Category: Blog

 

          This week new analysis showed that the Parliament first elected in May 2010 has been more rebellious by far than the Thatcher, Major, Blair and Brown led Parliaments. Conservative MPs have been the most rebellious.

          This should come as no suprise. Coalition governments are by nature different from majority governments. The Coalition is not enacting the Conservative manifesto, so it does not have the automatic loyalty that comes from fighting an election on  a common platform. Whips cannot appeal to MPs who are unhappy with something by reminding them  that their election was helped by the presence of this item in the manifesto, even if they themselves did not like it. Conservative MPs were not invited to a full meeting where we could all put our views about the potential Coalition before it went ahead, unlike Lib Dem MPs. No vote of Conservative MPs  was taken over it.

            However, I do not think the main reason Conservatives have been so rebellious is the existence of a coalition. Whilst some Conservative members think Lib Dems have influenced the government too much, there is not a huge amount of evidence to support that claim. It is true one of the most unpopular policies of the Coalition, the higher tuition fees, was worked out and proposed by a Lib Dem Secretary of State, but it is difficult to believe that either a Conservative or a Labour majority government would have come up with very different proposals in the circumstances. Both the main parties had given Browne a fair wind to produce his report and might have stayed a bit closer to it, but the differences were  not huge. It is true the Lib Dems pressed a referendum vote on a different voting system against Conservative wishes, but the public dismissed it.

          No. The main reason the Conservatives are rebellious is the EU. There are more rebellions on EU matters than others. And many of the issues which anger or annoy Conservative MPs are ones where EU law now has a considerable impact on what any Minister is allowed to do.

          Carbon taxes, renewables and dearer energy, fortnightly bin collections, votes for prisoners, higher spending to fuel the EU  budget, bail outs of Euroland countries, immigrati0n rules, human rights requirements for political correctness – all these matters are  determined by the EU or are areas where Ministerial action is very circumscribed by the EU or the ECHR.

           The EU has induced a dishonesty in UK politics over the years. Ministers do not normally come to the Commons and say they are  proposing this solely because we have to comply with EU requirements, though much of our legislation is now to do just that. It may well be that individual Ministers do think the same as the EU on matters like recycling or dearer energy, so they are telling the truth when the recommend these courses of action to us. Overall, however, the impression is given that the UK government still has plenty of freedom to choose its own way, when in many areas it does not.

             Conservatives in the government say they wish to limit immigration. Yet we all know that they cannot impose controls on EU immigration, including migrants from outside the EU who have spent some time in another EU country, unless EU law is changed. The government says it wishes to deregulate industry and commerce, yet  much of the regulation is now baked into the European system and cannot be repealed. Ministers say they are establishing a new UK system of financial regulation, yet in reality they are agreeing to the EU undertaking more and more of the controlling functions in financial regulation.

              The government is usually able to ignore the numerous Conservative Eurosceptics, because Labour and the Lib Dems agree with much of the EU lawmaking. It might be wise, however, for the government to amend its rhetoric on issues where the EU is in charge, and admit it. It would also be wise for the government to seek more powers back for the UK as the EU seeks our agreement to a further centralising drive in the name of saving the Euro. Conservatives at base worry more that any UK government now is just the provincial outpost of Brussels, than they worry about the balance of the Coalition.

 

Political commentators think something important happened yesterday when the slumbering press problems sprung to prominence.  Chris Bryant, who moved the special debate on the phone hacking affair, deliberately brought several newspapers into the frame in addition to  the News International stable. The TV and radio media stressed that they thought the whole question of the relationship between those in authority and the media is up for change. The Prime Minister and the Attorney General who spoke for the government in the debate talked of more than one enquiry, and seem to have in mind something very wide ranging.

We should expect the media to use this opportunity to get in some digs at their newspaper rivals. So far the spotlight has not fallen on the methods of tv and radio journalists. The newspapers themselves are locked in a brutal circulation war brought on by technology and the big increase in media outlets. Some of them will not be able to resist good copy if it emerges from this set of problems. The media loves talking about itself.

Politicians who realised that any complaints and action about media techniques of information gathering could look self serving if the issues were about celebrity privacy can now say the debate is about something much wider, with an impact on the victims of nasty crimes and tragedies. I suspect the significance of what happened yesterday is being overstated. It was interesting to hear how significant many politicians think a headline or story in a paper is. I have always thought the reality of what is happening and what is being done  was more important, and the way it impacts on people’s lives. For every unhelpful story about someone or something you can usually find a helpful one somewhere else.

