Month: April 2011

                  I read that Ed Balls is querying the wisdom of the UK helping Portugal with a bail out. As an opponent of expensive bails outs in general – they do not solve the underlying problems – I welcome that. As a  stronger opponent of UK contributions to Euro bail outs –  as we are not part of the folly of a currency in search of a country to control it – I welcome this for its own sake.

                I also welcome it, in case it is part of a new approach to the EU  by Her Majesty’s Opposition. For too long in the UK we have had two parties that accept more or less anything coming from the EU, and just shout at the Tories that they are being underminded by Eurosceptics. This was factually untrue, but it conspired at many crucial times to ensure the UK signed up to more and more of the federal plans from the EU against the wishes of the majority of voters. When it came to elections voters voted for the two  federalist parties  in sufficient numbers to keep the UK establishment on track with the main thrust of the EU plan. The reasoned Euroscepticism of the overwhelming  majority of Conservatives was unable to deploy to drive national policy for lack of numbers, and owing to the leadership’s past response to the majority  national politicians’ mood of collaboration. The Euroscepticism of many Labour and Union members was suppressed, as a supposed way of dealing with the Tories.

                Today both Labour and C onservative leaderships seem to sense a new national mood which is sceptical of the high spending plans of the EU, and worried about the way the UK is being drawn into financing and guaranteeing the borrowing of a number of EU states. The mood on the doorsteps is clear. Many do think the UK has to rein in its own state spending and borrowing. Most think charity begins at home, and dislike any suggestion that we should be involved in higher spending and borrowing to help relatively rich countries on the continent, especially as much of that spending is of questionable value and purpose.

               The UK needs to be able to have an intelligent debate on what its relationship should be with the emerging country of the Eurozone. All parties say they agree the UK should not join a political or monetary union. One is forming rapidly on the continent. The six pack of economic governance measures, and the financial structure of bail out and bind in for Euro members takes that process much further. If the UK have an Opposition that welcomes that debate and asks some tough questions of the government about the UK’s role within or outside that development Parliament will do a better job. I suspect some Euroscepticism will make Labour more popular, but that is a price worth paying for proper scrutiny of these crucial issues.

               Only if the Opposition in Parliament is prepared occasionally to question and vote against the drive to EU and Euro union will the British public have more reassurance that we cannot be bundled into a financial union by stealth or absent mindedness, or by a government saying it cannot keep out owing to EU qualified  majority voting and past agreements of the previous government.

              To have both main parties querying the size and the expansion plans of the EU budget, and to have both saying they are worried about the Portuguese bail out is progress. They are both getting closer to the national mood. Let us hope they keep this sensible approach up after May 5th. Let us hope when Parliament is allowed to reconvene there is a new realism about the UK’s future relationship with the Eurozone. Above all let us hope stricter limits are placed on how much the UK contributes financially to this dangerous and economically damaging continental  monetary experiment.

                   NATO is clearly looking for new ways to continue its intervention in Libya. We have heard of the use of drones and military advisers in recent days.  It needs to remember it is operating under a UN Resolution which only allows it to help save civilian lives. It does not have legal cover to kill civilians, to intervene on one side in the civil war or to enforce regime change.

                 Using air power only allows the destruction of heavy weaponry from the air when it is not close to civilians. As Libyan government forces now mainly operate street by street within cities it cannot be used to hold them back. Using drones is going to be difficult in such circumstances as well. They may be better targetted than bombs from warplanes, but there is still a danger of civilians being killed when letting them off in congested areas and narrow streets.

                 So why doesn’t the UN or NATO consider talks with the cause of their grief, the Libyan government? As NATO are not allowed to use all means to defeat him owing to the UN constraint and the wish to avoid more civilian deaths at the hands of NATO, wouldn’t it make sense to talk to the Libyan regime to see if there can be any diplomatic way of relieving the pressure on certain Libyan civilians from their government? What is there to lose from such an approach? How else is this all going to end, if the people of Libya are not about to evict their ruler, and if the friends and allies of Gaddafi still intend to keep him in power?

