Saying one thing, but promising to do the opposite

Today Chris Grayling made a speech about 'fixing Britain's broken society'. There was very little that was new in it, and once again he paid tribute to the work of 'the voluntary sector groups who can make so much difference in local communities', and spoke about how important it was to support them.

One certain effect of George Osborne's announcement at this conference about freezing the levels of council tax, however, is that these kinds of voluntary and community groups will end up getting less money. Councils spend a lot of money on grants for voluntary and community groups, and so spending freezes or cuts always end up reducing the amount of money available to these organisations.

Of course, there are ways of making sure this doesn't happen. To get the cash from central government, councils could have to prove that the spending reductions that they've made don't involve cuts for groups making a difference in local communities, or the money could be made available to councils which choose to prioritise supporting voluntary sector groups over council tax cuts. But as things stand, the Tories are saying one thing about helping people, but have policies which would do the opposite if they win power.

Campaign diary

Sorry for no posts for a few days, been busy, as per the following timeline:

1966-2003: Christian Social Union (CSU) win over 50% of the vote in every regional election in Bavaria. In 2003, they won 60.7% of the vote.

2008: Bavarian state elections take place.

September 26th, 2008 - Paskini and Cook electoral campaigning services start work in Munich. Deliver leaflets for Social Democrats for one hour, then go to pub.

September 27th, 2008 - Paskini and Cook hand out organic apples and Social Democratic leaflets to voters for one and a half hours, then go to Oktoberfest.

September 28th, 2008 - Election day. CSU support falls by 17.2%, the biggest drop in support for any party in German state elections for half a century, and they lose absolute majority for first time in over forty years. Paskini and Cook celebrate by going to SPD election party, and then pub.

So, what's been happening back in Britain?

Uncanny abilities

You know that you are doing well as a rising star in the Labour Party when the Daily Mail takes an interest in your work.

Today they profile Kirsty McNeill, the 'young Scottish woman' and local councillor who helped Gordon Brown write 'the speech of his life' thanks to her 'uncanny ability to translate ideas into 'Gordon speak''.

As super-powers go, the ability to translate ideas into Gordon speak is a pretty handy one just at the moment. Kirsty is also an extremely effective campaigner, having been one of the leading lights in the Make Poverty History campaign, and a parliamentary candidate at the last election who managed one of the biggest swings to Labour in the country standing against Simon Hughes in Bermondsey. (Tip for Daily Mail journalists - if you are writing an article about someone, there is a really useful research tool called 'Google').

But the Daily Mail are quick to warn their readers that it's not all good news, for Kirsty has a 'typical Left-wing feminist streak'. It's always the way with the Daily Mail - getting their praise is good, but it's their criticism that is really worth cherishing.

Good Old Boy #73

Apparently, the way that the media were briefed about Ruth Kelly's resignation left one minister 'too angry to eat his breakfast'.

This is very concerning, as being too angry to eat breakfast is something which you tend to do when you are two, rather than when you are a government minister. I hope he calmed down in time to have a good luncheon.

If they're against it, I'm for it

Just seen some of the criticisms of Gordon Brown's speech, which make me like it more:

Iain Dale sneers at the idea of reducing carbon emissions by 80% and the 'impossible' aim of eliminating child poverty, and that listening to the speech makes him realise why George Osborne hates Gordon Brown.

Progress say that it was a shame that there wasn't more about how 'the government can no longer make the changes to Britain it seeks by governing by central dictat and that there needed to be a new contract between citizen and state.'

And any number of anonymous right-wing people on the internet are complaining about how all the new announcements are really bad because Gordon Brown has no right to steal their money which they've worked hard for by taxing them and spend it on other people. Which is especially classy when you think that what they are complaining about is being taxed so that, for instance, people suffering from cancer don't have to pay for prescriptions.

And in a similar vein, trying to stop children from suffering is 'evil' if it involves 'arbitratry taxation'.

What's fair?

This Labour conference has been a massive improvement on last year's nonsense...but that's not hard.

I particularly liked two things about Gordon Brown's speech. Firstly, it seemed much more authentic. A lot of the self-inflicted damage of the past year has been when Brown has tried to be something that he is not. He's a decent, serious man who is trying to help people and does so to the best of his ability.

Secondly, and most importantly, the new policies are good. Long after all of this year's party conference speeches are forgotten, people will be helped by things like free prescriptions for cancer sufferers, expanding free childcare, health check ups for the over 40s and making sure more children have computers and internet access.

On the other hand, I don't think the attack on Cameron for using his kids as props was very clever, and I think there is a problem with this new emphasis on 'fairness'.

The problem with talking about 'fairness' is that there is no real common understanding about what it actually means, beyond 'we are in favour of nice things and against nasty things'.

For example, I found it really jarring when Brown talked about 'fairness' and then went on to mention the right-wing rubbish around welfare reform and introducing a migrant charge for public services. There will be other people who think that sounds fair enough, but think it is unfair that some sick people get free prescriptions and others don't, or that the government seems to care about poor children, but not poor adults. And many others whose personal experience of public services is that they were treated anything but fairly.