I would be interested in your views on what has gone wrong and what should be done about it. I will not be able to post anything that might prejudice a trial of named individuals or institutions, as we are told there are important investigations underway into possible criminal activity. One of the issues that does need discussing is the way the media reports the interviewing of witnesses and possible suspects whilst an important criminal investigation is underway. People who are  not subsequently charged and are therefore innocent can have their name and reputation badly damaged if reports that they are suspects are clumsily handled.

 

             On Monday night I was lobbied strongly to get the government to cut overseas aid. It was not the first time, and doubtless will not be the last that this happens.

              My adviser was someone who helps raise money for charity in the UK, someone with a strong conscience about poverty and lack of freedom around the world. She passed me a copy of a book which she wants the Prime Minister to read.  The book is called “Dead Aid”, written by Dambisa Moyo, a Zambian economist.

                UK politicians often like endorsements, quotes from well placed people to back up the view the politician wishes to espouse. Miss Moyo has some interesting quotes from the other side of the Aid argument. Her case is that “over the last thirty years , the most aid dependent countries have exhibited growth rates averaging minus 0.2% per annum”

                She prays in aid African leaders with direct experience of aid which fails to deliver:

Rwanda’s President Kagame (2007)  “In the last 50 years you have spent US$400 billionin aid toAfrica. What is there to show for it?…..in other cases they (the donors) have simply associated with the wrong people and money gets lost  and ends up in people’s pockets..”

Senegal’s President Wade (2002)  “I’ve never seen a country develop itself through aid or credit. Countries that have developed…have all believed in free markets. Africa took the wrong road after independence”

President Kagame: “The primary reason (failure of aid) is…much of this aid was spent on creating and sustaining client regimes of one type of another, with minimal regard to development outcomes…”

Miss Moyo charts how aid is misdirected, funds the wrong projects, sustains conspicuous consumption by rich elites, fuels repressive regimes and stimulates conflicts. She quotes liberally from World Bank and other international research to show how much money has been watsed and why the results have in many cases been so disappointing.

When I have discussed all this with Mr Andrew Mitchell, the Development Secretary, he assures me the UK government is remodelling aid to avoid the obvious mistakes of past programmes attacked in this book.

 

           The £9.3 billion for the IMF passed in Committee by 10 votes to 6 today. The Committee divided on party lines.

            Bill Cash, Steve Baker, Douglas Carswell, Peter Bone and I went and spoke against, but we were not voting members of the Committee. Graham Stringer and Gisela Stuart also spoke against from the Labour side.

             Douglas memorably said of the Greek bail out “It is the first time in history that they have been ladling the water into the boat”

              I raised the issues we have been talking about on this site.

 

           The Report published yestersay into care for the elderly posed the question what is fair between the generations?

           Should the elderly person pay for their care in a Care home, if they have capital available to do so? Or should the rest of society pay for that elderly person’s care, so they can pass on their accumulated wealth to their children? Or should the children of elderly parents in need of care help pay, if they are to inherit the assets that are saved?

            There are several possible answers to this question.

            The answer that successive governments have accepted up to today rests on the proposition that any elderly person who can afford to pay for their care home should do so. Those who cannot afford it will be paid for by the state. If an elderly person no longer can live in their own home, that home is sold so the proceeds can pay the bills for rent and service at the Care home. If the elderly person has no means of their own then the state will provide, just as the state provides benefit and pension assistance for them to live in their own home when still capable.

           Some want to go to a new model, where the provision of accommodation and hotel services is regarded as part of the elderly person’s care package. All the bills would then be paid by taxpayers, leaving the family of the elderly person free to inherit the full value of the elderly person’s former home, and any other assets acquired over their lfietime.

            The Report proposes a mixed answer. The first £35,000 of  residential care costs would be paid for by the elderly person, and any balance paid for by taxpayers. It invites a debate over what sum between £25,000 and £50,000 would be an appropriate level of  commitment from the elderly person.

               The baby boomer generation is sometimes  said to have been the lucky generation. No overseas wars were fought requiring compulsory call up. House prices over most of the baby boomer’s lifetimes boomed. It was the first generation where a majority owned their own home, and where they made good money as a result. It is, of course true that some baby boomers were not so rich or lucky. It is also true that if you need to live in your own home its value does not add to your income or your spending power.

               To many baby boomers it would seem natural and be popular for the state to pick up more of the costs of care  for frail and elderly parents no longer able to look after themselves. The children would then inherit more, which they in turn could pass on to their own children. In their turn baby boomers would benefit from taxpayer assistance if they need nursing home care.

