Ozzy's Corner

A view from the Libertarian Left. With no spin


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The Left Should Unite and Strike Now

“Anyone in this party who’s in any doubt who we should be fighting, what we should be debating, where our energies should be focused – I tell you: our battle is with Labour. This is a bunch of self-satisfied Labour socialists who think they can spend your money better than you can, make decisions better than you can and tell you what to do, and we should never, ever let that lot near government again.”

David Cameron, Conservative Spring Conference, 16th March 2013.

This passage from David Cameron reveals the hole in which he and his party find themselves.

The Conservatives surely never thought it could get as bad as this. Several things have come together.

Firstly, their key aim of this Parliament was the elimination of the deficit, an aim now stretched out way into the the distance. The austerity medicine delivered has killed patient. 2013, instead of seeing strong economic growth as predicted on 2010, is a zero growth struggling mess.The Government is actually more more money, not less, to plug that gap left by anemic economic activity.

Secondly, David Cameron policies have been a story of flip-flop, cock-up and disaster. The Coalition agreement always a back-of-the-fag-packet look about, and this has been borne out in practice Some policies such as NHS and education reform have been carried our despite deep unpopularity and the obvious fact they will not work. Other policies have been ditched for no reason other trying to popular after the event, such as the minimum price of alcohol.

Thirdly, they expected Ed Miliband to be a disaster. To their shock, Ed has not only not been a disaster, he is doing well. The Labour Party has not fallen apart, but has actually been a successful tactical opposition at least. This week’s PMQ’s, with Ed’s joke about organising things in a brewery, demonstrated the it is David Cameron, not Ed Miliband who appears on the back foot and struggling.

Not only does the Prime Minister have a united opposition to trouble him. The Conservative Party is split and ill-disciplined about issues such as gay marriage and Europe. Many Tory MPs see the Prime Minister’s stance as not Conservative enough, blaming the Liberal Democrats for unduly influencing the Coalition. This has created an opportunity that UKIP has taken with both hands. Eastleigh’s by election humiliation, where UKIP forced the Conservatives into third, was a stinging blow.

The polls also show no comfort either. A recent large poll by Lord Ashcroft showed how successful Labour could be in 2015 and how poor Conservative supporters thought their chances were. Polls have been showing a strong Labour lead of about 10 points for many months.

All these factors led David Cameron to his speech. He knows he is looking down the barrel of defeat if he gets to 2015 as leader. He also knows that he is polling the sort of numbers that Maggie Thatcher was when removed as leader. In addition, he knows that polling at the low 30’s is the irreducible core vote that they got at their biggest kicking in the modern era – 1997.

So should Labour prepare for Government?

Labour is in a strong position, yet quite frankly have done very little. To just allow the Government enough rope to hang himself is not enough. It is complacent and will not allow Ed to lead what would be needed in 2015 – a national renewal on the scale of 1945,

The real fear for Labour has always been stigmatised with being associated tax and spending. Virtually all we have heard from the Government since 2010 is blaming Labour for spending too much. Labour has meekly defended itself at best, and so it has stuck firmly despite being fundamentally wrong.

In addition, the signs are that Labour are drifting to the next election with caution, and a probability to match the Conservatives spending plans as Tony Blair and Gordon Brown did in 1997.

This would be very bad, as the clear aim of Cameron’s Government has been to privatise health and education, destroy the public sector and dismantle the welfare state. Another five years of following this Governments spending plans would make these changes permanent. What is required is a clear and loud rejection of austerity, and a laying to rest the economic myths that have now sadly become unquestioned. Anyone who thinks that these myths are true, don’t listen to amateur left bloggers, read the works of Paul Krugman (Nobel prize winning economist) and others.

Given the weakness of the Conservatives, now is the time to strike and strike hard. Labour now has only a few years to set out an alternative economic agenda. It will take time to blow away the myths, and this conversation may not be easy.

Labour needs to articulate their plans for health and education, and on how key services can be better by not auctioning them off to highest bidder. We need to accept that the treatment of the poor, frail and elderly in the UK is a disgusting abuse that shames us all. Vulnerable people need the dignity and care they deserve in a civilised society.

