gives them a disproportionate power, forcing Theresa May to accommodate their views and approaches to Brexit to a degree she would not perhaps otherwise wish.

Once Brexit negotiations start, it will become clear rather quickly that there are two major stumbling blocks almost impossible to circumvent. These are firstly the size of the the departure payment (the ERG want us to walk away and pay nothing, something almost impossible for the EU to agree) and secondly that access to the single market will require a substantial degree of freedom of travel for EU citizens, something that again the ERG are dead against.

These sticking points will become clear quickly and that is when we should expect the ERG to push for the UK to scrub the negotiations and simply leave the EU without any agreement. Theresa May in her position of being weaker in Westminster because of internal squabbles in Downing Street may find her position as Prime Minister threatened. The ERG would begin to pressure her to accept a hard Brexit or resign as PM and quite likely trigger a general election. From the ERG’s point of view, the sooner this is done the better. The longer the negotiations drag on the more likely the negative effect on the economy of the continuing uncertainties will become obvious. If that is allowed to go on popular opinion may well swing against Brexit, particularly if it is to be a hard Brexit. The ERG cannot afford to risk delaying till that happens.

At that point the takeover of the UK by the extreme right in Parliament would be complete. Labour, of course, have no part in this, apparently little interest in it and certainly would not be in a position to fight a general election with any plausible chance of success. Even brilliantly organised parties cannot overturn a position of being 18 or 19 points down on the government in a relatively short time.

British Higher Education System Failing the Young and the UK.

Summary: It costs much more to go to university in the UK than in any other OECD country. Students leave university with enormous debts that largely eliminate their chances of buying a house without parental help. The Student Loan Company has amassed over £90 billion of debt 70% of which will never be repaid. Far too many students take degrees that the country has little need of while other subjects are very short of candidates. Lengthy degree courses are necessary in many science subjects but for many a shorter more general degree as was common many years ago should be looked at seriously. Vocational tertiary education must be developed as the University Technical Colleges are proving much less successful than hoped.

There is a surprising amount of complacency surrounding the British university system. In England fees are now very high indeed at £9000 per annum, by far the highest of any OECD country (Note 1). Loans are available but many leaving with a debt well in excess of £50,000 will never be able to repay them particularly at the predatory interest rate being charged. Buying a house is out of reach for most young people today and having a substantial student loan makes that even harder (Note 2). Maintenance grants are very hard to come by and only available to those with very low parental income (Note 3).

There have been big changes in the structure and balance of tertiary education over the years. The definition of a University was simplified and Tony Blair, when Prime Minister targeted a participation rate of 50% by young people. Many former technical colleges were repackaged as universities and large numbers of vocational courses were eliminated. In the UK technical qualifications have never been greatly valued by the public. In Germany and other European countries they are of much higher status and generally highly sought after.

The consequence is that we have far too many students taking degrees which will be broadly irrelevant to their subsequent employment. The universities are in competition with one another, striving to increase student intake and therefore fee revenue. There is little control of the numbers of students attending different courses and virtually nothing done to encourage students to study subjects for which there is a significant shortage of skills within the UK.

Many years ago in Scotland, universities awarded Ordinary degrees after three years and Honours degrees after four. Scottish students have a broader secondary education and achieve Higher qualifications in many more subjects than English students who have followed an A-level course. The more able English students going to Scottish universities would be admitted directly into second year and could graduate after two years with an Ordinary degree, or three years if they wish to study the subject to a higher level. Today, the majority of full-time courses are three years with most language courses and many science and engineering courses leading to a Master’s degree after four years. Do we need them all to be so long?

The statistics of who does what after graduation are not easy to interpret but what is clear is that for subjects such as history, philosophy, creative arts and design, barely half of those graduating work and jobs dependent on their degree subject. Many jobs today require applicants to have a university degree even in a subject of at best peripheral relevance to the job. For many having a good 2-year degree would be just as satisfactory as having a longer one. In other subjects that normally lead to further training such as teacher training, it is highly likely that a 2-year degree would be a satisfactory preparation for teacher training. Shorter degrees would allow graduates to leave with greatly reduced student loan levels.

There is also the important matter of the university degrees that students take. Too often schools give relatively poor guidance to students, encouraging them to study whatever they fancy. The consequence is that the UK produces large numbers of graduates in subjects which are already relatively oversupplied in graduates. Relatively few graduates in subjects such as English, history and languages end up employed in those disciplines. At the same time the UK finds itself very short of graduates in science and technology, engineering and mathematics. At present almost nothing is done by government or by educational establishments to actively encourage a better balance in the way we educate our students.

This could be done simply by adjusting the fee levels so that courses affected by a shortage of applicants offered lower fee levels while those oversubscribed required higher fees. The government could set target levels for student numbers in different areas leaving universities to adjust fees to provide the desired outcome. An additional benefit of reducing the length of a significant number of university degrees would be to inject many more qualified individuals into the job market where there is a substantial shortage at present.

Another major area of concern is in technical education. Many technical colleges were closed or re-engineered as new Universities following Tony Blair’s aspiration to achieve 50% in tertiary education. This produced a corresponding loss on the availability of technical and vocational courses. University Technical Colleges have been established in recent years to provide training in specific subjects for students from the ages of 14-19. Unfortunately these are substantially under subscribed and it may well be that the hope to attract students away from mainstream secondary education, at an age where students are still very unsure about their future direction is just too early. Secondary schools that risk losing students make it difficult for the UTC’s to succeed. The UTC’s results at GCSE and A-level are significantly poorer than the national average state schools. The announcement that the government intends to improve the funding of further education colleges which have already suffered a 12% reduction between 2010 and 2020 is to be welcomed. One of the reasons that we need to bring in so many qualified workers from overseas is because of the squeeze on further education that started under Tony Blair and has continued enthusiastically under the Conservatives. Government needs to work with professional societies to design better recognised and better valued courses in many of the technical areas that are much more popular in Germany, for example that they are in the UK.

Sadly there is one area in which things are going completely in the wrong direction. Nationally there are about 24,000 nursing vacancies. The training of nurses in the UK became more difficult when the number of training places was reduced. It used to be that fees and living expenses for trainee nurses were funded by the taxpayer. That has ceased and students wishing to train as nurses are now faced with the same levels of fees as university students. As a consequence, the number of applicants to train as a nurse has dropped by over 23%. In addition, the effects of Brexit on EU confidence in the UK has meant that the number of European nurses applying to register in the UK has dropped by over 90%. There is more at: http://outsidethebubble.net/2017/02/02/government-driving-up-non-eu-immigration-intentionally/. There is no doubt that the shortage of nurses in the UK is going to become very much more acute in the future.

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Note 1: The coalition government increased substantially student fees. In England the fees are the highest of any OECD country followed by the US and Japan. These now stand at £9000 per annum in England. In addition, living expenses are estimated to be in the region of £12,000 per annum (£15,000 in London). In Scotland tuition fees were abolished in 1999.

Note 2: A student leaving with debts will have their debt repayments taken into account should they want to get a mortgage to buy a house. With the rapid increases in house prices, recent graduates now have very little prospect of ever buying their own home unless they have an exceptionally well paid job. It is increasingly the case that young people are able to get onto the housing ladder only if their parents can help them. The bottom line is for most young people and particularly those from less wealthy background, get a degree and forget about owning your own home. You are going to be renting accommodation for the rest of your life.

Note 3: Student loans are repaid once the student is in employment at 9% over a £21,000 salary threshold. Around 70% of students are expected never to finish repaying their loans. If they have not cleared it after 30 years then the Student Loan Company writes that debt off. The outstanding student loan debt now stands at around an astonishing £90 billion.

Extraordinary New Cult Discovered In UK!

Summary: a strange new cult, the BeLeavers, has been discovered in the UK. Their ambition is to leave the EU as rapidly and wholeheartedly as possible. Their vision of the future is of a strange fantasyland where the opinions of experts count for nothing and were they are happiest believing in alternative facts, formerly known as lies. Their vision of life in the future outside the EU is wonderfully imaginative. It involves living on another planet or in a parallel universe. International happenings are spun for the consumption of their followers in extraordinarily creative ways, defying gravity and certainly common sense. They have taken over the Tory party with their extreme views, and attack energetically any one who questions their vision of the future.

In the last few months there has been a remarkable flowering of a cult thought to be called the BeLeavers. Apparently there was some kind of referendum won with a small majority by those who wanted to leave the European Union. Almost the same number wanted to remain.

The cult is led by politicians who realised that by changing sides following the referendum their prospects of power would be enhanced. Most economists, businessmen, MPs etc believe that leaving the EU will damage the poor and middle-class in British society but the leaders are all wealthy. They do not need to concern themselves with the welfare of those who voted for them.

The BeLeavers are led by ArchWizard Boris and supported by David “The People Have Spoken” Davies. There is also apparently someone called Liam Fox, though few can remember what his purpose is. They are egged on to more and more extreme views on how BeLeavers want the future shape of the UK to be by a quite annoying small person called Nigel Farage. He has a very right-wing views which may or may not be related to his having the same initials as the National Front. Nigel is strangely under the influence of an eccentric American in charge of a worryingly similar cult in the United States. This American shares hair colouring with ArchWizard Boris. Could this be confirmation that Aryan genetics are key? Certainly, it might help explain why both are so negative about foreigners particularly if they are not Christian. Nigel returns from his sycophantic hours with the American to explain to us that everything is going so well in the US. Even in the US Nigel assures us there is little dissent.

Another of the acolytes is called Michael Gove. He also is a politician who changed sides and opinions. He had contrived to stab ArchWizard Boris in the back (possibly in the front) just when poor Boris thought he would become Master of the Universe. Dear Michael has difficulty mastering arguments against anyone who actually has qualifications and experience to backup views on the future of the UK. These people he calls “Experts” and he confidently insists that we must ignore them and rely on what are now called “Alternative Facts” to provide information for the people. It is important that the people have access to these Alternative Facts and so these are propagated by right-wing newspapers in the UK. In the past these Alternative Facts were referred to as “Lies”, a term frowned upon by BeLeavers. However there is no doubt that most of the promises of the BeLeavers turned to dust almost as soon as the results of the referendum was declared. Mind you, most of the dire consequences threatened by their opposition, the so-called Remoaners haven’t turned out to be much more reliable.

Their views about how things will work for the UK once we have left the European Union were helpfully summarised by the always thoughtful Kenneth Clarke. He described recently to the House of Commons that the BeLeavers expect us to tumble down a rabbit hole, and emerge into a wonderland where suddenly world leaders are queueing up to strike trade deals with Britain including such nice men as president Trump and the Turkish President Mr Erdogan. It wouldn’t matter that these countries are very protectionist and are cancelling trade deals right, left and centre. They would really want to work with the UK. Ken Clarke imagined there might be a Mad Hatter somewhere holding a tea party with a dormouse.

The BeLeavers have got an ally who also has had her views transformed by the referendum and the opportunity for great power. She is called Theresa “Brexit means Brexit” May and she managed to become Prime Minister without any national election. Sadly she cannot think of any way of cutting back on the immigration she is now so obsessive about. In fact she could have done this years ago as Home Secretary. See: http://outsidethebubble.net/2016/12/06/massive-negligence-by-theresa-may-when-home-secretary/ . She believes that by the UK no longer having access to the Single Market of the EU then everything will work, immigration can be controlled. This of course ignores the fact that the country can only operate with immigrants because so many of the training places for the jobs immigrants fill have been cut as part of the UK austerity campaign. The worst example is what her government has arranged to discourage young people from training to be a nurse. See: http://outsidethebubble.net/2017/02/02/government-driving-up-non-eu-immigration-intentionally/. The NHS, social care services and education will increasingly suffer but the leaders and strongest enthusiasts amongst the BeLeavers are confident that their private wealth will insulated them and their families from such inconveniences.

Of course Theresa May has sadly forgotten that many of those campaigning to Leave were adamant that there was no suggestion of leaving the single market and indeed that the arrangements that Norway has were ideal. Parliamentarians who on the record as saying clearly we would remain in the single market included Daniel Hannan, Owen Paterson, Matthew Elliott (the Vote Leave Chief Executive), the financier of much of the Leave campaign, Arron Banks and even the very annoying Nigel Farage. But again the Leave case was entirely based on Lies so perhaps these further changes of mind could be understood.

One of the most extraordinary things is that for many years Tory prime ministers have had trouble with a few extremist backbenchers often described as the Tory party’s headbangers. Curiously it is the same extremists who have managed to take over the direction that the Tories will take when negotiating Brexit. We have the slightly worrying sight of Peter Bone in the House sounding as if he has just been appointed the Kumquat of Stoke Poges. More distressing was to listen to John Redwood, also in the House a few days ago, celebrating the end of everything most of us hold dear as he was transported skyward in a miasma of ecstasy. All the ex-headbangers expect everyone to fall in behind them though I have very little confidence that they would have fallen in behind the rest of us had the referendum gone the other way. Sadly the lunatics appear to have taken over the asylum!

