Monthly Archives: June 2010

Ed Miliband: read my lips – no nuclear subsidies

In honour of Nick Clegg’s visit to Forgemasters today, I thought I would go back and see what Ed Miliband was saying about nuclear power before the election. On 9 November 2009, he told the House:

“We are not going to provide public subsidy for the construction, operation and decommissioning of nuclear power stations.”

(Hat tip: Left Foot Forward)

In response to the announced withdrawal of the Forgemasters loan, Ed went on to say:

“I am horrified by the Tory-Liberal coalition’s decision to withdraw the support promised to Sheffield Forgemasters by the Labour government. It is a sign of a government with a destructive industrial strategy and threatens the timetable for new nuclear in the UK.

“Yesterday Chris Huhne called for an ‘energy revolution’ while Danny Alexander was stopping investment in a British company that is central to producing the infrastructure for nuclear power that we need for a clean energy revolution. The government needs to say how Liberal Democrat opposition to nuclear power led them to target Sheffield Forgemasters.”

I hope that clears his position up in time for the leadership ballot.

Sorry, terribly tribal of me I know to point this out. But it does highlight quite how silly the Labour leadership contenders are behaving at the moment. At what point are they going to start taking more responsibilty?

Intergenerational equity and the perils of groupthink

As the implications of what it appears that the coalition is about to do in the upcoming budget sinks in, I have to admit to growing increasingly concerned. No-one – outside of the Labour leadership contest anyway – denies that the structural deficit needs to be tackled or that we don’t face some unpleasant spending cuts over the next few years. But I’m mystified by the economic strategy behind what the government apparently has planned.

If the government does have a game plan, thus far it has not been spelled out. Nick Clegg’s speech on Monday was remarkably void of much of an argument, resting as it did on two points:

1. There is no alternative: “to do anything else would not only be irresponsible, it would be a betrayal of our progressive values”.

2. It is a matter of intergenerational equity: “There is nothing progressive about condemning ourselves and our children to decades of debt, higher interest rates, fewer jobs.”

Nick Clegg and company keep emphasising how shocked they were by the state of the country’s finances, but thus far – despite all the welcome transparency – they have offered nothing to explain why they were quite as shocked as they were. The report of the Office of Budget Responsibility was mixed: it suggested that the structural deficit was worse than we’d thought but that public spending was actually under better control. Clegg himself keeps talking about this meeting he had with Mervyn King and how it made him see the light; it is almost as if he has come back from Mount Sinai carrying tablets of stone. But Mervyn King is just one man, and not one whose prognostications in the past have proven to be infallible. What is King saying in private that he can’t tell us in public? Why wasn’t it being said before the election? And how has it shattered Clegg’s and Cable’s own views of economic policy so irrevocably? I always knew that both of them were fiscally conservative, but this is radical neo-liberalism. It is the most spectacular policy volte-face I’ve ever seen.

More to the point, why does no-one else in the world appear to be pursuing a similar strategy. The UK is not in the mess that Greece is in, yet the coalition government is behaving as if it is. We know why the Tories want to do this: they’re Tories. I’ve yet to hear a single, coherent Liberal Democrat argument for why we should be going along with this.

The thing is, we do have choices here; lots of them. The government have made two fundamental choices which, on the face of it, contradict the advice of a very large number of economists and thus urgently need to be explained. Firstly, they are seeking to tackle the whole structural deficit within five years (something which the Lib Dems denounced during the election). Secondly, they are seeking to do this overwhelmingly by cutting rather than taxing (something which, to be brutally frank, the Lib Dems fudged during the election). I can see nothing in the OBR figures which suggest that such a strategy would be madness; quite the opposite. If the structural deficit is larger than we imagined, then surely there is a case for tackling it over the longer period of time, and an even greater scope for tax increases? To do otherwise would just risk damaging the economy, surely?

It is one thing to cut £6 billion this year: frankly I was pretty unfazed by that. But the numbers the government has started talking about really will risk – if not guarantee – a double dip recession. Withdraw the amount of money from the economy that we are talking about, and it is hard to see how the outcome will be anything other than negative growth. It actually looks as if, despite all the reassurances a few weeks ago, the government’s agenda is to actually engineer a new recession, seeing it as a necessary bit of pain with a view to long term benefits.