              It is likely to prove a popualr policy. It also poses the question of how should it be paid for? Labour’s so called death tax did not seem a popular way. There will doubtless be other suggestions of which tax or taxes could be raised to pay the bills. What is clear is that someone has to pay for it. The children who inherit may inherit more if we go for the Report’s conclusions, but they will in turn have to pay more tax to meet the state’s bills for this provision.  The popularity of the measure with the potential heirs will be tempered if the tax to pay for it is not popular.

           Mr Dilnot has suggested a National Insurance levy on retired people. That will be unpopular, as it means those who have saved and been prudent will pay yet more tax in retirement than those who have not. The underlying truth is this. The nation cannot get something for nothing. The money has run out and there are limits to how much can be borrowed.

              I would be interested to hear your thoughts on whether this is a good scheme or not.

 

        On Tuesday morning  this SI Committee in Committee Room 14 at the Commons will allow  ninety minutes consideration of the extra £9.5 billion for the IMF. Some or even much of this money will be lent to Euroland countries in trouble. As  a comparison the Coalition government cut Labour’s spending plans by £5.2 billion in 2010-11 and by £9 billion in 2011-12.

 

There is another leak, this time from Dr Roy Spendlove to Dame Lucy Doolittle

 

Dear Lucy,

I have returned to work after the day of action about pensions. I hope you realise just how strongly many of us feel about the pensions issue. I am pleased to report strong support for our principled stance, with all my main reports joining the industrial action.

You asked me to review progress with the government’s main aims one year on. Pressure of work has made this difficult, but I am now in a position to send you a preliminary outline of our findings.

The government’s stated main aim is to cut the deficit. The civil service has consistently advised that this has to be done mainly by higher taxes rather than by inappropriate spending cuts. The government has raised VAT, confirmed the increases in Income Tax and National Insurance commenced by the previous government, and increased taxes on banks and oil companies. In their first year they were persuaded to allow increases of more than 5% in cash spending. We warned them that this was still tight, and there have been some signs of strain within the public sector as a result. This year they want to limit increases to 3.8%. The pay freeze and pensions attack are both unfortunate and will result in a further erosion of morale and the loss of some good people.

From here I am concerned about the government’s deficit cutting strategy. I think it unrealistic. I do not see  how the government can reduce the cash spending increases to the very low levels ;planned for the last three years of the strategy. I think we all have a duty to spell out the consequences, as this will represent real cuts. The government also needs to allow for the increased spending on EU programmes and on the necessary solidarity expenditures for Eurozone member states.  Our preliminary advice is the government should revisit the Red Book targets in good time for the  Autumn Statement, and should increase the spending lines. It should explain to markets that it needs to take this action to reflect the slower rate of growth being forecast worldwide, and to help avoid a worsening of the position in our main export markets in Europe. Support for EU governments is also support for European banks. If Ministers do not come to the aid of weak banks the recovery will suffer.

The government has also made much of its intention to cut immigration to tens of thousands a year from the much higher levels of recent years. In its first year immigration remained at higher levels. Our advice again is to come up  with a more realistic statement of the position. Much of the inward migration has come from within the EU. The UK is committed to common  borders with our European partners. The government in its more thoughtful statements exempts EU migration from its aspirations. It is important that the language on the overall objectives is moderated to allow for this reality. We also need to stress to Ministers the importance of the Higher and Further Education sector to the UK and therefore the need to allow foreign students to enter. International human rights legislation puts on the UK strong obligations to let in asylum seekers. We need to ensure Ministers live up to the high standards the Uk sets for itself in these areas.

In its early days the government briefed that it intended to be  radical government undertaking wide ranging reforms of public services. In the first year we have seen them largely abandon their forest sale plans, have a pause to reconsider the wide ranging health reforms, and take a more measured approach to the speed of welfare reform. We have successfully changed Ministers minds on large computer schemes, persuading them of the wisdom of such approaches to both tax and welfare reform. We have further work to do to explain to them that if they wish to push through radical reform from the centre there are limits to what they can do with their so called localist agenda. I think they may discover that some of  the welfare changes they have pencilled in for the second half of this Parliament may not look so appealing when they see the full detail nearer the time. It is also doubtful how much of the very extensive computer systems can be delivered as quickly as Ministers would like. The government is pressing ahead with  Academies and a limited number of free schools. There were troubles with their over hasty cancellation of the Schools for the future programme, and I fear there could be more legal and administrative challenges over free schools.  Some of our colleagues in DFE are concerned about the pace of the changes.