Brown's definition of 'fairness' is about creating 'rules that reward those who play by them and punish those who don't' - separating the 'deserving' from the 'undeserving'. But one thing that we should have learned from the last eleven years is that the greater the effort that a government makes to target extra help to the 'deserving' and not the 'undeserving', the more widespread the feeling is that the results are 'unfair'.

We made social housing available only for the most deserving, the result is huge resentment about how it is allocated and people stuck on waiting lists for years. Tax credits were carefully designed and micro-targeted to make sure that they rewarded hard work, and thousands of people ended up with massive overpayments. And we're now planning welfare reforms which are based on cutting the benefits of those who don't follow the rules, even though the government's own research says that this won't help more people get jobs.

In contrast, we raised benefits for all lone parents, whether they were working or not, and child and family poverty fell and the number of lone parents who got jobs increased massively. Sure Start doesn't turn away parents who 'don't play by the rules' and is popular and successful. Undeserving and deserving alike get better healthcare from the NHS. The minimum wage helps all low paid workers, and the winter fuel allowance doesn't just go to those older people who have 'played by the rules'.

The policies which don't try and pick out who plays by the rules and who doesn't, but instead which help as many people as possible are the ones which got the biggest cheers from today's conference, and are the ones that will stand the test of time and which Labour can build on. And the reason for that is that this is the best, and fairest, way for governments to act.

Is that a barrel being scraped?

Britain's two Biggest Bloggers both currently have stories up attacking the Labour Party. I don't think their rivals in the 'Dead Tree Press' need lose much sleep.

Guido Fawkes reports that someone who works for the Labour Party is getting a new job. This is bad for the Labour Party because she knows some other people who have also in the past worked for the Labour Party. In addition, apparently Gordon Brown might not have said hello to Keith Vaz when he walked past him.

Meanwhile Iain Dale is criticising Alastair Darling for not following the economic advice of, erm, John Redwood. If only we'd introduced the recommendations in Redwood's economic competitiveness policy review, then, um.

Is this 'criticising the government' lark harder than it looks or something?

Obama's shock new election tactic

There are two closely related ways that well intentioned people, of all parties, try to sabotage the election campaigns of the party they support. The first is to complain that the campaign hasn't given them a poster to put in their window, and the second is to complain that they haven't been given a poster board to put in their garden.

FiveThirtyEight has a quite wonderful article about this:

"In a controversial move sure to upset millions of people, Barack Obama’s campaign has decided to forgo the traditional time-wasting distribution of chum (yard signs, bumper stickers, etc.) to try and win the election.

Settling on what they call a “get voters to register by approaching them on the phone and at the door with an army of volunteers” strategy, Obama’s senior staff has directed state, regional, and local field organizers to use their finite time to make tangible progress toward winning...

Despite Obama’s 100% name recognition, opponents of the “maybe worry about visibility after registration deadlines close” strategy pronounced the situation “dire” on the front page of Daily Kos yesterday.

Obama campaign strategists believe that, with their massive months-long, grinding-it-out-every-day registration plan, that 80 percent of those new registrations would vote for Obama, and that 75% of the newly registered voters will turn out. If 75% of an 80-20 split on 300,000 new registrants turns out, that’s Barack Obama adding 135,000 bonus votes to his total in Virginia alone. Organizers in Obama’s Virginia campaign offices have been sternly instructed to focus on those numbers by spending long, exhausting days recruiting volunteers instead of spending their limited time worrying about whether there are enough yard signs to go around...

Organizers – the people out there killing themselves to win this election – hate yard signs with the white-hot intensity of a thousand suns.

Barack Obama’s organizers hate them. John McCain’s organizers hate them. It’s because yard signs don’t vote – but they do generate a ridiculous amount of complaining that must be patiently listened to. Until yard signs sprout little legs and go to the polls on Election Day, in a presidential election with universal name recognition they are just a nice little decoration.

They’re little feel good things, making you feel like you’re on the team. There is nothing wrong with that – that’s not the objection. The objection is that there is limited time for organizers to accomplish a wide array of prioritized tasks, and in this election they’ve chosen to prioritize identifying, registering, persuading and getting their voters to the polls. Yard signs cut into the organizer’s sleep time – literally.

A lot of people aren’t going to like hearing this truth, but organizers recognize that the majority of people who walk into offices for yard signs are, for volunteering purposes – and this is a technical term – useless. In the majority, these people are not going to knock, they’re not going to make phone calls. Instead, they are going to throw the organizer’s incredibly precious, sleep-deprived time down a bottomless abyss of irretrievability.

People who plant yard signs are maybe going to make their neighbors aware that they support a particular candidate, and in theory, if they live near voters who cede their opinions to peer pressure, they could theoretically be shading the influence of a vote here or there.

Here’s a little secret: there will always be exceptions, but people who spend a lot of time volunteering in campaign offices tend to get yard signs. Organizers know and love these people dearly, and they take care of them.