It’s all rather sad really. I’m sure life will be delightful down the rabbit hole but I must say I rather liked it up here in the real world. It’s true that we are living in pretty close to a one-party state as Labour have degenerated into a giggling pointless group of directionless Lefties who cannot really work out whether half chocolate biscuits are better with milk or plain chocolate. But at least by staying above ground the poor have a fighting chance of becoming less poor in the future although of course the wealthy might even suffer. But that would require a Labour government, something that a few of us remember we apparently had in the past though that was probably a figment of our fevered imaginations. Perhaps there is another rabbit hole somewhere that we can enter and find a happy land where the leader of the Labour Party has resigned and things can move forward. Too much to hope for, I fear!

 

Government Driving up Non-EU Immigration Intentionally.

Summary: The cost of training nurses that is presently borne by the NHS is being replaced by student loans of £9000 per annum. There has been a 23% drop in applications for nursing places together with a 90% drop in applications from the EU to register for working as a nurse in the UK. This perfect storm guarantees a crisis even more acute than the ones we are used to. It is plainly an inevitable consequence of the hard-nosed accountant driven austerity that is progressively impoverishing us all, and further damaging the NHS already in crisis. It will drive up non-EU immigration numbers even further. So much for regaining control over our borders

The one thing that Britons agree on is the importance of the NHS. We all know that the NHS is under very great pressure. Partly this is due to the scarcity of nurses. At present there are around 24,000 nursing vacancies in the UK. The previous government reduced the number of training places for nurses even though these were oversubscribed. Instead the NHS employs many thousands per annum from overseas. Registration applications from EU nurses to work in the UK has fallen by around 90% since the June referendum.

In the past the most popular route to become a nurse was to start is a trainee working in a hospital and supervised by more experienced staff on the ward. That has been stopped and all nurses are now required to get a degree. A small number (up to 1000) of apprenticeships for nurses have been agreed but these have to be paid for by the NHS trusts. What is also stopping from September 2017 is the way that fees and bursaries to help with living expenses are not only being cancelled but replaced by £9000 fees per annum. This will require student nurses to take out a loan to cover the fees and all their expenses. In reality, most nurses are paid so poorly they will probably never have to pay much of this back. Requiring nurses that we are desperate to have and to train ourselves to get themselves £45,000 in debt before they even get a job is quite preposterous. Together with a work environment that is increasingly pressurised and unrewarding, becoming a nurse is less and less attractive. Many valuable caring and compassionate young people wanting to become nurses now face unacceptable barriers.

Surprise surprise! Student applications for nursing training have dropped by nearly one quarter in 12 months. The Department of Health insists that numbers will recover quickly as they did with university applicants. However the initial drop of university applicants was much smaller and took several years to recover. Undoubtedly these new regulations and fees will lead to a substantial shortfall in the number of nurses being produced within the UK. It will lead to a significant increase in our demand for nurses from overseas, often from less developed countries desperate that their best qualified should stay in their own country.

Theresa May while Home Secretary for six years had no success in bringing down immigration numbers even though she could have done so (see: http://outsidethebubble.net/2016/12/06/massive-negligence-by-theresa-may-when-home-secretary/). Nursing is already on the government’s “shortage occupation list” allowing nurses to be hired freely from anywhere in the world without concern about the U.K.’s tough immigration rules.

The inevitable consequence of these policies that penalises those wishing to train in nursing in the UK will simply lead to a significant increase in immigration from outside the EU. Just another example of how austerity is hurting the country. Something else that Labour might consider expressing an opinion upon?

 

Brexit Plan for Labour Agreed at Last!

 

 

Summary: There is a comprehensive new proposal for the approach which should be taken for the Brexit negotiations for the UK. It has been drawn up by the leaders of the Welsh Labour Party and Plaid Cymru. It provides a valuable template that could be adopted by the English Labour Party should it have a moment to think about this issue which is undoubtedly the most far-reaching and critical matter on the current political agenda in the UK.

Yes, we actually have reasonably detailed outline of what would be an acceptable plan for Labour. Unfortunately it is a plan drawn up by the the leader of the Welsh Labour Party, Carwyn Jones in agreement with the leader of Plaid Cymru, Leanne Wood. Wales voted to Leave the EU, and this plan is designed to respect the Welsh vote to Leave but would give the UK “full and unfettered access” to the single market.

The starting point for their plan is the economic reality that Wales is looking at and it is the same economic reality that is of overwhelming importance for most of the less wealthy areas of the UK. Although Wales voted to Leave (by a very similar majority as the rest of the UK combined) Welsh Labour MPs realise that it is something that is highly likely to damage the Welsh economy so they are prepared to say to their constituents “we really and truly think you made a mistake and we will fight for what we really believe to be in your best interests”. In many ways the plan follows the arrangements agreed by Norway and often touted by the Leave campaigners as being an ideal model. The outline plan has several key components:

  • Continued participation in the single market.
  • A balanced approach to immigration linking migration to jobs with “properly-enforced” employment practices that protect all workers. This would involve firstly implementing current EU rules that already could be used to limit substantially migration of people who do not have a job in the UK. There is more on this at: http://outsidethebubble.net/2016/12/06/massive-negligence-by-theresa-may-when-home-secretary/ . Legislation would also be introduced to ensure that workers from whatever source cannot be exploited.
  • Requires the UK government to make good on promises that Wales would not lose funding as a result of Brexit. Such a promise is essential for the remainder of the UK believe.
  • It also calls for a fundamentally different relationship between the devolved governments and the UK government. Essentially this is asking for more autonomy for the regions in the way that Labour has been calling for for some time. The desire for local responsibility and local autonomy is something that is strong particularly with the widespread and growing distrust of big central government.

The English Labour Party have so far been unable to articulate any particularly clear approach to Brexit other than to ask MPs to vote for Article 50. Many, including important Labour shadow cabinet ministers will simply refuse to do so, insisting on safeguards and the right to reject whatever the Brexit negotiators managed to come up with. Labour is continuing to haemorrhage support and we must expect the by-elections on 23 February to be a disaster for the Labour Party, leading to a significant increase in the Tory majority in parliament. Canvassers in the constituencies are finding the electorate much disillusioned with the leadership and in particular the lack of leadership surrounding the whole business of Brexit.

Brexiteers in Fantasyland: Trade Deals Much Harder Than They Imagine.

Summary: There is a great deal of naivety about setting up trade deals amongst the Brexiteers. The UK will have to wait in line while other countries establish their trade relationship with the EU. That will largely determine the trading rules and regulations that the UK will experience and we will have little influence upon them. If we look carefully at the claims of Boris Johnson, the UK Foreign Secretary, that countries are queueing up to sign rapid trade deals with the UK it is clear that they are quite nonsensical and do not recognise problems that have already been articulated. Most would work substantially to the disadvantage of the UK and the risk is that the UK would sign up too readily to something ultimately damaging to the UK.   (Updated 30/01/17)

There is a great deal of naivety about setting up trade deals amongst the Brexiteers. They seem to think that a trade deal is simply an agreement between two sovereign nations. In practice it’s much harder than that because each nation will have multiple trade deals with other trading blocs. Chancellor Angela Merkel is keen to pursue trade deals with Pacific Rim nations that have been jilted by the US when TPP was abandoned. The UK in trying to negotiate a trade deal with any nation will find them reluctant until they have agreed the terms with the big trading blocs such as the EU. Each country has its own standards covering safety and technical characteristics. These need to be harmonised. Single nations such as the UK when outside the EU will have to wait until the main deals are agreed.

Boris Johnson has claimed that countries are queueing up to sign trade deals with the UK after we leave the EU. Unfortunately arranging a balanced trade deal is something that is likely to be much harder than he ever imagines. Already many of these mythical trade deals are turning to dust as the British government insists on a very strict approach to such negotiations. It looks increasingly unlikely that any of these that are “queueing up” will lead to anything very serious and certainly not in the short term. Let us look specifically at the obvious candidates:

United States: Donald Trump’s trade chief, Wilbur Ross, has urged Britain’s rivals to exploit the “golden opportunity” of Brexit to take business away from the UK. Donald Trump has indicated he will withdraw from the negotiating process of the Trans-Pacific Partnership (TTP). It was never ratified by Congress so will have little immediate effect but it does indicate a very negative approach to trade deals by the US. He also wants to renegotiate the North American Free Trade Agreement (NAFTA), principally to get Mexico put at a trading disadvantage relative to its present position. Ignoring for the moment the fact that Donald Trump is pretty negative about trade deals unless they clearly benefit the US, some of the areas that US negotiators would particularly like an arrangement with the UK (and indeed the EU) include farming.

Unfortunately US regulations on food safety and the environment are much less strict than European (and therefore UK) regulations. About 70% of all processed food sold in US supermarkets contain genetically modified ingredients. The EU allows virtually no GM foods. The US also has much weaker restrictions on the use of pesticides and permits the use of growth hormones in its beef rearing, hormones that are restricted in Europe due to links with cancer.

Jobs would undoubtedly be lost to the US because labour standards and trade union rights are much weaker in the US. There is an interesting and relevant piece here: https://leftfootforward.org/2017/01/theresa-mays-trade-strategy-threatens-british-workers/

The best guide to the motivation of US politicians in respect of trade deals is to look at the fine print of the Transatlantic Trade and Investment Partnership (TTIP) recently abandoned by the Europeans as well as being unpopular in the US. This was widely opposed throughout Europe as one of its main aims was to open up Europe’s public health, education and utilities to US companies. It was feared, with good reason, to inevitably lead to the privatisation of the NHS. Under TTIP companies can sue governments if those government policies lead to loss of profits. Any attempt to restrict NHS service provision to the NHS could lead to the British government being sued by US companies with ambitions to run those services.

It is inconceivable that the British public would accept a substantial reduction in the quality of food it would find itself consuming if such a trade deal came into being, or accepting a virtual guarantee that the NHS would be progressively privatised.

India: India has made it clear that they simply are not interested in talking about a trade deal if the British government is not prepared to open the possibility of re-negotiating Visa restrictions on Indian citizens wishing to visit the UK.

Brazil: they have already made it clear they will be negotiating on behalf of Mercosur, a trading block that includes Argentina, Uruguay, Venezuela, Paraguay and Brazil. They are also negotiating with the EU and any agreement with the UK would have to be in the shadow of such an agreement which is, to them, very much more important. The agreement with the UK would have to be entirely consistent with the one with the EU.

Australia: a key item for them is to negotiate a weakening of Visa requirements between the two countries.

New Zealand: Theresa May became very excited at the prospect of negotiating a deal with New Zealand. Our current trade with them runs around £3 billion per annum or just over 1% of our current trade with the European Union. That leaves about 99% still to find!

European Union: there has been a lot of talk about negotiating special access to the single market for specific business areas such as car manufacturing and financial services. Unfortunately the World Trade Organisation rules forbid special treatment in particular areas being given to one country and not others that have the same “most-favoured-nation” status. Simply this kind of arrangement would be ruled illegal by the WTO. You are either in the single market or you are properly out of it.

 

Trident: The Third Way. Make Do and Mend!

Summary: We need to rethink what we should be doing about Trident, given the recent embarrassing failure. The choice need not be between scrapping Trident and replacing it with a new system at very great expense. The third possibility is to make do with the current system. It only needs to be kept running at a level that makes it a plausible deterrent. This would be dramatically cheaper than building a new submarine system when so many in the UK military feel it is simply not a sensible thing to do.

Calls to scrap Trident altogether or to replace it at great cost ignore the possibility of extending the life of the current Vanguard class Trident submarines.  Their design is based on the US Ohio design but the boats were manufactured in the UK.  Although designed with a 25 year lifetime there is no good reason why the Royal Navy cannot simply make do and mend, replacing any components that cause serious safety concerns.  The US replacement programme has their new submarines entering service 50 years after the Ohio class vessels entered service.  The Trident missiles are not British owned but leased from the US where they are routinely refurbished and repaired.  These missiles will continue to be used by the US replacement submarines.

Unfortunately, the recent failure during a test firing is very concerning. UK submarines have test fired around 10 missiles over the last 20 years. The manufacturers of the missiles, Lockheed Martin, claim very large numbers of firings without incident although the above image, of a Trident II(D5) missile being fired doesn’t look completely right. No doubt government press officers will explain how that might be completely normal. Another Trident malfunction in mid-2015 can be seen at: www.youtube.com/watch?v=1xLmB81v-BI .