The need for not just growth, but the right growth should be made. We don’t need everyone to buy a new TV or pile money again into a housing bubble, we need to grow by building low carbon energy technologies that supply us for decades cleanly and safely. We need to build in infrastructure – better, cleaner transport and high-speed broadband – that can be the backbone of future businesses. We need to ensure we build enough high quality housing to ensure that everyone can live in a modern, energy efficient home that ordinary people can afford.

The values of our society need to be challenged. As a nation we simply cannot accept the inequality hard-wired into our economic system. Work should earn a living wage, and excessive salaries by the elite should be both limited and action taken to ensure they are not squirreled away in off-shore tax havens.

These are the bold messages that Labour should be shouting from the roof tops now, and every minute up the next election. Labour are well placed to lead a coalition of the left, and with the agenda set out here would surely drive Cameron and company out of Downing Street and deliver a society we could all be proud of.

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The economy will doom the Tories if Labour can come up with a plan

The recent downgrading of the UK by Moodys from it’s AAA credit rating will certainly create problems for the Government.

It will make little difference to the UK financially. The UK’s financial position is well known and money markets will have been building this into prices for some time. Similar downgrades in the US and France have not made a real difference to their borrowing costs.

However, the Chancellor and the Government have had their credibility damaged. The perception of lost credibility is very dangerous, and once lost is hard to get back. In September 1992, just months after a remarkable election victory, Black Wednesday damaged the Major Government permanently.

George Osborne was already looking in a poor position, with his Austerity programme being stretch way beyond the period promised in 2010. Growth has stalled badly.

‘It’s the economy stupid’ is the political reality. It sums the fact that a Government need not be that popular, if the public feel that their jobs and economic future looks secure with them. Analysis of YouGov data since 2010 on this very issue paints the Government in a poor position. YouGov run a tracking poll that asks respondents which party is best for the economy in general. In June 2010 the Conservatives topped the poll with 37% vs Labour’s 26%. However, the poll in February 2013 showed a fall down to 27%. The data is plotted below:

Best Party

The same data has been plotted on a CUSUM chart. This essentially shows the trends beneath the noise:

Best Party Cusum

What is clear is that the Conservatives have been in free fall since around March 2012. This is a reference to the ‘omnishambles’ budget, and they have not recovered since. What is also noticeable is the fact the Labour has not felt any benefit, merely moving from 26% in June 2010 to 28% in February 2013.

The notable beneficiary of this has been ‘None’, moving from  7% to 13%. Quite simply increasing numbers of people feel that no party offers any prospect of improving the economy. They have lost faith in the Conservatives, but don’t feel Labour offers anything better. This finding is demonstrated by the correlation between the Conservative figure and the none figure (-0.75). The correlation of the Conservative to the Labour figure is a much worse -0.29.

The outlook for the UK economy is currently poor for the next few years. There looks to be no prospect of a change in economic fortune that would restore credibility back to the Conservatives. Our main trading partners in Europe are suffering very badly, and the overall picture is one of bouncing along the bottom of a long period of low or no growth.

Labour does have a open goal here, if they can have faith in plan not based on Austerity, but one of serious and sustained investment. The last few months has seen some speeches where Ed Miliband has begun to articulate an alternative, yet this embryonic economic plan needs much more flesh and bone. This plan cannot be Austerity-lite, but something different. The price of not creating and articulating this vision could be to enter the next election giving the Conservatives a chance it simply does not deserve.

Labour failing to beat the Conservatives in 2015 would be unforgivable.

 


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The Lessons for Labour

We are approaching half time in this Parliamentary term.

Team Cameron are looking worried. Labour, having appointed a new young Leader, are 2 – 0 up at half time. Ed Miliband had a slow start, but has grown in confidence. David Cameron found hostile economic winds blowing in his face from the Euro crisis, and own goals by his key player, his Chancellor , have left his side up against it.