Every single person pouring real effort into this campaign knows what I’m writing is true. In every office we stop into, we ask both sides about yard signs. It’s unanimous. In good old purple Colorado, in Montezuma County, the Republican women volunteering at the local office pointed out how their signs read, “Paid for by the Montezuma County Republican Party.” They, too, had to generate their own local signs, and have to deal with unhappy people who stop in to get their prize but go away empty handed.

Yes, of course it would be nice to have more yard signs. If organizers had an infinite amount of time, they would be happy to pester their bosses up the ladder to see when they’re coming in. Then they’d love to chat with you about how someone stole or defaced them, and run a bunch of replacements right out.

But in the very purple, exurban Northern Virginia neighborhoods there is a problem. There’s a walk list sitting in a campaign office not being walked and knocked, and a newly-registered voter who projects as .45 of a vote for Obama is not being registered."

Empowerment means do what I say

James Purnell has a really strange article in the latest Progress pamphlet. He argues that we need to redistribute power, which I agree with, and give more power to the people who use the welfare state, which I also agree with.

But his example of how to do this is to increase the conditions which people need to meet in order to get support from the government. So people become empowered by, er, having the government or private companies telling them what they have to do and sanctioning them if they don't obey.

What Purnell and other contributors to the pamphlet seem to mean by 'empowerment' is giving power to people so that they are more able to live their lives in ways that government ministers approve of (a theme expanded upon by, amongst others, Alan Milburn and John Hutton). But a key point about empowering people is that it is about precisely the opposite of this - giving people more power to make decisions, even if they are ones that important people like James Purnell disapprove of.

Stop it!

With the Tories and Lib Dems having nothing relevant or useful to say in response to the economic crisis, and Gordon Brown beset by MPs who want to change the leader but not the policies, an opportunity presents itself. Now is the moment for the lefties who predicted many of the problems that we are now experiencing, and who have good ideas about how to help people in these difficult times, to step forward and work together, er, slag each other off:

John Harris:

The fact that they've been joined by looser cannons such as as Graham Stringer, Gordon Prentice and that hard-left desperado John McDonnell (who has surely managed his own version of the Ribbentrop-Molotov pact) doesn't alter the revolt's fundamentals...

John McDonnell:

Let this fashionable Labour's Notting Hill set of Compass Cameroons continue to "emote" and let us on the left get on with organising to prevent the Tories taking power or failing that preparing the ground for the inevitable fight back.

"You're a desperado!"

"You're a Tory"

"Well, you're like Molotov"

I don't care who started it or who called who names first. Stop It!

Compass and the LRC don't agree on everything, but they agree on an awful lot about what's gone wrong and what needs to be done now. And by working together on what they agree on, they'd be able to reach out to lots of people who wouldn't describe themselves as being on the left-wing of the Labour Party.

Not once did I hear about in the debate talk about social justice

My former colleague, Stephen Tall, thinks that this has been a good week for Nick Clegg and a good week for the Lib Dems. If this is a good week, I hate to think what a bad week will be like (though I suspect we'll find out when teh comrades gather in Manchester for Labour conference).

It is a tricky dilemma for the Lib Dems in the current political situation, but I think Labour supporters can be relieved by the decisions that they've taken. On tax, they've got one set of policies about taxing the rich, and another about eye-watering cuts to public spending. The detail of these seems actively embarrassing, like Vince Cable's idea of requiring senior public sector workers to re-apply for their jobs and, if successful, cut their pay and pension entitlement.

I think I remember Stephen in his days as finance supremo on Oxford City Council mocking a variant on this idea when it was suggested as a way of balancing the council's budget by the Independent Working Class Association. Apparently this kind of posturing is going to fund massive tax cuts. And everyone can also have a pony too, if they want.

As a set of workable policies, this fails any kind of credibility test, but it does reveal that the Lib Dems no longer want to be the party for people who think public services are important and that we should pay a bit more tax to make them better. That's important because there are quite a lot of people like that, many of whom are feeling a bit unloved and unsure about who to vote for at the moment.

In contrast, people who think the government wastes loads of money and that taxes should be cut, while greater in number, are also likely to be intensely sceptical about promises by politicians, particularly those who up until last year supported higher taxes, and also find that there are a whole range of parties already competing for their affections.

And while it is easy to dismiss these policies because they won't get enacted at a national level, there are abundant examples of what 'Cleggonomics', in which tax cuts supposedly are the route to delivering "social justice", means at a local level. In Oxford, it meant closing play areas and reducing housing advice for the most vulnerable, to save £2 per year in council tax. In Liverpool it meant closing care homes for elderly people, and in Camden it means cutting funding for youth clubs in deprived areas.

But it's not just their tax policy, or the fact that their leader didn't know how much the state pension was worth (he's lucky the follow up question wasn't about how many houses he owned). It's that this seems to have been part of a wider shift in policy and outlook.