Trident continues to be reasonably popular with the public and politicians.  Refurbishing the British submarines would preserve jobs while allowing the decision about a replacement to be delayed.  Even in the British military there is increasingly doubt that these Trident systems are militarily relevant.  Trident is hardly an independent nuclear deterrent when the missiles are owned and maintained by the US.  It is inconceivable that the UK could use these without US knowledge and approval.  There is little doubt that keeping the existing Trident fleet going would be a significantly cheaper option in the medium term.

Given that there are almost no circumstances under which we might actually use a nuclear weapon it is difficult to see why an entirely new generation of vessels should be procured anyway.  The obsession with Trident replacement is another example of a military keen to be ready to fight the last war.  Along with aircraft carriers and other large warships, all greatly at risk from a single missile strike, they have little relevance in the 21st-century.  Defence money ought to be directed towards both improving cyber warfare capability as well as the development of fast, manoeuvrable unmanned aircraft.  These would be cheaper and more capable than the eye-wateringly expensive fighter aircraft still being ordered enthusiastically by the military.

Defence policy experts P W Singer & A Cole have written a novel, part fiction and part non-fiction entitled “Ghost Fleet: a Novel of the Next World War” which gives a much more realistic and much more scary idea of what real threats we might have to deal with in the future.  Defence policy must start looking much more to the future.  We must think through very carefully what the country actually needs to keep us all safe in a rapidly changing world.

 

Please Can We Have Better Leaders?

  

Summary: The last few days have been extraordinary in that we have had speeches by both British party leaders which were remarkable in their general level of irrelevance and incompetence. Can the UK not actually do somewhat better? Are there no better leaders around who could actually move us forward?

Last year was a bit of a car crash politically, worldwide. Who knows what’s going to happen to Comrade Trump. Leaving the rest of the world to one side, in the UK things seem to be just as bad with leaders of the two main parties vying for the “most hopeless leader” accolade. First we have Theresa May who gave an inspirational speech on the steps of number 10 shortly after her accession as Prime Minister. Six months later, six months in which she did virtually nothing to move the country in the directions of those brilliantly articulated aspirations (a good grammar school education plus Oxbridge at least guarantees a degree of grammatical coherence). At the Conservative party conference in October another articulate speech that was about as extreme in its right-wing nastiness as anything a Tory leader has produced in a generation (see: https://leftfootforward.org/2016/10/theresa-mays-speech-marks-the-rise-of-a-nightmarish-new-conservative-politics/). Fortunately nothing has come out of that either. And then more again in her January speech about mental health, full of compelling aspiration yet free from almost any money. Again articulate and engaging but utterly without any substance in that it can deliver nothing without new resources. If you, as someone interested enough to read this far, cannot remember very much about what she said (and I’m sure you’ll be struggling) then that is a bad sign. The extent to which she is devoid of ideas of ideas and certainly unable to deliver anything is detailed here: http://outsidethebubble.net/2017/01/09/the-naked-empress-theresa/

And now we have Jeremy Corbyn managing to “relaunch” his position as leader of the Labour Party. Yesterday was an extraordinary combination of muddles. He started by emphasising the way that immigrants have dragged down wages for the poor, a fact that is simply not true (have a look at: https://www.ft.com/content/0deacb52-178b-11e6-9d98-00386a18e39d). There are extensive studies that show that wage reductions in high migration and very low migration areas are essentially the same. Minimum wage regulations largely guarantee that but Corbyn used that non-fact to justify a reduction in the level of immigration while at the same time saying that he thought the current level of immigration was probably about right. He appears to be quite relaxed about the possibility of Brexit while wanting to keep British access to the single market. Does he really think there is a case for leaving the EU while keeping access to the single market and current level of immigration? What does he actually mean by this? Does he actually think about what he is going to say before he says it?

And then he has the idea of putting a cap on the maximum salary an organisation might pay without any idea how it might work or any appreciation that any half decent accountant can make sure that the CEO gets all sorts of non-salary handouts if that is what the board wish. This idea is then roundly rubbished by many of the experts and advisers that the Labour Party already have. There is indeed a case for looking carefully at how inequality is handled but this cackhanded approach to policy-making is simply appalling. Corbyn apparently has vast loyal support among the party members but a time must come when even the most sycophantic accept that the whole party has wandered up a cul-de-sac in a general state of giggling optimism. Something has to be done or the Labour Party will soon turn to dust. Not so much a relaunch as pulling the plug out of the bottom of the boat.

May and Corbyn are supposed to be the leaders of two biggest British political parties, parties which have an impressive history. The UK is still a great nation apparently. Is it not possible to find leaders who can come up with policies and strategies to implement those policies? Leaders can then explain to the nation what they are so the poor bewildered voter has some chance of understanding them? Leaders who make you think the might actually be a way forward?

The Naked Empress Theresa.

Summary: The latest interview with Theresa May made it clear that she does not expect to be able to pick and mix in our new relationship with the EU and essentially hard Brexit is what we are going to get. It is increasingly clear that she actually has no plan at all about negotiating with the EU. She also has produced almost no new initiatives in the six months since she became Prime Minister. Lofty speeches claiming that the Tories will become the party of social justice are exposed as extraordinary examples of disinformation. Despite so much evidence that many parts of the NHS are in crisis no new cash is promised. She actually doesn’t have any ideas at all and these wonderful new clothes that she and Tories are claiming are in fact completely invisible. The Empress is naked!

It is becoming more and more clear that Theresa May has actually produced no significant new initiatives in the six months since she became Prime Minister. Much of what she says is devoid of detail. “Brexit means Brexit”. “We will take back control of our borders”. As soon as she was appointed PM she gave a speech on the steps of Downing Street emphasising the importance of social justice particularly for ordinary working-class families that are just about managing.

On 9 January 2017 she explained how a government would improve mental-health services in the UK. Virtually no new money was mentioned (possibly £15 million for care services or approximately 25p per head for the UK). So little has been happening with this government that even the relatively sycophantic Economist despaired and called her Theresa Maybe (see: http://tinyurl.com/jhd5lxs). On 8 January 2017 Andrew Rawnsley in the Observer (see: http://tinyurl.com/zxsw2k3) worries that the Prime Minister is risking becoming the Queen of Misrule. She still has some support, surprisingly. Matthew d’Ancona on 9 January 2017 in the Guardian (see: http://tinyurl.com/z8wefnp) says that there is lots of happening in the background and cites half-dozen green papers that have been produced, ignoring the fact that green papers are produced by departmental civil servants as discussion documents for future policy and do not represent in any way ministerial or prime ministerial activity.

The most worrying event this weekend was the interview the Prime Minister gave with Sophy Ridge on Sky where her approach seemed to be to go for a hard Brexit and then negotiate our way back in as far as we could. The pound sterling fell sharply against the US dollar. In the last few minutes she is claiming that that’s not what she said at all although sadly you can still listen to it on the web!

Yet still we have no idea at all about her negotiating strategy. Sir Ivan Rogers felt that the government approach was a muddle. That now seems to be a little kind. There really isn’t any plan at all and simply saying “hard Brexit” and then hope we can sort out the mess is extraordinary naïve and will not endear the UK the other members of the EU. We may have many years in some damaging WTO trade rule condition while the economy gradually sinks into the mire.

The Prime Minister claims that by taking back control of our borders we will be able to manage immigration. Yet she was Home Secretary for nearly 6 years with full responsibility for immigration when around half of the net immigration was from outside the EU. What is she going to do when we leave the EU that will be so very different from what she didn’t do earlier? She didn’t have any ideas then apart from echoing the foolish claim that net immigration could be got down to 10,000 per annum. A post on the Tax Justice Network blog by Richard Murphy (see: http://tinyurl.com/z5pnsdn) shows how difficult this is going to be in one extremely narrow area of the NHS requirements, the provision of trained doctors.

All Theresa May’s claims that the Tories are the party of social justice are simply a fraud. The health service is in a terrifying tailspin. Mental-health provision is covered by just over 10% of the NHS budget although it accounts for nearly 25% of the NHS care burden. It is not subject to all the targets and goals of the clinical part of the NHS so it is easy to be cut and cut and cut. Once upon a time the Tories claimed that the NHS “is safe in our hands”. Nothing could be further from the truth.

Many of today’s announcement of mental health service initiatives will have to be implemented by schools and GPs without any extra funding, of course. Schools are already under incredible pressure and teachers simply cannot find the time and energy to make success of her plans. More funds are needed in so many areas but the only funding that is going to be made available is to big businesses by reductions in corporation tax. The Tories under Theresa May are now exposed as being the party of grotesque social injustices, increasing the inequalities that blight our community.

We Brits are happy to go along with the belief that there is a cunning plan, Baldrick like, that will take us to the promised land. On the evidence so far there isn’t even a cunning plan. The Prime Minister’s new clothes are simply a figment of the media’s imagination. This is why it needs to be said loud and clear. She is showing all the signs of being a very plausible Prime Minister but living in a land of fantasy, stark naked.

 

Brexit Fraud Unravelling

Summary: The government are being told by their ambassador to the EU what has been obvious for some time: the route towards Brexit is much more complicated and fraught than most of the public and much of the media realise. Negotiations are notionally with the EU but in fact with 27 separate nation states. Each has its own view on Brexit and the future of the EU. The political landscape across Europe is changing and the UK will be faced with negotiating with a rapidly changing EU. Many key countries face significant internal political upheavals. The probability is that only a hard-Brexit is possible in the time available. The economic damage caused by the threat of Brexit will become even more obvious to UK citizens as time goes on. Clamours for a second referendum will become irresistible.

There is increasing evidence that the whole Brexit Fraud is unravelling. The vote was one when the public were presented with a series of implausible lies that the Brexiteers packaged convincingly to fool the public. Now the British ambassador to the European Union is reporting that the widespread view within Europe is that negotiations for a trade deal could take up to a decade. The bland assurances of the government and the Brexiteers that this can be handled comfortably within a two-year window are patently nonsense. Sir Ivan Rogers report makes the greatest of sense.

The path for the government negotiating Brexit over the next two years or so is fraught with difficulties and uncertainties. We will ignore the fact that the government by all reports simply has no realistic or plausible plan for what it wants to do. There is no shortage of difficulties coming from the other side. The impression given by the Leave campaign is that we deal with a single entity, the European Union, to agree leaving terms. In fact we have to negotiate with each and every one of the 27 other members of the EU. Those negotiations are very complex, covering everything from fisheries, defence, policing, security, financial services, food and agriculture subsidies, scientific research and many other aspects. We do not need 100% agreement of the countries (67% is plenty). However we do need to have the agreement of the European Parliament and in particular the Council with a majority of at least 72% of council members comprising at least 65% of the EU’s population.

Along the way we have parliamentary elections in 2017 for the Czech Republic, France, Luxembourg, Netherlands and Germany. In 2018 we have Austria Bulgaria, Cyprus, Italy, Romania and Sweden. In 2019, before the end of the two-year negotiating period there are further elections in Belgium, Finland and probably Poland. All the evidence is that the popular mood in the EU is evolving. We can be confident that by the end of the negotiations the political views of MEPs and many European governments will have changed quite significantly. Finally, if the Article 50 notification cannot be given before May 2017 as seems increasingly likely, then just before MEPs are asked for their view on the Brexit arrangements this evolution will be visible following European Parliament elections in May 2019. Each of these elections has the potential to produce significant tremors across Europe. Some may be full blown earthquakes, with a number of European political parties already campaigning on an anti-EU ticket.

The consequence for all this will most likely be that no conclusive agreement can be reached. The choice will then be a hard Brexit or not leaving the EU at all. One recent development is the realisation that leaving the EU is something that does not automatically lead to leaving the European Economic Area. The EEA was set up to provide non-EU countries access to the European single market. At present the non-EU members are Iceland, Lichtenstein and Norway. It provides for free movement of goods, capital, services and PEOPLE between member states. Being in the EEA would not allow the UK to block immigration from other EEA states, even if the UK is no longer a member of the EU. It is increasingly clear that leaving the EEA would also require a formal notification (Article 127 of the EEA agreement requiring 12 months notice of quitting the EEA). Leaving the EEA would inevitably be challenged by the Remain side, in the courts and by the Lords, as being something that was not addressed by the referendum.

There are other signs of the Brexit fraud unravelling from the government itself. Number 10 is adamant that everything is going swimmingly. Their approach is very much cast off the ship and we will start the engines later. Any sailor will tell you how foolish such an approach will be. The Chancellor, Philip Hammond, said earlier this week that all thoughtful politicians were clearly in favour of striking a transitional deal with the EU. David Davis, the Brexit Secretary, now appears to be in favour of a transitional deal. Even the hard-core Brexiteers, all wealthy and unlikely to be affected by any Brexit themselves are going rather quiet. Brexit has fallen write down the running order on the main pro-Brexit right-wing newspapers.