While 2015 is not in the bag for Labour, they are in a good position, with a 10 % lead solidifying in the polls. The Conservatives need about a 10% swing from Labour to have the chance of winning an outright majority. Given the sluggish economy, real cuts to people’s living standards and the inevitable tension between the Coalition partners as they begin to fight for a distinct pre-election identity, this looks an uphill task.

The first challenge is how to get the economy working again. Any fair-minded person must accept the global economy as a whole, especially the Euro-zone crisis, is an ill wind beyond the control of the UK Government. The Euro-zone crisis looks to be nowhere near a conclusion. The reality is that any Government in power now has a poor hand to play with. While Labour might claim they would not have made the same mistakes as this Government, we will never know. It is likely they would have had great difficulties too. While the global economy struggles, so will the UK economy.

Secondly, the Coalition always looked an unlikely partnership. In many areas of policy – Europe, education, health and taxation to name a few – the heart of the Conservative party and the Liberal Democrats beat to a different rhythm. The Coalition Agreement was not a well thought out document. It was a quickly cobbled together set of policies to straddle the major differences between the parties. It has been clear that the poor implementation of the policies, the U-turns and the major revisions to key legislation are all symptomatic to the back-of-the-fag-packet agreement.

This has led to Liberal Democrat MPs voting through policies based on an ideology most of them have spent a lifetime in politics fighting. Conservative MPs also feel fatally compromised on totemic issue like Europe. Both Coalition parties have lost traditional support because of this. They will need to break free and set out their own stalls before the next General Election to try to get that support back. When this occurs the Coalition will become paralysed and totally dysfunctional. David Cameron’s MPs demonstrated over the reform of the House of Lords that they are willing to to break rank. Rebellion is running wild.

Given this then, what can Ed Miliband learn? How can he make Labour’s lead more than a protest vote that will drain away?

The key is the economy. Mistakes have been made by the Coalition, but saying in essence that we wouldn’t start from here is inadequate. Recent polling evidence from YouGov demonstrates that when asked, less that 20% of respondents think George Osborne is doing a good job, and over 50% think he is doing a bad job. Yet despite this, there is very little improvement in Labour’s economic credibility. The public basically don’t trust the Coalition or Labour to make it better.

Labour really needs a good idea of how it would make a difference and engage the public directly. Do they want to cut the deficit? If so, how quickly or slowly? Which taxes would they raise? Which areas of spending would they cut? If further investment in infrastructure was to occur, which projects would they be, how much would it cost and where would the money come from? Until these answers are forthcoming, then their economic competency ratings will not improve.

Another area is it’s response to the NHS reforms made by the Coalition and other policy areas. Rather than policies pulled out the hat eight weeks before the next election, it really needs well thought out policies prepared and a strategy to deliver them. These policies need to live, and updated as time elapses, so that whenever the election is called, they are ‘shovel ready’. The public need to really start to understand what a Labour Government in 2015 might do if the lead they enjoy is to really stick.

The next election could easily result in another Coalition. It was reported in June this year that Senior Liberal Democrats were meeting Senior Labour figures. Labour needs to ensure that it keeps it’s options open, despite an obvious severe and understandable dislike of the Coalition at present. The Liberal Democrats post 2015 will be different, and would be likely partners should Ed not secure a majority. Areas of common ground between Labour and the Liberals Democrats would considerable.

Ed can sit his team down at half time and be satisfied. However, the real work in providing an alternative Government in 2015 has barely begun.


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Francois Hollande – a Sheep in a Wolf’s Clothing?

Francois Hollande swept into power, not only with the hopes of French voters behind him, but also with the hopes of the whole of the European left.

The Euro crisis looks no nearer to being solved than a year ago. The only solution sanctioned by the European and world financial elite, lashing of austerity, is clearly not working. The European economy is bogged down and going nowhere.

The price paid by the people of Greece is terrible. Listening to Radio 4 today, poor Greek women giving birth in hospital are being bullied into paying over € 1,000, under the threat of the hospital not allowing them to have their children unless it is paid.