Don't take my word for it. Patrick Murray, who is a Lib Dem councillor and parliamentary candidate, put it far better than I ever could. In a passionate and eloquent critique of their new housing policy, he wrote that,

"The Eco-Towns policy passed at the Liberal Democrat conference was flawed: in seeking to oppose centrally imposed Eco-Towns the policy centrally imposed a rigid policy across the country, with no regard for local circumstances...

...I know, from my personal experience, that a life on the streets is a life devoid of liberty, devoid of equality of opportunity and devoid of social justice. We have adopted a one-size-fits-all policy that does not fit Oxford. It may be right for many areas of the country, but it is simply not justifiable in the homeless shelters of my city or to the thousands of families trapped by Oxford’s housing crisis. The supporters of this motion claimed they were not NIMBYs or BANANAs. But not once did I hear anyone in the debate talk about housing need and social justice.

So I ask them simply this. Where do we put the houses when the brownfield sites have run out?"

There are many decent Lib Dems, like Stephen and Patrick, and others who have consistently championed admirable causes, such as Evan Harris. But they aren't the ones who are 'making it happen' for the Lib Dems at the moment, and it would be a shame if the lack of attention that their conference has got masked the fact that the Lib Dems are becoming a very different kind of party from the one which many progressive voters supported in 2005.

What Tories say, and what they do

What Tories say:

"The voluntary sector should be neither poor relation nor a cut-price alternative to government. lt is absolutely central to the life of the nation, but with a character and contribution all of its own...I have great ambitions for the social sector in this country, and I make no apology for that. I simply do not believe that we will make serious progress in tackling relative poverty and deprivation, in creating communities fit for the 21st century, unless we inspire a revolution in social provision." - David Cameron

What Tories do:

"A financial crisis is theatening the Scrine Foundation charity for the homeless in Canterbury.

More than 100 people living in properties managed by the charity could be forced back onto the streets and nearly 70 full and part-time staff could lose their jobs.

It follows a decision by the [Conservative-run] city council’s housing benefits office to drastically cut payments to the charity’s clients."

Via here

Nick Clegg guesses how much state pension is, gets it wrong

Nick Clegg got asked today on the telly how much the state pension is. Not a difficult question, you'd have thought, for a leader of a national political party - it's the sort of thing that even politicians who don't know how much a pint of milk costs would know. His answer?

"About £30 per week".

I like that whenever Nick Clegg gets a question that he is flummoxed by, he guesses that the answer is thirty.

But it is actually £90.70 (for a single person) and £145.45 a week (for a couple).

We're from the government and we're here to help

I read the statement by 12 Labour MPs in Progress magazine. The article says that what Labour needs is a narrative. Their suggested narrative runs as follows:

'Dear electorate, there are a number of issues that are concerning you. Some of these also concern us, such as the economy. We have no idea what should be done about that except that we know that targeting money to help people doesn't work, except when it does. We do, however, have ideas for reforming public services and tinkering with the constitution. Will that do instead?'

It is a deeply weird document, aimed at winning over very, very small sections of the electorate while ignoring much larger groups. The civil libertarian who thinks that identity cards are a pragmatic and sensible idea, but was outraged at the decision to specify an age limit for buying cans of spray paint, for example, will be comforted to hear that the report's authors think that the latter 'was a step too far'. Not much help in winning over members of the No2ID campaign, but possibly a winner amongst the No2AgeRestrictionsOnBuyingSprayPaint activists.

They are also clear that they don't like 'top down', 'centralised', 'statist' solutions to problems. They want to devolve decision-making to the most local level, and highlight a couple of examples of the dividing lines that they would seek to draw on this issue, attacking the 'left' SNP for taking the decisions to scrap prescription charges and hospital car parking charges.

In ProgressWorld, it is quite wrong for the government to sort out a problem which annoys a lot of people, and instead the priority should be to ensure that the decision is taken at a more local level by a trust or a social enterprise or some similar such organisation, so that the government cannot get any credit for sorting the problem out.

But here in Britain, at a time when voters are shifting to the left, maybe instead the narrative Labour is looking for is one which is actually in touch with what people are looking for, the one which used to terrify Ronald Reagan:

"We've from the government, and we're here to help"

Labour surge in opinion polls

The last month and a half has seen the Labour Party, going for an unprecedented fourth election victory in a row, recover dramatically. Back in July, it was trailing by more than 20%, but opinion polls last week show the gap down to just 6% and closing...

...in New Zealand.

Although economic problems caused by the credit crunch have affected governments all around the world, the last couple of months has seen governing parties facing election later this year do rather well. In New Zealand, Labour was trailing 31%-52% in July, now it is 38%-44%. In Canada, the Conservative government was ahead by 33%-30% in June, they now lead 38%-24%. And the Republican Party trailed 35%-53% at the end of July, now trail 41%-46% (and their Presidential candidate is doing better still).