What do those who want to Remain in the EU, like the author of this piece, do about all this? Probably sit tight and wait for the unravelling to continue and indeed it will accelerate. Within a couple of years the economic effect of threatening to leave the EU will become more apparent in terms of significantly rising prices probably combined with a small drop in employment. We will also see the substantial cuts to benefits and public services already forced on the government to compensate for the costs of leaving. The great majority of the population will feel a marked tightening of the belt and a realisation that things are going pretty badly for most people. It is unlikely the government could go ahead with a hard-Brexit, resorting to WTO trade rules without a general election or a second referendum.

The Leave campaign are adamant that a second referendum should not be held. They realise the lies they told about the EU-free paradise we were heading towards are already unravelling. They are concerned that if another was held they might well lose it. That risk will increase in the future as the whole fraud of the Brexit case is exposed. However, if there is a significant popular opinion against a hard-Brexit that second referendum might become irresistible.

That would hopefully conclude this whole sorry business. A major distraction for the UK (and for the EU), for no productive benefit, delaying the return to real growth in the standard of living for the vast majority of citizens here. Labour are showing no sign of engaging with this seriously. We all rather wonder what they think.

Brexit: Opportunity for the Biggest Right-Wing Power Grab for a Generation.

Summary: If Brexit does go ahead a vast array of powers will be repatriated to the UK. Major government functions would have to be established from virtually nothing in short order. In reality this would be almost impossible to manage given how overloaded our civil service is at present. Inevitably much of this work will be contracted to large commercial organisations who will no doubt be delighted to make a generous profit from running things like agriculture or fisheries or aviation. The will be virtually no oversight from an overloaded Parliament that will not be involved in the selection of these companies nor in setting their performance goals. This will end up by being an extraordinary power grab orchestrated by an increasingly authoritarian right-wing government.

It is nearly 20 months since the referendum and the decision to Leave the EU. It is generally agreed that not very much progress is being made. Politicians and civil servants realise that what is on offer from the EU is essentially the status quo, take it or leave it. Had there been any significant progress we would have heard about it given how reliably Whitehall leaks rumours. They seem to be waiting for Godot, or perhaps hoping that Baldrick might turn up with a cunning plan.

No one can have any doubt about the complexity of what has to be managed following any kind of Brexit. A vast range of powers would be repatriated to the UK. The harder the Brexit the more that will have to be handled within the UK. Who will manage these devolved powers? Not the civil service as they currently are, with numbers reduced to lower than any time before the second war. The reduction is particularly acute if numbers working in the NHS and education are excluded.

The only solution will be to contract out major parts of the economy to private contractors. We all know how wonderfully well they work, and we can look to the way that the prisons (Serco and G4S) and the benefit system (formerly ASOS, now Maximus) are run. These companies will be given the job to run major parts of the economy at a significant profit to themselves. However, the terms of reference as to how each sector should be run and what policies are to be pursued as well as the selection of the companies themselves will be done by an increasingly right-wing government. The lack of civil servants will make it almost impossible to monitor what is going on in these areas. Think about one of these large companies looking after British agriculture, or the fisheries, or aviation. Altogether seriously scary for a government unable to articulate how it will get through the next few months before they trigger Article 50.

This provides potentially the opportunity for an extraordinary power grab, orchestrated by an authoritarian right-wing government without significant parliamentary oversight. Nothing like this has happened since the war. This is the consequence of seizing back “sovereignty”. Hand it to the private sector and all will be well!

Brexit – A Guide to a Dangerous Future: book review by Colin Gordon

ian-dunt-book-cover_071216     https://www.canburypress.com/…/Brexit-What-the-hell-happens…

Please note that this book review has been provided by Colin Gordon.

David Davis’s civil servants now routinely instruct business leaders coming to Whitehall to lobby or advise the Brexit Secretary that they are to speak about our coming exit from the EU only in upbeat terms, saying they are “very excited about the possibilities”. The Prime Minister, after all, has made it clear that “Brexit is Brexit and we will make a success of it”: suggesting that we won’t make a success of Brexit is now almost as much a heresy as querying what Brexit is or why it is a good idea – and may, in addition, not be good for the increasingly fragile morale of Mr Davis.

We learn this from journalist Ian Dunt’s book “Brexit: what the hell happens now” – a timely, compact and punchy new book which richly delivers on its title’s promise. Its core is a quite detailed map of the various economic hells into which the “people’s will”, as expressed on June 23rd 2016, has the potential to propel us. It offers a costed menu of the options, with their respective challenges, downsides and (relative) bonuses. It explains the Norway option, the Swiss option, the Canadian option, the Turkish option: in or out of the Single Market, in or out of the Customs Union, and (if we end up out of both) the fiendish pitfalls of the so-called WTO option.

None of these options, Dunt shows, promises us any net gain in our sovereignty in dealing with the outside world. It is much more likely to be the reverse: we will get to have rules imposed on us, through grinding attrition and outmanoeuvring by other, stronger and smarter economic players. (Norway used to get its trade regulations sent from Brussels by fax; nowadays it downloads them from the Brussels website.) And as things stand, the UK state doesn’t actually have more than a handful of trained people who know how to negotiate, over period of years, such colossally complicated trade deals.

The book is written for the general public, not officials or academics, but it takes the reader some way into the depths of devilish detail and fiendishly tangled process which lie in store. It looks at the complexity and hazards of some specific challenges, like the future of animal welfare and veterinary safety standards in our abattoirs. Dunt makes the point that we will not only stand to pay a massive economic price (via exclusion from the Single Market) to regain our coveted, unrestricted power to keep out EU migrants: we will also pay a further price – in growth, jobs, tax revenues, services – as soon as we start using that power to indulge our taste for greater ethnic uniformity.

It’s scary to realise, as one quickly does, that anyone who has read Ian Dunt’s book is likely to have a much better grasp of Brexit than any of our current Brexit ministers.

No less scary is the staggeringly vast, intricate and expensive reconstruction the UK state, law and governance which leaving the EU will require us to execute.

Instead of a bonfire of regulations, we’ll be having to write a whole new set for ourselves (even while exporters still have to comply with the EU’s ones), plus hire and pay for dozens of new regulatory agencies – each one a national replica of a current European agency – to administer and police them.

Implementing Brexit will be the greatest, and probably longest peacetime state project in UK history – as Dunt says, it practically amounts to ‘making a new country’. It may very possibly have to be conducted alongside the dismantling of our Union itself. This is going to demand a level of political and administrative capability well beyond either the depleted resources of our state, or the meagre talents of our current rulers. There will be the cost, and also the opportunity cost – in other words, we won’t have much time or energy to spare for renewing our society or economy while we are kept busy at the task of reinventing its gloriously independent separateness.

If that doesn’t sound he most rewarding project for the nation’s future over the next 10 or 15 years, reading this book is a useful basic training for the challenge of taking back control of our future from the incompetent team now in change.

It might also just help ensure that our people and their MPs will muster the wit and courage to check seriously whether whatever the hell the least-worst Brexit is that’s eventually going to be proposed to us, isn’t a hell of lot worse then what we currently have at the moment… and then, having made that comparison, go on to reconsider (as we most probably could, even to the last minute) stepping off the A50 process and staying alongside our European democratic neighbours to stand together against the tide of fascism.

Colin Gordon

Ian Dunt, Brexit. What the Hell Happens Now? Canbury Press, 2106. 188 pages £7.99

https://www.canburypress.com/…/Brexit-What-the-hell-happens…

Massive Negligence by Theresa May when Home Secretary.

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Summary: The rules that define the permitted extent of Freedom of Movement within the European Union allow very much more control than the UK currently exercises. Working EU citizens are allowed in but non-economically active EU citizens can only stay longer than three months if they have sufficient finance and take out a comprehensive sickness insurance policy. Benefit/welfare tourism is illegal and EU citizens who have not been working have no rights to benefits. Theresa May was Home Secretary from 2010 yet she did nothing even though it was in her power simply to implement the rules as drawn up when the UK joined the European Union. This is an extraordinary example of massive and shameful negligence by Theresa May and provided much of the momentum leading to the success of the Leave campaign.

One of the key promises of David Cameron’s government was to reduce immigration to a level of tens of thousands. The implementation of immigration policy was the responsibility of Theresa May, the Home Secretary from 2010 until she became Prime Minister in the middle of 2016 the responsibility of and. Around half the net migration into the UK was from countries outside the EU and therefore potentially controllable by the Home Office. The other half comes from the EU and politicians of all shades in the UK have accepted that the unrestricted freedom of movement (FoM) of people from the EU at any time was part of being a member of the European Union. There is presently no attempt to track people coming into the UK with an EU passport or indeed to track them when they leave the UK. Estimates of EU migration are indeed estimates as accurate figures do not exist. In a comment by Colin Gordon in a piece on the leftfootforward.org website by Ian Dunt it is pointed out that, incredibly, the above understanding of EU citizens rights under the FoM provisions are being seriously misrepresented by politicians from all sides and in particular from those of the Leave campaign. This is detailed in: http://tinyurl.com/jjysrx9. A more detailed piece by Prof.Brad K. Blitz may be found at: http://bit.ly/1DG3I4I. For those who really have a lot of time on your hands, the regulations covering free movement of workers within the European Union can be found at: http://tinyurl.com/zl5rw4s (the website of the European Parliament).

What are these rules in reality? Freedom for a citizen of another EU member state to move to the UK applies to (taken from http://tinyurl.com/jjysrx9):

• Economically active EU-citizens (i.e. working)
• Plus their families if EU-citizens
• Non-economically active EU-citizens for up to 3-months
in addition, non-economically active (not working) EU-citizens can stay longer than 3-months provided:
• They can show they have sufficient finance
• They take out a comprehensive sickness insurance policy

Freedom of Movement does not apply to:
• Non-economically active EU-citizens without funds
• Non-economically active EU-citizens without sickness insurance
• EU-citizens who have no realistic chance of working
• Family members of an EU citizen who is not an EU Citizen may reside in the UK but does not have an automatic right to work

Benefits:
• EU-citizens working in the UK acquire rights to benefits after working for a period
• EU-citizens not working do not have rights to Benefits.

In addition, the UK has the right to restrict FoM through:
• Suspension of the FoM for up to 7 years from when a new member country joins by preventing/prohibiting movement or the UK can insist upon work permits for each migrant
• Benefit/Welfare “tourism” is illegal

No-one has been prosecuted to-date under these regulations as the UK is not tracking movement of EU citizens in and out of the UK.

The piece on: http://tinyurl.com/jjysrx9 also summarises research showing the current levels of benefit tourism (essentially undetectable) and also points out that research clearly demonstrates that migrants do not appear to reduce wages and do not appear to take jobs from the UK natives. Because migrants from the EU are young and healthy and keen to work, the HMRC said that in the year 2013/2014 recently arrived EEA nationals paid £3.1 billion in income tax and took out £0.56 billion in HMRC benefits.

The fact that the British government has completely failed to implement the controls outlined above which already exist and do not require any changes in European Union legislation is utterly shameful. This negligence has contributed very substantially to the pressure that led to the success of the Leave campaign. The fact that Labour and the other political parties have also been unaware of these facts and, if they were, certainly not been prepared to talk about them is further evidence that the political system in the UK is so much poorer than the British public must have.

Brexiting in an Earthquake Zone.

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Summary: the route towards Brexit is much more complicated and fraught than most of the public and much of the media realise. Negotiations are not with the EU but with 27 separate nation states, all with their own views on Brexit and the future of the EU. The political landscape across Europe is changing and the UK will be faced with negotiating with a rapidly changing EU and countries with significant political upheavals internally. The probability is that only a hard-Brexit is possible in the time available. Economic damage caused by the threat of Brexit will become even more obvious to UK citizens as time goes on. Clamours for a second referendum will become irresistible.

The path for the government negotiating Brexit over the next two years or so is fraught with difficulties and uncertainties. We will ignore the fact that the government by all reports simply has no realistic or plausible plan for what it wants to do. There is no shortage of difficulties coming from the other side. The impression given by the Leave campaign is that we deal with a single entity, the European Union, to agree leaving terms. In fact we have to negotiate with each and every one of the 27 other members of the EU. Those negotiations are very complex, covering everything from fisheries, defence, policing, security, financial services, food and agriculture subsidies, scientific research and many other aspects. We do not need 100% agreement of the countries (67% is plenty). However we do need to have the agreement of the European Parliament and in particular the Council with a majority of at least 72% of council members comprising at least 65% of the EU’s population.

Along the way we have parliamentary elections in 2017 for the Czech Republic, France, Luxembourg, Netherlands and Germany. In 2018 we have Austria Bulgaria, Cyprus, Italy, Romania and Sweden. In 2019, before the end of the two-year negotiating period there are further elections in Belgium, Finland and probably Poland. All the evidence is that the popular mood in the EU is evolving. We can be confident that by the end of the negotiations the political views of MEPs and many European governments will have changed quite significantly. Finally, if the Article 50 notification cannot be given before May 2017 as seems increasingly likely, then just before MEPs are asked for their view on the Brexit arrangements this evolution will be visible following European Parliament elections in May 2019. Each of these elections has the potential to produce significant tremors across Europe. Some may be full blown earthquakes, with a number of European political parties already campaigning on an anti-EU ticket.