The last time that was done was the early 80s, under Thatcher. The result? In some parts of the country a whole generation was left on the scrapheap. Far from tackling the structural deficit, we’re still paying for it. That shocking welfare bill that Frank Field and Iain Duncan Smith have been given the task of slashing? A large proportion of it is due to the government plonking a large proportion of ex-miners onto incapacity benefit. The price has not just been financial; lives were shorn of value overnight; communities were destroyed; the following generation grew up with no hope and no aspiration. Social mobility fell. This is what shock doctrine economics does to a country and even the Tories pledged we would never return to it.

This brings into question the claims that such a hard and fast approach is progressive from an intergenerational perspective, and also causes us to consider some other worrying trends emerging from the government. Leaving aside David Willetts’ extraordinary views that higher education is an intolerable burden on the taxpayer, we have the fact that one of the main things the government has slashed over the past month has been youth employment schemes. Clegg’s argument that it is progressive to cut now to ensure that future generations don’t end up paying for our mistakes are only actually convincing if the future of those generations are not being curtailed by the same economic policies. Deny a graduate or teenager a chance of either employment or training now, and it won’t matter to them how high taxes are in the future because their own earning potential will go through the floor.

All of this flatly contradicts Clegg’s emphasis on social mobility, or does it? Because when he talks about social mobility, as he did on Thursday, Clegg’s emphasis is all on children. We can all agree that the most effective time in a person’s life to invest in is their early years, but this truism appears to have fallen victim to doctrinal reductionism. Simply put, it makes no sense whatsoever to invest in early years and schools while having nothing to offer people once they hit 16. What is the value in the government creating the most aspirational dole queue in history?

All of this adds up to an emerging picture of futures of the current crop of teenagers and young adults being sacrificed in the name of their younger and older generations. You’ve got to ask what they’ve done to deserve it? Equally, you’ve got to wonder if Clegg and Cameron would be quite as ready to do this if Antonio, Alberto, Miguel, Nancy and Arthur were a little older.

No-one else seems to be taking as much of a hit. Wealth taxes have been almost entirely ruled out, despite the fact that taxes on property values (or, better yet, land values) would have the least negative economic impact. And yet, far from being an economic burden, it is the 14-22 generation that we will largely depend on to make our economic recovery over the next decade a swift one. I am completely mystified; it makes no sense to me whatsoever. It seems to have been concocted by a bunch of people more concerned with sounding tough and being seen to make grown up decisions than actually steering the country down a fair and economically sustainable path. In short, it screams of groupthink; I pray that I’m wrong.

Late last week I spoke to someone on the “inside” and painted them a rosy picture. I speculated that all this doom and gloom that had been coming out of the Treasury and Downing Street over the past fortnight was a shadow play designed to placate the Tory headbangers and that what would emerge would be something surprisingly progressive and far-sighted; people like me all breathe a collective sigh of relief.

I still like to think that is a distinct possibility, but my source didn’t seem to find my theory anything more than charmingly off the ball. If they would at least offer us an actual economic argument, it would be something. Instead we just get echoes of Thatcher’s There Is No Alternative.

Has David Willetts really thought through his pro-tuition fees argument?

I really am starting to wonder if the Tories get economics at all (on a related note, see my latest article on the Social Liberal Forum). In a fascinatingly revealing intemperate rant to the Guardian, David Willetts has described students as a “burden on the taxpayer” and that “the so-called debt [students] have is more like an obligation to pay higher income tax”.

Let’s leave to one side for one moment the idea that investment in HE is little more than a “burden” (so much for the learning economy), or the fact that Willetts is the author of, um, The Pinch: How the Baby Boomers Took Their Children’s Future – And How They Can Give it Back. What is fascinating here is that he seems to think that it is news to people that tuition fees are a tax on students. That’s what the Lib Dems have been saying consistently since they were introduced in 1997!

If we are finally now allowed to start calling a spade a spade without being accused of scaremongering, then great. If tuition fees are a tax, they aren’t a particularly progressive one. People who land into profitable jobs in the private sector will comfortably pay off their fees quickly and subsequently cheaply. Meanwhile, people who choose to do more socially responsible jobs end up paying off the fee for years. In short, the less of a “burden” you are to society, the more you pay. How can Willett’s support that logic?

Since, despite Willetts’ ill-judged comments, it is unlikely the Tories will accept the argument that the best way to pay for higher education is to simply raise the higher rate of income tax itself, it is perhaps time the Lib Dems bit the bullet and accepted that if scrapping the regressive tuition fee system is ever to be affordable we will have to accept the case for a graduate tax. That would ensure that all graduates earning above a certain amount would make a contribution throughout their working lives with the ones who gain the most benefit making the greatest contribution. No longer would graduates start off in life with a mountain of debt to pay off and the wider benefits of the higher education system to society would be better reflected.