               Yesterday’s news broadcasts usually referred to the 0.2% increase in retail spending in March. I did not hear any BBC news broadcast mention the fact that public spending was 5.1% higher in 2010-11 than the previous year, though that too was announced yesterday.

            As the BBC seem to welcome every spending increase and condemn every cut, you would have thought they would welcome such news and want people to know that more of their money was being spent.  Nor did I hear them tell us that we had all paid 6.9% more in tax last year than the year before. Again you would have thought they would be ringing bells in joy at this, as so many of their broadcasts seem to urge higher taxation, to pay for the higher spending they favour.

                Easter is a  bitter sweet festival. First comes the grim Friday. Churches are stripped bare. Christians are in mourning. The Gospel story is at its most harrowing, the story of the judicial killing of  a man who had done no criminal wrong. For the rest of the country it is a day off.

               Then comes the joy of Easter Sunday. The Christian message of resurrection becomes entwined with old pagan rites of Spring, new birth and revival. A modern commercial festival of shopping and indulgence is built on the back of the twin origins. The chocolate makers share the day with the egg producers, the spring lamb farmers and the poultry magnates. The many  celebrate plenty around the Easter table.

              Almost 2000 years on from the cruel events in Jerusalem it is one of those ironies that conflict and violent death still cluster around the streets of some Middle Eastern towns. In 33 AD the Romans were finding decision making as the colonial government difficult with a noisy crowd wanting to influence decisions of life and death. In 2011 AD the western powers want to influence the government of Libya, but do not wish to put troops on the ground as the Romans did, and as the allies have done very recently in Iraq and Afghanistan.

                Today’s Romans are more circumspect about military involvement, preferring to leave the difficult engagements to the French, British and Americans. Maybe the poor press Pontius Pilate received for harnessing popular opinion to guide his decisions as a judge have left a long shadow. It has taught latter day Romans how difficult it is to govern another’s country.  Maybe it is just more prosaic worries about the impact on trade and migrant flows if Italy were to take a tougher line.

                 The Easter stories provide a background to  what should be a happy festival, about new life and the triumph of good over evil. The problem this Easter, as on so many other occasions, is the West is still finding it difficult to learn from the problems of the past when it comes to intervening in the government of the Middle East. The Easter present I would like is acknowledgement that the West cannot settle the government of Libya. The UN should  not go beyond a No fly zone, which should be policed by the near neighbours, not the UK.

              Today we see figures for the state of the public finances over the last financial year, 2010-11.

              Current public spending is up by 5.1%. Tax revenues are up by 6.9%. Additional  Public Sector Net borrowing after financial sector interventions  falls from £156.5 billion 2009-10, to £141 billion 2010-11.  In other words every man woman and child owes £2350 more this April than last April if you share the government borrowing out equally.

              You could not make it up. The EU is busy lecturing all its member states to get their budget deficits down. Well they are not always wrong. They are telling states to cut spending and raise more tax revenue. At the same time they want them to pursue a growth strategy, which needs lower tax rates, not higher. So why on earth are they at the same time demanding a higher spending budget for themelves?

               Surely as they demand or impose austerity on struggling Euro members, they should be taking the lead and pruning their own budgets?  It would be good if they showed the way, by proposing an eye catching 10% off through efficiency savings and a smaller overhead. Even better if they proved they do now believe in subsidiarity and local decisions, by offering to cut out whole programmes. Why not end most of  the agricultural programme and leave that to individual member states, who could  achieve more for less? Why not end the EU’s programme of overseas aid, and let states do their own thing in the parts of the world they know best?  And why not repatriate fishing policy whilst they are about. it. That would make them popular for once in the UK.

                         Given the scale of the financial crisis being hurled at the EU it is time for radical reforms and brave departures. It is time for the EU government to give us a lead. They say they mean it when they urge lower deficits and lower spending. Surely then they need to pioneer, trail blaze, blast a way through the EU satrapies themselves. Then we might believe them when they say the way out of this crisis is better housekeeping.