The consequence for all this will most likely be that no conclusive agreement can be reached. The choice will then be a hard Brexit or not leaving the EU at all. One recent development is the realisation that leaving the EU is something that does not automatically lead to leaving the European Economic Area. The EEA was set up to provide non-EU countries access to the European single market. At present the non-EU members are Iceland, Lichtenstein and Norway. It provides for free movement of goods, capital, services and PEOPLE between member states. Being in the EEA would not allow the UK to block immigration from other EEA states, even if the UK is no longer a member of the EU. It is increasingly clear that leaving the EEA would also require a formal notification (Article 127 of the EEA agreement requiring 12 months notice of quitting the EEA). Leaving the EEA would inevitably be challenged by the Remain side, in the courts and by the Lords, as being something that was not addressed by the referendum.

What do those who want to Remain in the EU, like the author of this piece, do about all this? Probably sit tight and wait for the inevitable unravelling. Within a couple of years the economic effect of threatening to leave the EU will become more apparent in terms of significantly rising prices probably combined with a small drop in employment. We will also see the substantial cuts to benefits and public services already forced on the government to compensate for the costs of leaving. The great majority of the population will feel a marked tightening of the belt and a realisation that things are going pretty badly for most people. It is unlikely the government could go ahead with a hard-Brexit, resorting to WTO trade rules without a general election.

The Leave campaign are adamant that a second referendum should not be held. They realise the lies they told about the EU-free paradise we were heading towards are already unravelling. They are concerned that if another was held they might well lose it. That risk will increase in the future. However, if there is a significant popular opinion against a hard-Brexit that second referendum might become irresistible.

That would be the final major earthquake in this whole sorry business. A major distraction for the UK (and for the EU), for no productive benefit, delaying the return to real growth in the standard of living for the vast majority of citizens here.

Trump Success Should Stimulate Labour Refocus.

jeremy-corbyn

Summary: what has happened in the US and what happened with Brexit have much in common. There is a worldwide revolution underway that should work greatly to the advantage of Labour. The right-wing Conservative UK government will not be able to deliver what the poor and middle-class left-behinders are demanding. With a coherent well worked out policy package Labour could do that. Sadly, there is little sign that this is being developed. An outline of what that radical centre-left package might be is given

Labour must recognise that Trump supporters in the US have a great deal in common with Brexit supporters in the UK. The Brexiteers and the triumphant right-wing media have occupied the political sphere in the UK and are using it to impose a worryingly right-wing flavour on what happens next. The left-behinders in the UK will not benefit from a hard Brexit. Labour must therefore reposition itself more clearly to address the concerns of these people who in the past have been strong Labour supporters. It must always emphasise that Labour are leading the way towards a fairer society.

Immigration is important to them because there are many jobs in the UK that are poorly paid with mediocre working conditions. We have a society that people working full-time with available tax credits can still be in poverty. Our schools produce children badly educated and ill-equipped for the 21st-century. The NHS is under appalling pressure because of lack of staff at least in part because training places are not available for the large numbers of student applicants.

Above all it is the economy that hurts them and the way that it has been distorted to their disadvantage. Conservative cuts to social services and the NHS, education and local council facilities are all very obvious to those in poorer areas with little chance or hope of a better future for themselves and their children. Labour must make much more of the reality that a great deal of the unhappiness in the US and in the UK is driven by this inequality and apparent lack of concern by the centre for what is happening in the poorer regions. The present Conservative government leaning increasingly rightwards is unlikely to address these demands despite the fine words of Theresa May when she took over as Prime Minister.

Labour needs to establish a detailed economic and social programme that will convince traditional Labour supporters that it understands what they want and has a plan to deliver it. The plan has to be comprehensive and convincing. It has to be structured so that it is relatively immune to the inevitable attacks from the right-wing media and the right-wing of the Conservative party. Articulating a plan like this is something that right-wing Brexiteers will have great difficulty in doing, particularly as the hard Brexit they seek will be economically damaging particularly to the poor.

Outline of a strong, radical programme for Labour.

The key question is where is the money coming from? The plan must start with radical changes to the current taxation system if the plan is to be credible. The use of the Land Value Tax (LVT) is key to unlocking the £6 trillion held in residential property in the UK and the just under £1 trillion held in commercial property. This property has increased in value by about £330 billion per annum averaged over the last five years. A 20% tax on that growth will generate £66 billion per annum for the Exchequer. Those who are cash-poor can accumulate their LVT until they can afford it or the property is sold.

Addressing widespread corporation tax avoidance is a critical part of making the UK a fairer society. This could either be in the form of an infrastructure charge (see: http://tinyurl.com/h9wjn25) or the Alternative Minimum Corporation Tax suggested by Richard Murphy (see: http://tinyurl.com/ho6yy73). These similar approaches could yield perhaps £17 billion per annum. Together with LVT, such an approach would transform the balance sheet of the UK government.

The minimum wage should be progressively raised to the point where a family with one full-time wage earner is guaranteed to be above the poverty level, without needing help from tax credits. A program to require significant improvements to the minimum working conditions must be developed together with the ability of the state to enforce those regulations.

We must invest significantly in our education system and look carefully at countries that manage to produce much better outcomes than the UK. For example, in Finland attainment is very good indeed on an international scale. Yet in Finland children spent less time in class, have no homework and no interminable exam package. They are much less stressed and worried that our children are and we must think very carefully about how this can all be improved. At the tertiary level, Tony Blair dismantled the network of technology colleges. Universities were encouraged to accept many more students for university degrees further devaluing the importance of technical and vocational qualifications. We are very short now of skilled people in industry, construction and many other areas. This was not the case 10 years ago. The Technical College network need to be reinstated and the universities encouraged to emphasise qualifications in areas that are important for the UK and discourage those in areas where their effect on job prospects of the students is slight. Fees should be substantially reduced and indeed could be eliminated for subjects such as STEM and medicine.

A major programme of housebuilding must be introduced with the emphasis on building substantial numbers of low-cost, genuinely affordable houses. For a variety of reasons (see: http://outsidethebubble.net/2016/09/27/a-fairer-deal-solving-the-housing-crisis/) it is probably essential to use prefabricated construction methods partly to produce houses at the rate we need while maintaining top-quality and keeping prices down.

Money needs to be put into infrastructure development, not vanity projects like HS 2, but into programs to improve rail, road and other infrastructure components. Part of that money should be dedicated to improving infrastructure in regions that are particularly affected by being in the British rustbelt. In particular these regions should be a priority for the introduction of good quality high-speed Internet connections made available through wide coverage council Wi-Fi systems.

Yet it is undoubtedly immigration that needs to be faced up to. As long as Labour fails to address seriously the concern of so many natural Labour supporters about immigration they will simply not be convinced by the other parts of this package. Short-term immigration by students should be removed from the count. The great majority of jobs taken by foreign-born workers are in skilled occupations and sectors even though these workers are often qualified for significantly better jobs. The need for these workers would be reduced substantially by a program to train British students in these areas. It is ridiculous that we have a shortage of nurses, for example, when 100,000 applicants have to compete for about 20,000 places and our hospital managers spend time overseas trying to recruit medical staff that Third World countries can ill afford to lose.

Making the least well-paid full-time jobs in the UK able to take an employee and their family out of poverty would be the most effective way to help people move away from benefits. All these programs would allow net immigration into the UK to be reduced substantially. However we must realise that half the immigrants to the UK are from outside the EU and present policies and demands from within the country have failed to reduce that despite repeated promises by the Conservatives. Labour must work tirelessly to counteract the Conservative message that it is immigration that makes our regions so impoverished as they impact health, education and social care provision. The country simply cannot function without a significant number of immigrants and at some level it doesn’t really matter where they come from.

Surprisingly, the success of Trump makes a more radical approach to the running of an economy more appealing. Many European countries have elections in the near future (Czech Republic, France, Germany, Luxembourg, Netherlands, Norway). We must expect that within the EU there will be increasing pressures from the same constituents that delivered Brexit and Trump. The realisation that the financial crash of 2008 has badly affected the prospects of many poor and middle-class families around the world is likely to be widespread. Concern about immigration is also widespread and it may be that if the EU starts to look more seriously at the problems generated by unrestricted internal movement. Indeed its reform might provide the basis of the new relationship to be negotiated between the UK at the EU after Brexit.

This is the time to produce a comprehensive plan that is articulate and clear, with all the sums properly worked out and a clear idea in what order it is to be implemented. Labour has a great opportunity in a time of revolution and must do what it can to drive itself forward.

 

Trade Agreements with EU Virtually Impossible.

eu_pleniere

Summary: The rejection of CETA by the regional government of Wallonia has demonstrated just how difficult it is to establish a multinational trade deal with the EU. It has also rejected TTIP, and TiSA is also in trouble. The idea that the UK with its complex and rather mixed history with many parts of the EU will do better than Canada is preposterous.

The regional government of Wallonia has rejected the Canadian-EU trade agreement (CETA) for reasons that appear to be technical but actually are substantially due to local politics. The Belgian Socialist party once had a significant membership of the Belgian Parliament but it has declined and no longer has seats there. It is still moderately strong in Wallonia but is now challenged by a rapidly growing Communist Party. The key thing here is that CETA is being resisted for local political problems as much as for technical issues.

Any trade agreement negotiated by the UK with the EU will also need to be ratified by over 30 national and sub- national legislatures across Europe. Each of these legislatures has subtle national problems that we are mostly unaware of. The ability of any party in any of these legislatures to scupper a trade agreement for entirely local political reasons will be a continuing barrier. There are also increasingly widespread and popular movements against trade deals such as CETA, TiSA (less well-known: The Trade in Services Agreement that is currently being negotiated by 23 members of the World Trade Organisation)  and TTIP (The Transatlantic Trade and Investment Partnership which is effectively now dead because of such opposition).

The Brexit cheerleaders are confident that everyone in Europe is essentially well disposed towards the UK. Have we all forgotten President De Gaulle originally saying “Non” when Britain first tried to join the EU? Unfortunately there are plenty of groups within the EU who have been snubbed or insulted by leading Brexiteers such as Boris Johnson and others, as well as having many years of a complex history with the UK.

The people that the EU will be forced to deal with as part of the Brexit negotiations have for many years propagated myths about the EU that coloured the British view of the EU. For many within the EU, it is an aspirational project with long-term goals of integration and cooperation that are viewed very favourably. Those in the UK that have consistently distorted and misrepresented the EU have built up a significant backlog of resentment. The view from within the EU is that Britain has never really committed itself to Europe. The chance of the UK negotiating a satisfactory trade agreement with the EU now seems completely negligible.

The choice is simple: stay in the EU to give access to the single market and accept free movement, or get out of the EU and accept that the WTO trade rules are what we will have. Our economy in so many ways will be damaged by this. Jobs will be lost, growth will almost certainly reverse and many of our key services such as the NHS, social care and education will be further eroded. The referendum result has articulated a widespread dissatisfaction with the political establishment and that has been registered if not accepted. However the narrow vote to Leave was at least in part a consequence of extraordinary lies propagated by the Brexiteers. The deal that the British people are likely to be offered by this government will be so different from what was promised that it has to be put again to the people.

Fair Taxation On Corporate Profits (Rev3).

Summary: Multinational corporations have too many options of avoiding paying corporation tax. So let’s forget about it and introduce an infrastructure charge based on the proportion of audited profits worldwide. This is an updated version of an earlier post (23/09/16) on this site giving estimates of the likely yield of such a charge. Again updated (20/10/16) to reference Richard Murphy’s Alternative Minimum Corporation Tax proposals. GDP figures updated 13/03/17. Further updated on 3/04/17 in light of Google’s undeclared turnover in the UK.

Multinational corporations have an extraordinary range of options for moving profits away from where they are actually made to where they can be taxed minimally. An OECD report today said five countries reduced their tax rates for corporate profits in 2015 and another four announce planned reductions for the future. There is widespread anger about the unbelievably low rates of taxation for some of the largest companies in the world such as Apple, Vodafone, Starbucks and Google. These low rates keep profits high and benefit the wealthy. At the same time VAT rates throughout the OECD are gradually rising, from 17.6% in 2008 to a record high of 19.2% in 2015. VAT rates disproportionately hit the poor.

The capacity of corporations to manipulate their accounts so that they pay essentially no tax is limitless. They employ accountants and lawyers of great skill who are always several steps ahead of governments. Governments are extraordinarily slow at agreeing anything so little happens and profits continue to accumulate. What is needed is a completely different system that is relatively immune to corporate fiddles, is fair and returns the proper amount to each nation.