It's not just the economy, therefore, that explains why Labour in Britain is trailing behind the Tories. Labour in New Zealand have been in office for a long time, and the Republican Party has been far more incompetent and disastrous in power. But neither spent their time turning on each other or feeling sorry for themselves. Lessons from other countries show that even in a couple of months, it is possible to turn things round quite dramatically. Who knows, some of our MPs might even find that helping Labour recover in the polls is almost as much fun as talking to each other and to journalists about whether we should get rid of our leader.

Good Old Boy #72

Via Daily Kos, Sarah Palin: the Ultimate Good Old Boy:

"when there was a vacancy at the top of the State Division of Agriculture, she appointed a high school classmate, Franci Havemeister, to the $95,000-a-year directorship. A former real estate agent, Ms. Havemeister cited her childhood love of cows as one of her qualifications for running the roughly $2 million agency."

Britain and America

Apparently, political analysts, journalists and William Hague actually believe that the fact that Gordon Brown (or one of his advisers) wrote in an article that the Democratic Party is "generating the ideas to help people through more difficult times" is a 'gaffe', or a diplomatic blunder, and generally a sign of how bad Gordon Brown is as Prime Minister.

Do they seriously believe this nonsense?

It is a statement of the obvious (even if the specific example given was wrong) that the Democratic Party are the ones trying to help Americans through difficult economic times. It didn't mention the Republican Party's ideas to help people through more difficult times because (seriously) their main new policy idea is 'drill, baby, drill'.

The second line of criticism is that this will in some way damage Barack Obama's campaign, because it shows that foreigners support him. If, by November, it is possible to find a single American who even remembers this non-story, let alone one who changed their mind about who to vote for as a result, I'd be amazed.

The third, and most asinine, is that this is a diplomatic blunder which will harm British interests. I guess the idea behind this is that we want to be sure that if John McCain wins and decides to bomb, bomb, bomb, bomb, bomb Iran, or invade Georgia, that he values the 'special relationship' with our Prime Minister, just like George Bush and Tony Blair.

In a recent poll, 14% of people in Britain want McCain to win, 49% want Obama to win. One of the main reasons why Tony Blair's popularity decreased during his time in office was that people didn't like his support for George Bush's foreign policy.

The analysis of this is all about which official wrote which draft of which note and who said what to whom. But this kind of trivia misses the bigger point.

Both candidates for the American Presidency claim to want change from the past eight years. On a whole range of issues, from reversing the increases in poverty amongst Americans to rebuilding crumbling schools and infrastructure to setting legally binding targets to reduce climate change, there is a lot that the Americans can learn from what's been happening in the UK, both the successes in areas where the Bush administration failed and also some of the challenges and problems that these policies encountered.

Meanwhile in Britain, a significant part of the Tory Party actually believes that what Britain needs is to import George Bush's policies over here. David Cameron brands himself a 'compassionate conservative', thinks millionaires should be first in the line for tax cuts, supports failed welfare policies, won't support raising the minimum wage and stands shoulder to shoulder for a suicidally aggressive foreign policy. Meanwhile, a majority of his MPs want to restrict abortion rights and a vocal minority denounce the 'myth of man made global warming'.

But these are only trivial matters of fact which will actually affect people's lives, as opposed to really important issues like a politician making a 'gaffe' by revealing that they share the same opinions as a majority of the people that they represent.

Good Old Boy #71

Also like this one and this one.

Choosing the fight

Polly Toynbee and Tom Miller write in defence of middle class lefties. It reminds me of a piece of research which deserves a wider audience.

About ten years ago, the Joseph Rowntree Foundation funded a project called the Commission on Poverty, Participation and Power. The idea behind this commission was to bring together twelve people, six 'grass roots commissioners' and six 'public life commissioners'. The grass roots commissioners were people who had direct experience of living in poverty, and the public life commissioners were people who had academic or theoretical knowledge of poverty and its causes. The idea behind this was that both direct, practical experience and theoretical knowledge are vitally important in understanding a problem and knowing what to do about it, and neither is sufficient on its own.

The evaluation report (pdf) of this project is a really excellent piece of work. It is searingly honest about some of the challenges which the project faced, and has lots of recommendations about how this kind of approach needs to be developed in order to work effectively (for example, it needs a lot of resources, and plenty of time for people to get to know each other). It is also clear, however, that bringing together people with different kinds of knowledge and experience is a powerful way to get new insights and avoid many of the problems that traditional policies have encountered.

The evaluators asked the grass roots commissioners about what they felt about these academics who they were working with. There was one response in particular which cuts through the crap and gets to the heart of what's important, which I'll always remember:

'With poverty, some people were born into the fight, and some chose it; those in that fight really appreciate those who make that choice.'

10 grand well spent

John Redwood writes that the government is spending an average of £10,000 per year per person. He claims that for all this, he just gets his dustbin emptied once a week, and is allowed to use some inadequate roads.

There are any number of ways in which this is a sign of a man out of touch with reality. It would be easy enough to come up with dozens of examples of how he directly benefits from, to pick just a very few examples, the NHS, schools, universities, the police, social services and the welfare state, the armed forces, health and safety inspectors and most other things that the government spends money on.