Ministers are now saying that they cannot deliver the welfare to work programme if migration continues at current levels. I suggest we put to them options for tackling this, as it is difficult to forsee a sudden collapse in migration. I fear all options will  cost more money, but Ministers will have to learn that you cannot undertake these big tasks on the cheap.

Please let me know if you would like further work on these outline conclusions. Given all that we are doing on HS2, renewable energy and the EU response to Greece, I will need additional staffing if you need a detailed paper on these large and complex themes.

 

Yours ever

Roy

 

There are few signs of the spending cuts when you try to drive around the UK.  The other evening I found simultaneous  road works on the M1, M3, M4, M 40, A 404 (M) and A 322. There is  a large programme of bridge changes over railway lines being undertaken, along with substantial alterations to central reservations and motorway signs .

In many towns and cities there are continuous works to narrow lanes,to  put in larger pedestrian refuges, introduce new road  closures and cycleways. London itself is under continuous road works, with expensive new pavements, new higher kerbs, wider pavements, new central reservations, cycle lanes and pedestrianisation.

Some work is necessary maintenance and some work is improvement. It is however surprising that there is so much money for so much of this work at this juncture, when we have been told getting the deficit down is the number one priority, and when Councils tell us they are short of cash. The work is causing considerable congestion and disruption to England’s inadequate highways.

Are you finding the same thing in your area? Is anything being done to reduce congestion and pollution, by improving traffic flows, increasing capacity and safety of junctions and making life easier for all those who do have to rely on cars and lorries? If there is so much money to spend, could some of it be used to improve flows in ways which means the roads work better and more safely? Why do some transport planners want trains to go faster and faster, but cars to go slower and slower? Faster trains and slower cars both mean more fuel  burnt, the way they are doing it.

 

Yesterday’s strikes passed without huge passion or support. The Labour party did not come out for the strikers. Union leaders were split over the wisdom of the strikes. Most newspapers wrote mildly in support of the government’s approach to public sector pensions.

Some public sector employees feel strongly that their pensions should not be altered. They should understand that the government has promised to honour all  pledges made to date – there will be no attempt to take away pension entitlement already earned. The pensions issue has created a divide in the country between public and private.

A couple of decades ago the defence of the more generous index linked public pension was simple. Public sector employees on average earned less than  their private sector neighbours. They were given a better relative deal in retirement as some compensation. The funded public sector schemes were capable of paying the future pensions.

The last twenty years have seen three hugely important changes. The first was the rapid increase in public sector pay, leading to the average public sector worker now earning a little bit more than the average private sector employee. The second has been the big increase in longevity, as better diets, lifestyles and health care have enabled many more to live in to their 80s and 90s. The private sector, once the home of the final salary pension plan, was hit badly by the taxes imposed on pension plans in the 1990s, and by the poor investment returns of the noughties. Companies have in the main closed their funds to new members, many to new accruals. A significant number of funds have been closed down altogether.

As a result we now have pensions apartheid in this country. Many in the private sector think it most unfair they have to pay more tax on their lower earnings to pay for generous pension schemes in the public sector that they cannot enjoy. Some wanted the new government to do to public pensions what has been done to private sector pensions. They wanted the funds closed to new members, and maybe to new accrual as well.

Instead, the government has gone for a more moderate approach which will still leave the public sector with more generous pensions than the private. The government is proposing that indexation be switched from RPI to CPI, that the age of retirement be delayed and that public sector employees contribute more themselves for their pension provision. The details of the changes are up for negotiation.

The country cannot afford to pay for a large number of public employees to retire at 60, or even at 65, on final salary pensions indexed to the RPI. The outgoing Labour government admitted that, and a former Labour Cabinet Minister has prepared the Report on pension changes that the government is using as its text for the deal on offer.

Something has to give. If anything  governments have been   slow to raise the retirement age in line with rising expectations of longevity.The total pension liabilities of the UK state are bigger than the national debt, and do need controlling.

The  government must not concede or lose the argument about affordability. On BBC figures there will be an increase of £2.4 billion a year in the taxpayer cost of public pensions between this year and 2015-16. That means each family having to pay around £500 a year more tax to meet the bill. The accumulated capital cost of the unfunded schemes and the deficits on the funded ones now amounts to a debt of around £20,000 for every man, woman and child in the country. There has to be some limit. Let us hope both sides negotiate about what that limit should be, and then agree the best way of hitting that target with least damage to the future benefits of public sector pension recipients.