Every company no matter how big has to produce reliable accounts. They all have shareholders and the legal penalties in most jurisdictions for falsifying these accounts are very serious indeed. We can start with these accounts as being something reliable and dependable and relatively honest. The second piece of information that we can get fairly easily is what fraction of each company’s turnover takes place in the UK (or indeed any other country). If Apple sells 5% of its output in one year into the UK then we are looking at 5% of the total profit of Apple worldwide as the base to talk about. We must forget entirely about corporation tax but instead make an “Infrastructure Charge” which might coincidently be levied at what is deemed to be an appropriate UK corporation tax level, currently 20 %. The usual concern about high tax levels is that it discourages investment in a country. That it is claimed is why Apple is now resident in Ireland. However the Infrastructure Charge is independent of where anything is located, it simply is a crude but reliable method of coming to a fair charge. Of course each company paying the Infrastructure Charge can deduct that from their overall tax bills in their accounts as usual. However it does not require any agreement between governments in other countries. The only way that a multinational can avoid paying the Infrastructure Charge is by withdrawing from that market and foregoing the profits it already makes in that area.

How much money is involved? It is quite difficult to put this all together but a recent report by McKinsey & Co suggested that global corporate after-tax operating profits were in the region of US$8 trillion. The UK has approximately 1% of the world’s population and 3.5% of the worlds GDP. The UK proportion of those profits is therefore $280 billion. Let’s be generous and suppose that half of that has already been properly taxed and the other half has magically vanished to some more favourable tax haven. In that case 20% of $140 billion is about £28 billion. It is difficult to exaggerate how much difference that would make to the British NHS! To think this is been going on for many years could easily make someone quite angry.

Amazingly, companies like Google have no compunction about lying through their teeth (see: http://www.itv.com/news/2017-03-31/google-accused-of-being-less-than-transparent-after-revealing-latest-uk-tax-payments/ ). Recently Google paid a small amount of tax on their UK turnover which they stated as being £1 billion. However the global Google turnover declared by the company that the UK turnover was actually £5.65 billion. Under the AMCT proposed here, Google would pay closer over £1 billion, rather than the £36.4 million it actually coughed up.

The Infrastructure Charge as described above is fair and reasonable and will produce a very substantial income stream for the Treasury at a time when the great majority of the British people want to see much greater fairness in the way our society operates and the way that each of us pays our dues as we should and as we can afford.

Readers may be interested in the post from Richard Murphy on 30 September 2016 with a link to his article on Bloomberg dated 29 September 2016 entitled “Time for an Alternative Minimum Corporation Tax?” which you can find at: http://tinyurl.com/ho6yy73 . It is also interesting that the US does already have a version of AMCT which may well be why Donald Trump’s tax returns for 2005 show that he paid quite a decent amount of tax.

A Brexit Plan for Labour

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Summary: Theresa May in Birmingham claims the Conservatives are working for everyone but her policies, particularly on Brexit, are much more right-wing. Widespread concern about hard Brexit has caused further falls in the value of sterling. Labour has yet to articulate its own approach to the Brexit negotiations. Unless it does so, and does so quickly, the entire agenda will be set and dominated by the Government.  In order to get discussion rolling, here is a strawman proposal of what might be at the core of Labour policies on Brexit.

The first move should be, as proposed by Theresa May, to convert all EU legislation into UK law. This will allow everything to continue running much as it does. It allows Parliament to scrutinise any changes but it will be critical to ensure that the legislation is not restructured so that the dilution of those provisions cannot be implemented by executive order. All EU laws that were passed by Parliament should only be changed after proper parliamentary scrutiny.

As a matter of urgency we need to unambiguously guarantee that all EU residents already working in the UK will be allowed to remain. The uncertainty for them and indeed for their employers cannot be permitted to drag on for years. The view of Liam Fox, who simply looks upon real people who have made their lives in the UK as just another negotiating card is outrageous.

There are two main areas which need detailed policies, the single market and immigration. In a surprisingly middle-of-the-road piece on the Conservative Home website, Peter Lilley, the former Secretary of State for Trade and Industry and for Social Security suggests a very hands-off approach to the single market. Basically he suggests not making unnecessary work for ourselves. Simply declare that we will happily welcome all imports into the UK from the EU as they are treated under the current arrangements and in return we expect to export from the UK into the EU in the same way. Individual countries within the EU or indeed individual business sectors or other interests that are unhappy with this can raise the matter and negotiations, if appropriate, can then proceed on those specific matters. The great majority of trade is unlikely to be particularly contentious. Even if we had to leave the single market relatively little would change. Average tariffs into the single market are only about 4%, and more like 2.4% for manufacturers, much less than the 12-15% slump in sterling since the Referendum.

The worry about passporting rights comes mostly from not appreciating that they derive from simple requirements of liquidity and financial probity on financial services organisations from one part of the EU wishing to carry out retail sales in another. The UK regulation regime is strong and retaining these rights should be straightforward. In short, preserving passporting rights is really a fairly minor matter in the scheme of things.

The hardest area for these negotiations is undoubtedly immigration. There is no doubt that Labour is much more relaxed about immigration than the Tories or UKIP. We know that about 1/3rd of the 9 million who voted Labour at the last election backed Leave. Their concerns about immigration must be addressed if Labour is to be seen to respond to the results of the referendum seriously. Labour needs to attack immigration as an issue on several fronts. Firstly it must row back against the continuing negativity about migrants, explaining again and again what everyone knows. For many years Labour has made far too little effort to counter the right-wing anti-immigrant tone of Tory governments and the right-wing media. It has suited recent governments obsessed with austerity and deficit-reduction to blame the consequences of their policies on immigration. Immigrants are blamed for the stresses on the NHS, overcrowding in our schools and the shortage of affordable housing. They are not the benefit scroungers demonised by the right-wing tabloids. Very many are forced to accept poorly paid, unpleasant jobs that the locals are not prepared to countenance. They often live in substandard accommodation with minimal complaint. They are young, ambitious and energetic. They are eager to make success of their lives. Their demands on the NHS are small principally because they are young.

In reality our country simply cannot function without high levels of immigration. Already half of our migrants are not from the EU and come across borders that we control totally. Yet we let them in because our country simply couldn’t function without them. Restricting immigration to under 100,000 as the Government wants will simply crash our economy. The NHS and social care sectors would simply cease to function without migrants. Boosting the living wage as John McDonnell has promised makes many more jobs attractive, and clamping down on zero hours contracts will help to suppress some of the worst labour practices that exploit immigrants. Building very many more affordable houses in high cost areas will also ease these pressures, but these are all well into the future long after Brexit has happened.

At present non-EU immigrants must have the offer of a job, and in certain jobs there are quotas to try and keep numbers under control. Even if we maintain free movement from the EU we need to manage migration much better. We need to know who was coming into the UK, where they will work and what demands on local services they might make. We also have to start tracking who is actually leaving the UK, something that can be done very easily by putting exit passport information on airlines, railways and ships.

However the result of the Referendum means that politically we have to accept restrictions on EU migrants. One of the most straightforward things we could do is simply require that EU migrants are allowed to enter the UK only if they have a formal documented job to go to which has already been advertised within the UK but remain unfilled. A symmetrical arrangement could then apply to British workers wishing to take a job in the EU. The restrictions on non-EU migrants would stay as they are which is of course how they were managed under the then Home Secretary, Theresa May. The migration rate would be set by the demands of the UK economy. The best way of reducing that rate is to improve the quality of vocational training at every level given to our own children.

Labour has already identified the need for a Migrant Impact Fund, money used to offset the strain locally imposed by migration. How big might this turn out to be? The amount of money suggested by the Government is quite derisory. Amber Rudd promised £140 million or about £540 per head. Compared with the substantial sums of money distributed from central government to local authorities to pay for schools, the NHS and many other services this is quite inadequate, probably by a factor of 10. Money needs to be distributed to the local authorities in proportion to their receipt of immigrants. This must be paid immediately in anticipation of their arrival locally and their starting to pay taxes.

Above all, Labour must hammer home a fundamental number which shows how much the problem is exaggerated. Current immigration is only increasing our population by about one person in 200 per annum. Immigration is not a massive invasion rather a relatively minor perturbation but one that is critical to the functioning of our society. Problems arise when immigration is not spread uniformly across the country and the xenophobic opinions of UKIP and the right-wing media are allowed to go unchallenged. The Migrant Impact Fund when properly funded could substantially change the view of communities about incomers. Without it Labour will have an uphill battle against entrenched right-wing opinions of many otherwise centre-left voters.

This framework for what Brexit might look like is something that Labour needs to refine and complete if it is to have any influence on what happens.

 

 

 

Labour’s Elephant in the Room: Immigration

nhs-discounts-pm

Summary: Labour needs to articulate its policies on immigration before the Brexit negotiations get set in stone. It cannot keep ignoring real concerns about immigration and the fact that if it is not addressed satisfactorily it will be very difficult for Labour to win a general election. Jeremy Corbyn is resisting reduction in the free movement of people from the EU. He understands that significant restrictions to immigration will simply crash the economy. A carefully thought out Migration Impact Plan could help to persuade voters that immigration is manageable and indeed could be of benefit to areas most affected by migration. However many will be very difficult to persuade.

There is no doubt that Labour is much more relaxed about immigration than the Tories or UKIP. We know that about 1/3rd of the 9 million who voted Labour at the last election backed Leave. Their concerns about immigration must be addressed if Labour is to be seen to respond to the results of the referendum seriously. Labour needs to attack immigration as an issue on several fronts. Firstly it must row back against the continuing negativity about migrants, explaining again and again what everyone knows. For many years Labour has made far too little effort to counter the right-wing anti-immigrant tone of Tory governments and the right-wing media. It has suited recent governments obsessed with austerity and deficit-reduction to blame the consequences of their policies on immigration. Immigrants are blamed for the stresses on the NHS, overcrowding in our schools and the shortage of affordable housing. They are not the benefit scroungers demonised by the right-wing tabloids. Very many are forced to accept poorly paid, unpleasant jobs that the locals are not prepared to countenance. They often live in substandard accommodation with minimal complaint. They are young, ambitious and energetic. They are eager to make success of their lives. Their demands on the NHS are small principally because they are young.

In reality our country simply cannot function without high levels of immigration. Already half of our migrants are not from the EU and come across borders that we control totally. Yet we let them in because our country simply couldn’t function without them. Restricting immigration to under 100,000 as the Government wants will simply crash our economy. The NHS and social care sectors would simply cease to function without migrants. Boosting the living wage as John McDonnell has promised makes many more jobs attractive, and clamping down on zero hours contracts will help to suppress some of the worst labour practices that exploit immigrants. Building very many more affordable houses in high cost areas will also ease these pressures, but these are all well into the future long after Brexit has happened.

At present non-EU immigrants must have the offer of a job, and in certain jobs there are quotas to try and keep numbers under control. Even if we maintain free movement from the EU we need to manage migration much better. We need to know who was coming into the UK, where they will work and what demands on local services they might make. We also have to start tracking who is actually leaving the UK, something that can be done very easily by putting exit passport information on airlines, railways and ships.

However the result of the Referendum means that politically we have to accept restrictions on EU migrants. One of the most straightforward things we could do is simply require that EU migrants are allowed to enter the UK only if they have a formal documented job to go to which has already been advertised within the UK but remain unfilled. Unlike the rules for non-EU migrants, there would be no quota limits. If you have a job offer you can get in to the UK. A symmetrical arrangement could then apply to British workers wishing to take a job in the EU. The restrictions on non-EU migrants would stay as they are which is of course how they were managed under the then Home Secretary, Theresa May. The migration rate would be set by the demands of the UK economy. The best way of reducing that rate is to improve the quality of vocational training at every level given to our own children.

Labour has already identified the need for a Migrant Impact Fund, money used to offset the strain locally imposed by migration. How big might this turn out to be? The amount of money suggested by the Government is quite derisory. Amber Rudd promised £140 million or about £540 per head. Compared with the substantial sums of money distributed from central government to local authorities to pay for schools, the NHS and many other services this is quite inadequate. Money needs to be distributed to the local authorities in proportion to their receipt of immigrants. This must be paid immediately in anticipation of their arrival locally and their starting to pay taxes. All immigrants intending to remain in the UK should complete a form that allows local authorities to plan for their arrival satisfactorily. Specifically we need to know:

  • Where is the immigrant family going to live and work? The relevant local authority must be informed.
  • How big is the family? Current NHS budget runs at about £1800 per head (official figures).
  • How old are the children? Allows schools to plan for space. Per-pupil funding at present is highly variable but averages around £4500 per annum. In addition the pupil premium should be added for immigrant children for three years at £1900 per annum particularly if they will need additional teaching to bring them up to the local standards.
  • Can they speak English? Some money must be provided for local authorities to enable English-language lessons to be provided.