But there is an even simpler criticism of Redwood's point. Because as well as getting his bin emptied and being able to drive on the roads, there is also the small matter, which seems to have slipped his mind, of his £61,820 salary, and £105,928 for expenses and to run his office.

[The comments that his article attracted are totally beyond parody, including the man who wants to relieve the burden to the taxpayer by charging people if they want to go to parks or recreational areas. But best/worst of all is the man who complains that he paid nearly £100,000 in tax last year. If you are so rich that your tax bill is that high, surely you should have better and more enjoyable ways to spend your time than whinging on the internet about life's injustices?]

Arguments against windfall tax 'essentially nonsense'

Something that supporters of a windfall tax on energy companies haven't managed to do is to refute the arguments made against the tax. Opponents have claimed that it would damage investment in renewable energy and the costs would be passed on to the customer anyway, to which groups like Compass have concentrated on political arguments about its popularity rather than providing detailed, technical arguments to support their claims.

All of which might lead people to suspect that whatever the moral force of the argument, a windfall tax is one of those left-wing ideas which sounds nice but in the Real World is not actually very realistic and would have negative consequences.

So I asked a friend who knows about these things whether it was true what the energy companies and John Hutton were saying about the negative consequences of a windfall tax. And it turns out that, well, read it for yourself:

"We’ve been hearing a lot about windfall taxes recently. The ‘Big 6’ energy companies have came out with two main counterarguments. Firstly that this would hurt ‘UK pensioners’ as dividends were cut and secondly that this would harm ‘vital investment in infrastructure’.

I’m a firm believer that economic quick fixes are often a bad idea – and both arguments sound convincing.

The problem is, if one bothers to open an annual report and look at the actual numbers… then both arguments against the windfall tax are essentially nonsense.

The basic point is that the energy companies are natural monopolies and enjoy very high profit margins.

To take just the example of BG Group – old British gas – which is typical:

Post tax profits in the year to 30th June (most recent numbers) were £2,411mn.

It had a pre-tax operating margin of 41.7% - i.e. for every pound of revenue it made pre-tax profits of 41.7p.

That is excessive. For comparison's sake most business operate on between 3% and 15%!

It had a operating cash flow of £3,718mn. Cashflow is more useful than profit (as lots of non-cash items are charged to ‘profit’, ‘profit’ is a number made up by accountants, cashflow is recordable).

So the company, after tax, and meeting its costs, generated £3,718mn of cash.

Of that it paid out just £314mn as dividends (about 8.4%).

It spent £498mn on buying back its own stock (generally something companies do when they can’t think of anything else to do with the cash).

Finally it spend £2,249mn on capital expenditure – i.e. maintenance and upgrading of its physical infrastructure.

So that still leaves spare cash of £657mn. Excluding useless buy backs that leaves £1,155mn!

In other words a windfall tax would neither –

(i) Lead to a cut back in dividends – to ‘UK pensioners and insurance companies’ as they claim.

(ii) Lead to a cut back in vital ‘infrastructure spending’.

Profits are expected to rise this year…

The only potential issue would be stopping them passing on any rise to the consumer. And the best way to stop them passing on the tax is by sitting them down and saying – ‘if you pass this along to consumers, then we are getting to get OFGEM to ‘investigate’ your monopoly position’."

It's not April Fools day already, is it?

Shorter Denis MacShane - Labour supporters should not slag each other off. To make this point, I shall compare Derek Simpson to anti-semites:

"Derek Simpson, the Unite joint leader even tells the Observer, "We might as well elect Cameron." Did I read that right? It was in the midst of a stream of abuse against David Miliband. In Moscow, Miliband is denounced as a "Jew". For Simpson, he is "smug" and "arrogant"."

Shorter Henry Porter - The downward trend on crime under Labour is undeniable. We should get rid of all the policies which have contributed to this.

Tom Watson asks the world's least difficult question - Is Frank Field right to team up with Nicholas Soames and Migration Watch for his new ideas about immigration? [Is there some other organisation called Migration Watch which has ever had a good idea about immigration?]

And the Department of Work and Pensions wants Jeremy Kyle to produce a show aimed at getting people into work.

Political Compass

The Political Compass test has been around for a few years now. The idea behind it is that you tell them whether you agree or disagree with some statements, and it tells you how you rank on left/right economic scale and authoritarian/libertarian social scale.

The people who run it have put in examples of real life politicians, so that people who take the test can compare themselves. Here's an example from Labourhome about 'omg look how right-wing Labour are'.

As a quick experiment, I did the test, giving the answers that reflect the best guess about what Gordon Brown or the majority of his colleagues would think. And it came up with results of slightly left of centre economically (-1) and slightly more libertarian than authoritarian (-2.7). Which makes more sense to me then the rankings that they gave.