                            They should see the growing restlessness of electorates around the EU. Many more people are coming  to realise there is no more money. There are limits to how much Germany, the UK and France can finance, limits to how much subsidy  can be transferred, limits to how much taxpayers throughout the EU are prepared to pay for their European government. The EU should note that the bond markets strongly believe Greece will be the first but maybe not the only EU state which will renege on its debt because it has borrowed and spent too much. Why doesn’t the EU help it by cutting its own spending, instead of giving it more expensive lectures on austerity and putting up the bill for those same lectures?

               There are three big areas where public spending can be cut without touching the core public services which are popular with many voters.  These are unemployment costs by getting unemployment down, money given away overseas, and the costs of regulation. Cutters can also look at  services and activities not valued by so many or as strongly as the core services.

            All political parties agree on the need to get unemployment down, though there are arguments about how you do it. Much is riding on the government’s welfare reform programmes, designed to equip people to work and to give them the incentive to find a job. The UK cannot afford more than 5 million people of working age on benefits.

             The issue of giving money away overseas is far more contentious. Now our gross contribution to the EU is around £20 billion a year it is a major item. The money we get back often comes back in the form of payment for spending that is marginal, little valued, or could be better controlled and spent under a UK programme. Overseas aid at £8 billion a year does not all go to the relief of famine and disaster, or entirely to very poor countries. The work being done to improve the effectiveness and to target the direction of the spending could allow reductions in the level of total spending for at least a year or two whilst we get the national accounts into better balance and work out more effective ways of using overseas aid. Many of us see no reason why the Uk should be contributing to Euro area bail outs. Nor should the UK pick up a large bill to help the UN in Libya, when others are better placed to do that.

                 The costs of policing and complying with all the regulations heaped on us over the last decade or more by a hyper active national and EU government should also be the centre of the deficit reduction programme. The UK needs a great Statute of Repeal, to confine to the dustbin of history many of the needless or infuriating measures passed in recent years. They were often the sledgehammer to miss the nut. There may have been a very worthwhile and moral purpose, but the regulation usually failed to tackle the heart of the abuse whilst burdening the many largely law abiding with big costs and complexities.

            I suspect the government itself will conclude that items one and three are central to its task of deficit reduction, but will prove shy of tackling the easy money going abroad. High on the list of areas outside the core services  that bloggers would like to see reduced are all the different expenses on climate change. That too may prove too difficult for this government.

              The decision to supply protective clothing and now to offer military advisers to the rebels in Libya is an important development  in the UK’s mission. This is more than operating a No fly zone, more than using high flying military intervention to prevent the Libyan  government using warplanes and tanks in open ground against Libyan people. This is offering military advice to just one side in a bitter dispute, which looks like a civil war to some outsiders.

               It would be wise to take the whole problem back to the UN and seek a review of the policy and the UN resolution. Is the UN satisfied with what has now been achieved in its name? What does the UN think should happen next? If more is to be done in the name of the UN, which other countries, preferably nearer to Libya than ourselves, might like to do it? The UN using NATO could stop tanks in open ground heading for the rebel city, but it cannot stop government troops from the air when they a embedded in  cities and towns.

                          The US has been able to borrow larger sums for longer than European countries. More people and countries around the world will accept dollars and lend money to the USA.

                          Even the USA will discover there are limits to how much other people’s money you can spend before they refuse to lend you so much on such favourable terms. The politicians in Washington had realised that before Standard and Poors yesterday put the  USA on  notice of a possible downgrade of its credit status. A mild rebuke from the Agency attracted a lot of media attention. It has given the US politicians another push in the direction of deficit cutting.  The Agency did not take sides between the Democrats who want more to come from taxes, and the Tea Party members who want more to come from spending cuts. In a run up to a Presidential election there will be plenty of politics in arguing over how, how much and when deficit reducing measures should be put in.

                 Meanwhile expect the lawmakers to agree that their current limit of $14 trillion of borrowing  is simply not generous enough. This will be relaxed.