Both Greece and Italy have Leaders that have not been elected, but forced upon them to deliver austerity by the IMF, World bank and the Central European Bank.

The European banks are sitting on huge amounts of toxic debt. To admit the true scale of this time-bomb could sink the capital bases of the Europe banking system, bringing much needed credit grinding to a halt.

Against this backdrop Francois Hollande won the French Presidency by promising growth, higher taxes for the richest people in France and employing more teachers – instead of austerity.

A stated aim within his campaign was to renegotiate the stability pact. This pact is appalling in democratic terms, and is only fit for the dustbin. It is one of the final pieces in making a federal Europe. If a nation chooses to invest seriously in its infrastructure by running a deficit of 5% for a few years rather than a prescribed 3%, it is no-one else’s business. The budget of a nation is its own business. The trouble with the single currency is plain to see. Monetary union can’t work without fiscal union. Fiscal union is political union by default. Political union is both unwanted by the people of Europe and undemocratic. Francois Hollande needs to do more than just tab a few growth policies onto this pact – this is not enough.

The BBC’s Stephen Evans reported:

President Hollande did what it seems likely that President Nicolas Sarkozy would have done: he asserted, as one with Chancellor Angela Merkel, that (1) Greece should remain within the euro and (2) that it should adhere to the painful commitments already made.

http://www.bbc.co.uk/news/world-europe-18087085

The situation is critical in Greece, a microcosm of the every problem with the Euro. Yet Mr Hollande seems keen to maintain the ostrich stance that has totally paralysed Europe’s Leaders.

It’s early days, but I fear that pinning hopes on a Europe based on the values of people, not the markets, on Francois Hollande may well lead to disappointment.


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The Left Should Support Universal Benefits

The reignited row over the proposals to withdraw Child Benefit from higher rate tax payers in April demonstrates an important principle that the left needs to firmly grasp.

The basic issue is that if one parent is a higher rate tax payer, then the benefit is removed. This leads to a blindingly obvious ‘cliff-edge’, using a phrase coined by the PM. If only one parent works and earns £45,000 per year, the whole benefit goes. However, if both parents earn £40,000 per year, despite the family earning 77% more, they keep the benefit.

This is the simple problem with all means-tested benefits. They always have an arbitrary cut off point. Who can decide whether £35,000 or £40,000 is the right level? You can live in a small house in Middlesbrough, and a family income of £30,000 would leave you much better off after the mortgage has been paid than earning £45,000 in Kensington. Each city contains the variations within them too. Therefore, setting arbitrary cut off points is an endlessly impossible task.

Further, means tested benefits are subject to the law of diminishing returns. The more strictly that rules are applied, the more it costs to administer, reducing the size of the pot to pay out.

Also, such strict application procedures are known to put off genuine claimants. The DWP reported in 2005 that the level of fraud for DLA was a mere 0.5% or £40 million pounds. The benefit is hard to get and the procedure very complicated, and many who need it and are eligible for the benefit are simply are put off.

It must be understood  that the nature of humans creating a system for others to work to will always have the chance for fraud. I would rather have a 95% take up rate with a 3% fraud rate than have a 75% take up rate and 1% fraud.

Politically, means tested benefits are difficult too. If those who pay taxes into the system get less out, the political support for the system will decline. The poor will suffer most in these circumstances.

I support a system where the poorest pay nothing in, middle earners pay in about what they get  out, and higher earners pay more in than they get out. I understand that is redistributing income. While the highest earners still get the benefit, they have massively overpaid into the system to start with.

Tax credits are good in intention, but flawed in my view. Why? Ultimately general taxation is subsidising low wages. Low wages are part of our flawed neo-liberal economic system, and so to reduce the effect on the poor tax credits were developed. I would rather have a real living wage in place, and then we would not need to top up people’s wages from taxation.

This is an opportunity for the left to be principled and get support from a huge number of people by championing universal benefits. It must be understood that increasing the means testing of benefits will lead to the destruction of the welfare state as support for it declines, and the insurance based system present in the USA will come to us, with terrible consequences for those most in need.