 | Jacob's views |
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Tuesday, 02 June, 2009
 | European Election 2009 |
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There is a great frustration and disjunction between voters and politicians in this country. The normal political platitudes are rolled out while the electors are baying for change. In the middle of this come the European parliamentary elections. Normally these are an anaesthetic to political controversy. This time they have a certain significance.
This specific election will make few hearts beat faster as the whole structure could be designed to create torpor. The allocation of seats is worked out on a complicated system few understand. There is no ability to support or reject individuals as the party lists are set centrally. The regions are vast – the South West includes Gibraltar – leaving little link between voter and member. Those elected then serve in a peripatetic parliament at vast cost and have limited clear cut power. Even ardent supporters of the European parliament call it a ‘pan-European soapbox’ which at a cost of £1.16billion per annum is a rather gilded soapbox
Yet this election counts for two reasons. First it is a nationwide election providing an opportunity for judgement to be passed on the current government. The words ‘mene, mene, tekel, upharsin’ come to mind – ‘you have been weighed in the balance and found wanting’ is a fair appraisal of Gordon Brown’s stewardship. Assuming Labour is below 20% it would vindicate David Cameron’s call for a general election and perhaps this exhausted government could be put out of its misery. There is no constitutional requirement for this but the disquiet about politicians’ behaviour makes a new mandate desirable. Representative democracy is the best form of government yet developed but throughout history the motives of some of the participants have been questioned. Occasionally this becomes the overwhelming concern of the electors and when it does the solution is to have an election which cleans the system.
Second, it is a chance to finish the business of the Lisbon Treaty. Labour and the Liberal Democrats both promised a referendum on the almost identical Constitution which they conveniently dropped once they were safely through the 2005 election. This is typical of the way pro-Europeans have tried to lull us unto a federal super-state. It is this type of behaviour that makes voters feel that politicians cannot be trusted. Perhaps this current crisis will encourage all of us not to over promise and to deliver on what we do promise. The Conservatives continue to call for a referendum and this poll may be used as one. Every vote for the Conservatives, among others, is one against the Lisbon Treaty and it will be interesting to discover, when the votes are counted on Sunday, how many voters want to see the further integration of Europe. A strong anti-Lisbon vote will make it easier for Euro Sceptics to continue the campaign against this treaty being foist upon us.
The usual form is to say that these elections concern the functioning of policy making at the European level and to gas on about how we can make our voice heard in the corridors of power. This time it is different and most people will not vote on such a basis. It is a referendum on the government and on Lisbon. A strong Conservative vote uncluttered by fringe parties could provide the impetus for a general election and a better government for our country.
Tuesday, 28 April, 2009
| The Budget |
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The real shock of the budget was not the proposals to increase taxes. After running out of stealth taxes it is hardly a surprise that direct tax rates should rise. The surprise was the level of debt forecast which are almost certainly too low. The worst manufacturing figures since the war showed the economy to be in as even worse state than the Government expects so debt will rise further.
It is worth remembering that debt is merely taxation delayed – it has to be pad for eventually plus interest. This is why David Cameron is right to predict an era of austerity. We cannot continue to live off the earnings of future generations. The country will need to start living within its means which requires reductions in public spending. It cannot be prudent for Government expenditure to account for half the economy.
As has been typical of the Government its costs will fall especially hard on Somerset. It has pushed more taxes onto those things that people who do not live in cities cannot avoid. The increase in fuel duty, which comes into effect in September and will then keep rising, will hurt rural families and businesses far more than urban areas.
Pubs, which have been struggling as the Government ignores their pleas for assistance, will be hit again as alcohol duty – which rose in December – will continue to increase above inflation on beer, cider, spirits and wine. This will punish responsible landlords operating in a harsh business environment and it will do nothing to reduce problem drinking.
Alastair Darling has also announced an increase for National Insurance. This is a tax on jobs that discourages local firms from hiring more staff, whilst potentially forcing them to reduce costs by cutting wages or jobs. This tax will mean that anyone on over £20,000 a year will lose out. In B&NES the average annual wage is just over £26,000 (source Nomis) meaning most local people will be worse off thanks to this budget.