In retrospect I fear that my generation botched the chance to change HE funding for the better in the late 90s, getting distracted as we did by tuition fees at the expense of maintenance. Is there a chance we might learn from that mistake now?

Wilfred Emmanuel-Jones: victim or player of the race card?

Back in September last year, I wrote about Chippenham Tory candidate Wilfred Emmanuel-Jones and specifically about his claim that the Lib Dems’ criticism of him not being local had racist undertones (declaration: his rival Duncan Hames is a friend of mine).

I suggested that this was a case of the Tories getting their excuses in early. All the local indications suggested that Chippenham, notionally Lib Dem, was going to stay Lib Dem, and that the “not local” card would have been played just as strongly regardless of his race. And so it proved to be.

It is a shame that Emmanuel-Jones is now choosing to continue with this line of attack, especially given the fact that he spent the election campaign making a big issue out of the fact that Hames himself was not local. But he spectacularly missed the point. Hames was not local in the sense that he was not born in the constituency and had lived elsewhere. That he had lived in the constituency since 2002 and contested the last election in one of its predecessor constituencies was not in doubt. Even his business was called Chippenham Consultants (and had been established before the constituency even existed).

By contrast, the criticisms of Emmanuel-Jones were that he didn’t live locally and that his business and family home were located in Devon. He was the very definition of a candidate who had a vested interest elsewhere. If his opponent had not raised questions about that, they would have been utterly foolish, regardless of skin colour. Either Emmanuel-Jones doesn’t want special favours on account of his race or he does; which is it?

I’m really sorry that even now Emmanuel-Jones still doesn’t see that this is a perfectly valid concern for a potential constituent to have. Even then, he didn’t exactly get wiped out. In fact, he actually increased his share of the vote. The bizarre thing about this racism claim is that, unfortunately, it suggests more than a little sense of entitlement. It is one thing to suggest that Conservative supporters didn’t vote for him because of his skin colour (in fact they did); it is quite another to suggest that Lib Dem and Labour supporters are racist for not voting for him.

I feel sorry for Emmanuel-Jones. Under any fair electoral system, he would be an MP right now I have no doubt. But accusations of racism without foundation are simply smears. I hope that in time he will come to regret making them.

For the record…

I was a bit disappointed by Andy Beckett’s article on the future of the Lib Dems in the Guardian today. It is not that I have been misquoted – although I seem to recall saying that the number of Lib Dem MPs after the next election could be as low as 30 rather than probably 30 (a small but distinct difference). It is just that some of the potshots he makes are rather lazy ones.

I’m annoyed that he repeats the great Orange Book fallacy, that being that the book in question was written by a bunch of right wing idealogues with a specific agenda in mind. In fact, as anyone who has read the book cover to cover can testify, it is a mish mash of chapters which don’t particularly hang together. The only authentically economic liberal chapter is David Laws’ chapter on the NHS – even his chapter on liberalism is more of an overview than anything else. The rest of the book is written by people from all over the Lib Dem political spectrum. Still, the legend is more interesting than the fact, so print the legend. You can’t fault David Laws’ genius for giving his political movement a name simply by publishing a book and shouting about it six months before an election in a way that really annoyed people. At the time it looked reckless and foolish; now it looks inspired (if more than a little devious).

I’m irritated by his quoting of a comment by Joe Edwards on the Social Liberal Forum website. I don’t know Joe Edwards from Adam but if the irate text message from a reliable source I got this morning is correct he is not a Lib Dem member, resigning from the party before the election. He certainly has no association whatsoever with the Social Liberal Forum, and the biography on his blog makes no mention of party membership. Yet the article invites you to infer that he is somehow an SLFer. I thought the practice of quoting comments from blogs had been discredited by the West Wing?

Finally, just to clarify my position about the “long game” and the “short game”. I do see the Lib Dems taking a hit in popularity at the next election (assuming neither the Tories nor Labour self-destruct, which isn’t entirely impossible), but I wasn’t merely arguing that the party would crawl back in the long run. My point was that this government’s political reforms, if fully implemented, will transform UK politics for the long term and that in the long run the Lib Dems will get credit for that. And even if the party doesn’t get the credit, those reforms should be worth the hit.