This adds up to probably around £5000 per annum for the average migrant or about £1.6 billion per annum for new migrants. It sounds a lot but it is a tiny fraction of current government spending. These costs must translate into proportionate changes in the allocations nationwide made to local government to fund the NHS, education etc.

Above all, Labour must hammer home a fundamental number which shows how much the problem is exaggerated. Current immigration is only increasing our population by about one person in 200 per annum. Immigration is not a massive invasion rather a relatively minor perturbation but one that is critical to the functioning of our society. Problems arise when immigration is not spread uniformly across the country and the xenophobic opinions of UKIP and the right-wing media are allowed to go unchallenged. The Migrant Impact Fund when properly funded could substantially change the view of communities about incomers. Without it Labour will have an uphill battle against entrenched right-wing opinions of many otherwise centre-left voters.

 

Austerity Madness Curable at Last

asst-sterling

Summary: The economics underpinning the drive for austerity and cutting the deficit are fundamentally flawed. Few economists ever really thought it was the right thing to do. Borrowing to invest in the UK, for housing and infrastructure including transport and education is fundamentally economically sound and has been for a long time.

For many years the Tories have projected themselves as the party of fiscal responsibility, cutting the deficit and reducing wasteful spending. Labour never responded satisfactorily to claims that they were the party of high taxation and profligate spending. They are still blamed for allowing the deficit to expand without limit. In fact this choice has never been between left-wing and right-wing philosophies but rather very different understandings of the fundamentals of economics.

The money we use is built on a wonderful confidence trick though it doesn’t stop us all trying to get a bit more! The £20 note carries the statement from the Chief Cashier “I promise to pay the bearer on demand the sum of £20”. Once upon a time when sterling was on the gold standard you could actually swap these notes for gold. However today, if you go into the Bank of England to cash it they will properly give you a nice clean £20 note that says much the same thing. Your £20 note was printed by the Bank of England mainly because the Bank of England thought it would be a good idea at the time. It cannot do this indefinitely because to print too much might make our business partners overseas think it doesn’t represent a consistent value. The crash of 2008 triggered a great deal of money printing to keep the economy running and avoid the collapse of the banking system. This money printing has been given the delicious name of “Quantitative Easing”. Already the Bank of England has printed an additional total of £375 billion to keep the British economy ticking over. Beside that, the current UK deficit of £69 billion which George Osborne was desperately trying to reduce looks relatively minuscule. Apparently the £375 billion printed doesn’t actually count as part of the deficit.

Our capitalist society depends utterly on debt. The Bank of England lends money to the high street banks which in turn lend money to housebuyers and businesses. Businesses invest the money in order to grow the business, employ more people, make bigger profits and eventually repay the loans. The same approach should be true for the government. Money can be borrowed by the UK for 30 years today at very low interest rates. There is no reason why money should not be borrowed by the government or by Local Authorities to invest in infrastructure projects such as housebuilding, road and rail building and refurbishment. The Tory view is that such an approach simply leads to an increasing deficit and all deficits are bad. By cutting expenditure of all sorts George Osborne aimed to cut down this deficit.

Curiously, while all this was going on no one heard of any Tory MPs frantically trying to repay their mortgages or any other loans to reduce what they owe (their individual or family debt). The consequence of the government austerity programme has been to inflict extraordinary damage on our economy and on the structure of our society. Many social programs that help the poor, the elderly, the disadvantaged and the disabled have been cut to the bone if not eliminated in order to save laughably small sums of money. Thousands of small cuts mean the NHS is approaching collapse and the school system is under severe strain. And it’s not just a British problem. Many Eurozone countries have been forced to accept levels of austerity in order to make interest payments on debts they will never repay. They agreed to keep their deficits very low when they joined the Eurozone but with the challenge of the 2008 recession they could not manage it. The damage in several countries has been even more extreme than we have experienced in the UK.

Even the Tories are now talking about ditching the austerity programme, the view that Labour have taken for some time but is now been clearly articulated and argued for by Jeremy Corbyn and many others. The supporters of borrowing to invest in the UK are not just left-wing crazies. Even the Economist newspaper has been arguing that austerity in the UK has gone far too far. Within Europe one of the main proponents of austerity at any cost has been the German finance minister, Wolfgang Schäuble, and his inability to grasp these economic fundamentals has been extraordinarily damaging to the Eurozone. Its current weakness is substantially because of German intransigence about the need for austerity and deficit reductions.

Borrowing money is a good idea if it is for investment in something that will give a reasonable return. At the interest rates the UK pays today even only moderately good ideas justify borrowing. We must welcome the end of austerity as a greatly overdue return to economic sanity.

Reference: There is a lot more to read in Richard Murphy’s book, “The Joy of Tax, How to a Fair Tax System Can Create a Better Society”. It is marvellous, highly readable, entertaining, not too long and strongly to be recommended book.

Fair Taxation On Corporate Profits.

apple_hq

Summary: Multinational corporations have too many options of avoiding paying corporation tax. So let’s forget about it and introduce an infrastructure charge based on the proportion of audited profits worldwide. This is an updated version of an earlier post (23/09/16) on this site giving estimates of the likely yield of such a charge. Again updated to reference Richard Murphy’s Alternative Minimum Corporation Tax proposals.

Multinational corporations have an extraordinary range of options for moving profits away from where they are actually made to where they can be taxed minimally. An OECD report today said five countries reduced their tax rates for corporate profits in 2015 and another four announce planned reductions for the future. There is widespread anger about the unbelievably low rates of taxation for some of the largest companies in the world such as Apple, Vodafone, Starbucks and Google. These low rates keep profits high and benefit the wealthy. At the same time VAT rates throughout the OECD are gradually rising, from 17.6% in 2008 to a record high of 19.2% in 2015. VAT rates disproportionately hit the poor.

The capacity of corporations to manipulate their accounts so that they pay essentially no tax is limitless. They employ accountants and lawyers of great skill who are always several steps ahead of governments. Governments are extraordinarily slow at agreeing anything so little happens and profits continue to accumulate. What is needed is a completely different system that is relatively immune to corporate fiddles, is fair and returns the proper amount to each nation.

Every company no matter how big has to produce reliable accounts. They all have shareholders and the legal penalties in most jurisdictions for falsifying these accounts are very serious indeed. We can start with these accounts as being something reliable and dependable and relatively honest. The second piece of information that we can get fairly easily is what fraction of each company’s turnover takes place in the UK (or indeed any other country). If Apple sells 5% of its output in one year into the UK then we are looking at 5% of the total profit of Apple worldwide as the base to talk about. We must forget entirely about corporation tax but instead make an “Infrastructure Charge” which might coincidently be levied at what is deemed to be an appropriate UK corporation tax level, currently 20 %. The usual concern about high tax levels is that it discourages investment in a country. That it is claimed is why Apple is now resident in Ireland. However the Infrastructure Charge is independent of where anything is located, it simply is a crude but reliable method of coming to a fair charge. Of course each company paying the Infrastructure Charge can deduct that from their overall tax bills in their accounts as usual. However it does not require any agreement between governments in other countries. The only way that a multinational can avoid paying the Infrastructure Charge is by withdrawing from that market and foregoing the profits it already makes in that area.

How much money is involved? It is quite difficult to put this all together but a recent report by McKinsey & Co suggested that global corporate after-tax operating profits were in the region of US$8 trillion. The UK has approximately 1% of the world’s population and 2.4% of the worlds GDP (2015 figure). The UK proportion of those profits is therefore in the region of $200 billion. Let’s be generous and suppose that half of that has already been properly taxed and the other half has magically vanished to some more favourable tax haven. In that case 20% of $100 billion is about £20 billion. It is difficult to exaggerate how much difference that would make to the British NHS! To think this is been going on for many years could easily make someone quite angry. Indeed, this may underestimate the total amount that could be recouped. The companies that are most successful at transferring profits offshore are the ones that have the biggest amounts tp transfer. They are often high-tech with a substantial exposure in the UK. It was recently revealed that the receipts from advertising of Google were over 9% of their total within the UK.

The Infrastructure Charge as described above is fair and reasonable and will produce a very substantial income stream for the Treasury at a time when the great majority of the British people want to see much greater fairness in the way our society operates and the way that each of us pays our dues as we should and as we can afford.

Readers may be interested in the post from Richard Murphy on 30 September 2016 with a link to his article on Bloomberg dated 29 September 2016 entitled “Time for an Alternative Minimum Corporation Tax?” Which you can find at: http://www.bna.com/time-alternative-minimum-n57982077695/ .

Tackling Inequality: Making Britain Fairer For All

greyterrace

Summary: The gross inequalities in British wealth distribution needs to be substantially rebalanced by combining strategies to make the poor richer and to make the rich poorer. A great deal of the wealth held in the UK is in the form of assets and in particular property. Making the investment in property much less attractive is key to reducing inequality. A number of approaches are outlined that could lead to a substantial reduction in house price inflation. In particular, a radically new tax is proposed on the continuing growth in property valuations. By reducing house price inflation rates it would benefit millions of young people hoping to get on to the housing ladder.

Since the financial crisis in 2008 there have been rapid divergences in the fortunes of the rich and the poor. The availability of cheap money has allowed investors to make fortunes while the recent government obsession with austerity has made the majority of the population significantly worse off in real terms. The UK is already one of the least equal countries in the Western world. Reversing this trend must be a combination of making the poor richer (for example by increasing the minimum wage, reigning in some restrictive employment strategies such as zero hours contracts, improving benefit baseline levels, increasing the basic income tax threshold etc.) and by making the rich poorer. It is very important to address how the rich should be made poorer since it is the overt and visible extravagance of many lifestyles that underpins the perception of gross unfairness in the way things are today in the UK. We should expect this to be unpopular with the right-wing media!

The obvious approach of increasing taxation for the rich has merit, reintroducing the 50% tax rate abandoned by George Osborne and perhaps setting the threshold at a lower level of £100,000 taxable income. National insurance payments on taxable income above £43,000 could also be increased from their present level of 1/6th the level paid below that threshold. Public opinion will probably demand substantial penalties for companies that pay grotesque levels of salary and/or bonuses but it is important to appreciate that the wealth underpinning the rich is principally that they hold very substantial assets, and that the increase in wealth derived from asset appreciation is usually much greater than that actually earned in the form of salaries. Unless the growth in asset value is contained then the inequality we already find unacceptable and unfair will simply continue to increase.

Stamp duty is already charged at a very low level on the buying and selling of equities and bonds (typically 0.5%) and this could be increased. However it is easy to move bond and equity trading offshore so an increase may not be very productive without a lot of complicated safeguards. The main asset class that is easy to access is property since it cannot be moved overseas and is relatively easy to value.

The shortage of housing in the UK has, for many years, been quite scandalous. A major overhaul of our housebuilding strategy is long overdue and some radical ideas about how this might be addressed are analysed in an accompanying post on Outsidethebubble.net entitled “Solving the Housing Crisis”. By building many more houses and in particular affordable houses, the upward pressure on house prices from the extreme shortage in many parts of the country should be eased. However the very rapid growth in property prices must be counterbalanced by taxing the above inflation growth in those property prices. Proportional Council tax levels must be extended to much more valuable properties than at present. Many of the exceptions made for unoccupied property and second (holiday) homes must be removed.

However many of these changes are still not addressing the key underlying problem which is that property in the UK is an extraordinarily good investment, growing way above the rate of inflation and making it almost impossible for young people to ever get on the housing ladder. At present property is essentially taxed (apart from your main residence) when properties are sold or inherited. Buy to let properties owned by a small landlord are therefore taxed but properties of any sort that are sold by a business are not taxed explicitly. Taxation of those profits comes from dividend income tax or corporation tax. The income from a commercial sale may be reinvested in another property and the existing appreciation in the value of the property is preserved in full. This contributes to property price inflation.

Introducing a property sales tax would create a mechanism to return significant amount of property appreciation values to the Exchequer, throttling back property appreciation rates and making property a significantly poorer investment. This in turn would actively push down property prices.

In this section I want to layout a radical new framework to be used to tax continually but fairly property price increases. We start by recognising that average figures for the typical prices of different kinds of property are published regularly by organisations such as the Nationwide and Zoopla. We may think conveniently of residential accommodation but the tax described here is intended to apply to all kinds of real estate including commercial property and land.