Labour has neglected our area for over a decade and now it is taking more money from us yet again. We will all have to tighten our belts but it is wrong that Somerset is once more hit so hard.
Monday, 16 February, 2009
| Unemployment in North East Somerset |
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Last week’s unemployment data show a worrying trend for North East Somerset. Male unemployment in Bath and North East Somerset rose by 113% in the year to 8th January, while female unemployment was up by 185% as measured by those claiming Job Seekers Allowance. Although these numbers are from a low base, it is none the less shocking to see so great a rise. It means that over a thousand more people and their families are now dependent on Job Seekers Allowance than were one year ago.
This is the human cost of the credit crunch. Families have been hit by collapsing house prices, first time buyers cannot get a mortgage and jobs are harder to find.
This is not a problem made in the United States as Gordon Brown would have us believe. It is a British problem that has been caused in part by Labour policies. The move of bank regulation away from the Bank of England to the FSA was a mistake. The instruction to the Bank of England to focus on consumer prices and to ignore the rising asset prices, when setting interest rates, was an error. The failure to take responsibility is a disgrace.
The bankers, who have at least had the decency to apologise, have to take their share of the blame and the global situation is bleak. That does not excuse home grown policy blunders which are making life uncertain and insecure for hundreds of families in North East Somerset.
Friday, 02 January, 2009
| New Year Message |
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The New Year is an appropriate time to consider hangovers and their cures. Overindulgence leads to dehydration, headaches and in severe cases delirium tremens. Much energy is devoted to debating various cures: to Jeeves’s secret remedy via the odd aspirin to the hair of the dog. The same debate greets 2009 with regard to the economy.
The binge was the result of the largest boom in British economic history which lasted almost 16 years. Inflation stayed low as emerging markets with low wage rates and high competition produced manufactured goods at low prices while India began delivering inexpensive services as well. Economic activity increased, fuelled by debt, which was then recycled in increasingly complex derivative forms. This was apparently bought by some people who could barely spell the word derivative let alone understand the product. Those who were the greatest beneficiaries of all this now empathise with Ozymandias, King of Kings looking on their works, they despair.
The hangover from this binge is now affecting people around the world. The collapse in trade is worse than any reasonable forecaster or business planner could have expected. Volvo saw its sales of lorries fall by 99.7% from 41,970 in the third quarter of 2007 to just 115 in the third quarter of 2008. Retailers are unlikely to have had a good Christmas and polls indicate that a high proportion of people will cut back in 2009. Is there a cure for what is clearly a delirium tremens type hangover?
First, the cause needs to be identified - what was the alcohol in the grape juice or juniper berries? The answer is debt. The amazing level of growth came off the back of the greatest credit creation ever seen. Figures show that the United Kingdom’s total public and private debt could be as high as 400% of gross domestic product (GDP) which is even higher than the 350% in the United States. This led the boom in asset prices and paid for the consumption of goods and services which we enjoyed. Policy makers slept the deepest slumber of contented complacency as long as the boom lasted. The Government now favours the hair of the dog solution to persuade the banks to lend to people who cannot afford to borrow and for us to start spending again money we do not have. Like the drink the morning after, this may provide a short time palliative but by mid-day the hangover will be worse and the fundamental problem unaddressed.
Unfortunately this massive debt burden needs to be paid off and there are three ways of doing it; none of which is comfortable in the short term. There is default where lenders simply lose money and have to cut their total lending. This is already happening. Also, there is repayment, which is equally taking place. Both the UK and the US have seen net mortgage repayments; in America this is the first time since 1952. Then there is inflation which the central bankers are toying with like a child playing with matches. The first two depress economic activity in the short term but form the base for the next expansion. The last seems like a short cut but risks ending up like Zimbabwe.
This is a cautious New Year’s message - beware the easy solution. There is hope as even the worst hangover apparently goes in time and ‘tempus fugit’. We will get nearer to a solution as long as we resolve not to repeat the problem.
With very best wishes for a Happy and, if at all possible, prosperous New Year.
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