So I think what the people who run Political Compass have done is that rather than use their the same methodology which generates scores for the people who use it to allocate where politicians are placed, they've fixed it such that nearly everyone who takes their test is much more leftie on economic grounds and more libertarian than the main political parties. Which is kind of clever and I approve of on general propagandist grounds , but just another reason not to take it too seriously.

President Bush: the big government liberal

Amidst all the excitement about Sarah Palin's speech last night, spare a thought for my favourite evil Republican, Mitt Romney, the man so dislikeable that even spending millions and millions of his own dollars couldn't buy him the Republican nomination.

Less than a year ago, Romney would have hoped to have spent this week's Republican conference as their Presidential candidate. Less than a month ago, he'd have expected at least to be the Vice Presidential nominee.

But he was still on fine form, explaining to cheering delegates that the problem with the current government was, wait for it, that it is too liberal. In Mitt's own words:

"Last week, the Democrats talked about change. But let me ask you — what do you think Washington is right now, liberal or conservative? Is a Supreme Court liberal or conservative that awards Guantanamo terrorists with constitution rights? It’s liberal! Is a government liberal or conservative that puts the interests of the teachers union ahead of the needs of our children? It’s liberal!

Is a Congress liberal or conservative that stops nuclear power plants and offshore drilling, making us more and more dependent on Middle East tyrants? It’s liberal!

Is government spending — excluding inflation — liberal or conservative if it doubles since 1980? It’s liberal!

We need change all right — change from a liberal Washington to a conservative Washington! We have a prescription for every American who wants change in Washington — throw out the big government liberals and elect John McCain!"

Is this really going to be the Republican message? That the problem with George Bush and Dick Cheney is that they are big government liberals? It's obviously ridiculous, and yet you can see from the video all these people listening to the speech, clapping, cheering and chanting along with him.

Leading from the front

Phil Glanville wrote an excellent article in Progress magazine recently:

"Where I would advocate serious change, however, is from the top down, with MPs, peers, MEPs, AMs, MSPs and councillors.

There are many, many Labour MPs who work all year round, quietly building the party's presence in their community. Yet, there are many others who haven't knocked on a door in years...The best MPs are already excellent campaigners, but the NEC and party whips should be less concerned with votes in parliament as a measure of loyalty and more worried about how many voters they have spoken to. If MPs aren't up for leading from the front they should be out - deselected. As simple as that.

True renewal will only come when we become closer to the people. Let's take a good look at the Britain we have been a part of creating, look at what works and what doesn't. Let's return politics to the people by talking to them about their priorities."

Of course, regular campaigning activities, talking to people about their priorities isn't much good unless it is linked to the development of messages and policies ("Hello, it's us again. You know all those things you suggested we should do? Well, we haven't done any of them.")

This isn't a panacea or magic cure for all of Labour's problems. But if both elected Labour representatives and also all those unelected advisers who develop policies spent much more time in contact with the people whose lives are affected by the decisions they make, then things would be a good bit better than they are now.

It would also be a better use of, say, Charles Clarke's time then the way he chooses to spend it at the moment.

4 Right Wing myths about the economy, debunked by a wealth creator

I got sent this earlier by a friend who works in the City and who is not very impressed by some of the right-wing myths in circulation about the UK economy at the moment:

Claim 1

Our economy has stagnated (0% growth in Q2) whilst the US, the so-called epicentre of the crisis, grew 3.3% in Q2

This is incorrect. The numbers 0% and 3.3% refer to quarter on quarter growth (i.e. the US economy grew 3.3% over quarter two compared to quarter one). The more useful, less volatile and more standard measure is growth over a year before. Using the standard measure we get the following for the G7 (the most comparable economies to our own).

Country	Q2 08	Q1	Q4 07	Q3	Q2	Q1
US	2.2	2.5	2.3	2.8	1.8	1.3
Canada	0.7	1.6	2.8	3.1	2.8	2.2
Germany	1.7	2.6	1.7	2.4	2.5	3.7
France	1.1	2.0	2.2	2.4	1.7	2.1
UK	1.4	2.3	2.8	3.1	3.3	3.1
Italy	0.0	0.3	0.2	1.6	1.7	2.1
Japan	-2.4	0.3	0.2	1.6	1.7	4.0
UK Rank	3/7	3/7	1/7	1/7	1/7	3/7

So the UK economy is not only doing comparably fine and has been for the past 18 months.

On the quarter on quarter issue – the main reason the US grew so fast was because of the emergency fiscal stimulus (tax rebate) which cost US$150bn and probably cannot be repeated - an expense one quarter shot in the arm.

Whilst still on the issue of quarter on quarter growth – on that basis both Italy and France shrunk 0.3% in Q2 whilst Germany recorded -0.5%.

And let’s remember a recession is two quarters of negative growth in a row. We haven’t had one yet!

Claim 2

Northern Rock was a disaster. Why are we the only country in the world with bank failures?

Yes NR was a disaster, but the fault lies with the board for pursuing a stupidly risky growth model and the market participants that funded this growth.