For each property above a certain threshold the typical price increase in a year is determined from published data. If that price increase was, say, 6% and we had a tax rate of one third then the tax due would be 2% of the current price of the property. The owner of the property does not have to pay that tax but the following year the owner only owns 98% of the property and the state owns 2%. If again the following year a similar price increase of 6% applied then the value of the property would be reduced by 2% of 98% or 1.96% so that the owner only had 96.04% of the property and the state 3.96%. This would continue each and every year. Effectively the state takes a charge on the property that increases each year. The actual numbers do not matter because they are only realised when the property is eventually sold. We are only accumulating percentages and not absolute amounts. If the tax rate was one third then simply the difference between the purchase and sale price is what is actually taxed at one third not the accumulation of all these above calculations. However an individual should have the opportunity of paying for example two thirds of the tax due in one year so that he or she can then keep 100% of the property. In this case the owner needs to establish the value of the property before and after the year in question. The valuations can be provided centrally again by using typical price increase rates for that type of property over the period in question. Should the owner disagree with those valuations then he or she would be entitled to use independent valuations instead. In this way money flows from property price appreciation directly to the Treasury. This reduces the amount of capital being created in property by inflation and returns that to the Treasury. It can be shown that the maximum tax payable on a property owned for a very long time and bought for a very small amount of money is never more than the tax rate, such as the value of one third used in these calculations.

In the case of the sale of someone’s main residence the tax due is established using the above formulae. Should the individual wish to purchase another property and not pay any of the accumulated tax then the new property will end up by being partly owned by the state who will have invested the tax due in this new property. Any other sales or transfers would necessitate payment of the tax due in full at the time of sale. For owner occupiers this taxation approach will make very little difference compared with the present situation until the property is sold for the last time. The critical difference here is that all other property will then be taxed whenever it is sold with the owner having the ability to preserve value by paying two thirds of the tax as it arises on a year-to-year basis.

This form of taxation might appear to be a very complicated way of deriving much the same taxes that are taken today. With a constant tax rate (the one third used above) that may be true but it does allow rather different way of taxing that reigns in very large rates of property price inflation. Rather than use the one third mentioned above, the rate could be for example 2/3 of the rate of inflation above the consumer price index (CPI). A relatively high tax rate of that sort would have a much greater effect on the overall rate of price inflation.

Neoliberalism: A Beginners Guide.

maggie_reagan

Summary: The word “neoliberalism” is used widely but surprisingly few people really appreciate what it means. This brief summary outlines its importance. For most on the centre-left of the political spectrum it is the enemy and it is important each of us knows the enemy and recognises exactly what it is and what it has tried so successfully to achieve.

Earlier in 2016 George Monbiot gave a talk in Cambridge to an audience of several hundred. Cambridge is notorious for being able to put up an audience of clever-clogs, but when asked how many knew what neoliberalism actually was, barely a handful claim to know. His excellent talk was written up in the Guardian on 15 April 2016 and can be seen in full HERE. This post is simply an outline of what neoliberalism is. George’s piece which is well worth reading in full. For serious addicts, there is a massive entry in Wikipedia which also shows that its manifestation in different parts of the world is somewhat different. However from the British perspective its importance and influence is very clear. It is in the UK that we might argue it has been applied in its harshest, most uncompromising way.

The core idea underpinning neoliberalism is that each and every one of us is in competition with one another. As consumers we buy and sell goods and services and companies compete for our custom. Anything that interferes with that is anathema. Regulation should be eliminated and taxes minimised. Anything that assists the organisation of labour such as trade unions should be suppressed. Any activity of government should be privatised if at all possible. If you cannot afford a house or a good education or you do not have a job it is your fault and you only have yourself to blame. Certainly the state should do the minimum it can get away with to make your life any easier.

Monbiot argues that one of the strengths of neoliberalism as a political philosophy was that nobody really knew what it was. Nobody could identify the radical changes in our society which were driven by neoliberalism. Naomi Klein showed how neoliberal is used a variety of crises to introduce yet more restrictions on the role of state and its capacity to support those at the bottom of the heap. Right-wing governments such as those of Margaret Thatcher and Ronald Reagan followed neoliberal programs. Many right-wing think tanks from the Heritage Foundation to the Adam Smith Institute were financed heavily to propagate neoliberalism. Neoliberal attitudes became widely accepted by those who ran every part of our country, including the media, the justice system, the civil service and, in the UK, large swathes of the conservative party. The New Labour government of Tony Blair broadly accepted neoliberalism as the right approach to government even though the vast majority of those that voted for it were being progressively made poorer by that government. Austerity in recent years has been an almost perfect neoliberal manifestation.

Above all neoliberalism is a policy almost perfectly designed to promote unfairness. It undoubtedly caused the crash of 2008 and the resurgence of the left-wing within the Labour Party. It has been key in attracting so many new members, and the recent revolution within the Labour Party must be seen substantially as an important move against neoliberalism. In the same way the dissatisfaction with government visible across all of Europe and indeed the United States may be attributed substantially to revolt against the neoliberal consensus.

Divine Right of Labour MPs

Handout photo issued by UK Parliament of Labour Party leader Jeremy Corbyn responding after Chancellor of the Exchequer George Osborne delivered his Budget statement to the House of Commons, London. PRESS ASSOCIATION Photo. Picture date: Wednesday March 16, 2016. See PA story BUDGET Main. Photo credit should read: Jessica Taylor/UK Parliament/PA Wire NOTE TO EDITORS: This handout photo may only be used in for editorial reporting purposes for the contemporaneous illustration of events, things or the people in the image or facts mentioned in the caption. Reuse of the picture may require further permission from the copyright holder.
16/3/16: Image of contented colleagues working well together!

Summary: Labour MPs need to make a serious effort to realign their policies to best match the changed centre of gravity of Labour views represented by the vast new membership. There is no divine right for any MP to keep their job. Each of us must evolve our ideas and attitudes in response to the rapidly changing political environment.

The centre of gravity of the Labour Party has shifted. Many people naturally on the centre-left were energised by Jeremy Corbyn’s vision of a markedly more socialist party than Labour has become in recent years. Many of these people will have voted Labour at the last election because the alternative was (and indeed is) much worse. Most were not particularly enthusiastic about the neo-liberal New Labour which had great difficulty in articulating its difference from neo-liberal Conservatism. Labour is now by far the biggest political party in Europe, a remarkable achievement in a year that has shown widespread disenchantment with political structures in most European countries. These new members are not crazed lefties, desperate for the politics of confrontation and struggle from the last century. Every party has extremists and Labour has members on the far left of the political spectrum but they are a tiny minority. The Tories have a wonderful variety of extraordinary headbangers on the far right, and they manage to cope with them. It is the centre of the new Labour movement that is key.

Labour will only come to power if enough Labour MPs are elected. A current MP has no God-given right to continue to be an MP if he or she no longer reflects the new political spectrum that defines the Labour movement. In every walk of life we now have to reposition ourselves to best match the opportunities for the future. People just don’t get jobs for life any more and that is certainly true if you happen to be an MP. Stasis simply doesn’t work, and failure to change will lead to defeat. It is also true of the Labour leadership. They need to reposition their strategy and methodology of leadership to reflect what the membership actually wants. A strong vote for Jeremy Corbyn does not mean total approval of everything he is doing and how he is doing it. But it does mean much clearer approval than for the ways and policies and attitudes that led to the humiliating defeat of Labour only 16 months ago.

Simply waiting for the Labour leadership to sort out the divisions within the party will not be enough. The local Labour parties need to engage with the new membership and articulate what it is that they and the rest of their constituencies actually want addressed so they can tailor local Labour policy accordingly. In turn MPs and candidates must understand how they should reposition their own political priorities to match those of the activists and party members who ultimately will have them elected. Each MP needs to identify key policy areas that are particularly important to their constituents, and work with that constructively.

Even if the Labour leadership is somewhat left behind in this realignment it will ultimately lead to the maximum Labour vote whenever the election occurs. MPs who look as if they can really deliver votes will be in the strongest position to influence party policy and this is the influence above all that might assist the Labour leadership to align better with the Parliamentary party. Jeremy Corbyn is already much better aligned with the membership and that is why he will be re-elected leader so overwhelmingly.

Hinkley Point C: Can We Trust China?

chinese_nuclear_reactor

Image: Proposed Chinese Reactor Design.

Summary: The economics of Hinkley Point C project are so poor that it is believed to be essentially a loss-leader for China.  What it does offer is a near-guarantee that China would have the right to build the next reactor at Bradwell in Essex and possibly another at Sizewell, using its new reactor design as a showcase for the world.  These reactors would be designed, built and operated by the Chinese Nuclear Power Corporation, a company intimately linked to the Chinese civilian and military nuclear programs.

We have no insight into the motives the Chinese might have for building a reactor at Bradwell.  The Chinese owners would sell electricity to the UK but we would have little idea of what other ambitions they might have.  There is a great deal of international concern about Chinese expansionism in the South China Sea where substantial military bases are being constructed on tiny islands.  The Chinese are completely ignoring the ruling of an international tribunal in the Hague that they do not have the right to do this.  Were the Chinese to expand their activities at Bradwell we would have little way of knowing what they were doing or why they were doing it.  Basically it all boils down to whether we can trust the Chinese to do what they say they will do and nothing more.  The Chinese are widely believed to have a substantial cyber warfare operation within China which frequently targets Western including British facilities, military, commercial and research laboratories.  There is a continual battle waged by GCHQ and MI5 to contain repeated cyber attacks.  An unsupervised base for Chinese activity on UK soil would be extremely difficult to contain.  If we discovered they were actually operating a covert facility there would be very little that we could do to stop them even assuming we had the military and technological capacity to do what we wanted.  It is interesting to note that the US have completely embargoed any comparable activity by the Chinese on the US mainland for such security reasons. In addition, US authorities have recently arrested a senior Chinese Nuclear Group (CNG) executive on charges of spying within the US.

In the post-Brexit world we need to develop commercial links with a wide range of countries.  Would we accept Russia as a partner in such a project?  I really don’t think so, with Vladimir Putin’s Russia also in an expansionist mood.  Surely this means we must graciously decline Chinese involvement in Hinkley Point C.

Hinkley Point Reactor: Doesn’t Work and Isn’t Safe.

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Summary: the reactor design for Hinkley point C has not been made to work despite many years of effort. EDF engineers think it should be postponed. In addition, the fundamental design of the reactor is not safe by current standards

The decision about whether to build one of the biggest nuclear reactors at Hinkley Point will no doubt be taken by economists in the Treasury, despite the eye watering costs. The construction cost per megawatt of generating power at Hinkley Point is more than 3 times the cost of other nuclear reactors currently being built in South Korea, for example. There is the separate matter of security and whether giving Chinese organisation intimately linked with the development of Chinese military nuclear weapons a bridgehead on UK soil is wise. However what concerns us here are the two fundamental questions: does it work and is it safe?

The Hinkley Point C design, known as the EPR, is new. Four of these are already under construction, one in Finland, one in France and two in China. Hinkley Point C would use two of these reactors. The French and Finish reactors are running very late and way over budget. The Finish one is about 9 years late. It is not known when the French reactor will come online, but it is also many years late. They are all proving to be very difficult to build, with pressure vessels cracking and other serious structural issues. The fundamental problem is that the current design simply does not work. In June 2016, EDF managers told MPs that the Hinkley Point C proposal should be postponed until it has “solved a litany of problems” not least of which is the soaring debt of EDF. The chief executive of EDF, Jean-Bernard Levy stated in September 2015 that the EPR is currently being redesigned to make the reactor easier and cheaper to build. The fundamental problem is that the EPR does not at present work, and there is no EPR working anywhere in the world yet.

A safety assessment of a reactor upwind of the population centres in the UK is critical. Nuclear reactors have two main control systems, one which manages the operation of the reactor and a separate one that manages safety aspects should a fault occur with the reactor. Independence between these systems is of the highest importance. The present design does not provide anything like adequate safety as these control systems are intimately linked. The reactor needs cooling pumps to be operational for up to 3 years after a shutdown in order to let it cool safely. Should a catastrophic accident befall the reactor (think a fully fuel-laden airliner, 15 minutes into a flight from Heathrow to the US, being flown into the reactor as was done to the World Trade Centre), it is highly likely that the safety system would also be damaged badly. It is very difficult to be confident in a design only partially complete. Without a complete design we cannot know what might happen and what the consequences of such an action might be but they are likely to be serious.

The case for building more nuclear reactors in the UK is very strong. Renewables are long way from being able to provide power on dull, still days. Battery technologies are improving but they had to the costs substantially as they have to be renewed at regular intervals. Until these issues are resolved we must accept the capacity of nuclear power to provide the guaranteed supplies everyone in the UK must have. However at present we must recognise that the present plans for Hinkley Point C are flawed and potentially dangerous. It should not proceed until these are resolved.

References:

The economics of nuclear power: http://www.world-nuclear.org/information-library/economic-aspects/economics-of-nuclear-power.aspx

Wikipedia: EPR (nuclear reactor): https://en.wikipedia.org/wiki/EPR_(nuclear_reactor)#cite_note-82