In Germany IKB bank failed in June 2007. In Denmark (which incidentally is IN recession) Roskilde bank failed last weekend.

In the US, aside from the Bear Stearns bailout (which involved a $29bn loan), ELEVEN banks have failed THIS YEAR. The largest, excluding Bear, was IndyMac – which had a $32bn balance sheet- is the second largest bank failure in US history.

The Federal Deposit Insurance Corporation (FDIC, the body that steps in when banks fail) now has 117 (!) banks in the US on its ‘problem’ list at risk of failing. Now that’s a banking crisis.

Claim 3

The collapse in Sterling shows that Brown is lying

Let’s take this one in three parts. First off – yes sterling has fallen sharply in the last year – 17% against the Euro and 11.6% against the dollar.

However sterling has been historically strong – mainly as UK interest rates have been consistently higher than US and Eurozone interest rates for the past decade – this has helped to keep inflation lower but arguably badly hurt the manufacturing sector. The unwind over the past year is more a reversion to mean than a sign of a loss of faith in the economy. Against the dollar Sterling is still 14% stronger than in 1997. Obviously I can’t get comparable figures for the Euro (only introduced in 1999).

Point two, is this a bad thing? In a market economy the exchange rate acts as a natural stabiliser. We have imported too much abd not exported enough for the past decade. Weakening sterling will boost exports and lower imports – helping correct the imbalance. Notice that in the US over the past year, dollar weakness has helped cut imports and boost exports – narrowing the trade deficit.

Point three, are exchange rates a reflection of the strength of an economy? Not really. A good example is the yen – all over the shop in the 1990’s despite Japan’s ‘lost decade’.

Claim 4

We have a massive inflation problem and it will get worse, bring on the 1970’s.

Let’s get some perspective. CPI inflation is 4.4%, it’s 5.6% in the US and even using the older RPI measure ours is still 5%.

RPI hit 26.5% in 1975. It was at 10.9% in 1990. The average of the EIGHTIES was 7.5%. We do not have high inflation. We have marginally higher inflation than we have had for 15 years – 15 years in which the integration of China into the world economy acted as a deflationary force on the world economy and dragged inflation down.

We hear a lot about the rise in commodity prices. We here less about the recent and spectacular falls. From their highs (mainly May-June), have have commodites faired?

Oil -28%

Wheat -49%

Corn -25%

Copper -18%

Natural Gas -30%

Of course as the rises took a few months to feed through to consumer rprices, so will the falls. But the inflation outlook is not exactly scary...

I also notice neither the Mail nor the Express have put ‘Oil down 30% - Petrol price to collapse’ on their covers.

Let’s also note that inflation is the YEAR ON YEAR change in prices. Oil is still up 70% since this time last year – but for energy price inflation to be constant (let alone accelerating) then on 1^st Sept 2009 oil needs to be at $178 a barrel. Somehow I don’t see that.

For what it’s worth I think we seen an increase in relative prices of commodities against consumer goods- this will lead to a short run spike in inflation (which are coming to the end of) and then things get back to normal.

Rising commodity prices are a catalyst for long periods of high inflation but not sufficient to cause them unless commodities keep rising at the same pace (and currently they are collapsing). Without a wage spiral, which there is very little evidence off, we won’t have a sustained inflationary period.

So everything is fine?

No. House prices will fall further. The economy will slow further as bank lending slows. Unemployment will tick up (although Eastern Europeans returning home might actually mean unemployment doesn’t rise as much as in previous slow downs).

But let’s not pretend that this is the end of the world or that we are doing worse than everyone else.

Good Old Boy #70

Jamie Carragher praises Alex Ferguson:

"I've got more respect for Ferguson than anyone else in the game. He's like a Scouser, really.

"He's funny, doesn't mind telling people to f*** off, and he even votes Labour. I love him."

Evidence based policy making

Thanks to Harpymarx for the link to a new research report from the DWP about 'workfare' (requiring people who receive out of work benefits to take part in unpaid work activities). A quick summary of the findings, based on evaluations of workfare schemes from USA, Canada and Australia:

- There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers.

– Subsidised job schemes that pay a wage can be more effective in raising employment levels than ‘work for benefit’ programmes.

– Workfare is least effective in getting people into jobs in weak labour markets where unemployment is high.

– Workfare is least effective for individuals with multiple barriers to work.

– Welfare recipients with multiple barriers often find it difficult to meet obligations to take part in unpaid work. This can lead to sanctions and, in the most extreme cases, the complete withdrawal of benefits that leaves some individuals with no work and no income.

- Some states in the US [as well as Australia - DP] have scaled down large-scale, universal workfare programmes in preference for ‘softer’ and more flexible models that offer greater support to those with the most barriers to work. This includes a greater reliance on subsidised jobs that pay wages rather than benefits to participants.

**

As Keynes once said, 'When the facts change, I change my mind. What is it that you do?' Now that his own department have published evidence that workfare policies didn't work when tried in the USA, Canada or Australia, will James Purnell please kindly drop plans to introduce them here?