Amidst the understandable UK media attention to the great performances of Team GB there has been little comment on the titanic struggle at the top of the Medals Table between the USA and China. China  spent most of the Games just ahead, though faltered at the end compared to the USA.  Doubtless China was not expecting a crushing victory over the USA on the scale of Beijing, when China won 51 Gold medals to 36 by the USA, with the benefit of home advantage and the massive effort she put into doing well as host nation. This year is however important. It reminds us all that China is now the serious and established challenger to the US in sport. There have only been two teams in the competition to lead the Medals table from the beginning.  This has come to represent a wider truth, in the economy and world politics.

           Olympic Games should be a celebration of sport and its ability to unite peoples from a wide range of countries and cultures to enjoy together a shared passion. However, there is often a political message or undercurrent, intensified by the convention that people represent their country and display their flags with pride.

               The political message of the 1936 Games in  Germany  that Germany was the power to be reckoned with, was challenged by the stunning victory of Jesse Owens from the USA in the 100 metres.  The unexpected victory of  Abebe Bikila, a late entrant from Ethiopia, in the Marathon at the 1960 Rome Games also told a political story. Legend has it that he surged to victory from the obelisk taken from his homeland by the Italian fascist government during their period of occupation of his country. Running barefoot made the story more poignant and more remarkable.

                In “Superpower Struggles” published in 2005 I argued ” The EU has its global pretensions, but  is unlikely to emerge as a superpower….A much more effective competitor to the US….is rising in the Far East…” “There was no more magnificent image of China joining the first world… than the Chinese Grand Prix, held for the first time in 2004….China will make an even more dramatic statement to the world when she unveils  the 2008 Olympics in Beijing.” I charted her economic rise, predicting rapid moves into second place by the second decade of this century.

                 Much of this has now happened. London 2012 should serve to remind us whilst we still live in an American led world, the challenger to the US is now primarily China, as an economy, as a sporting nation, and in due course as a military power.

           Mitt Romney’s choice of running mate has galvanised Republican support for their candidate, and has ensured there will be a big debate in the USA over how to tackle the deficit and promote faster growth. Paul Ryan believes in cutting spending and cutting tax rates. He will give Democrats under Obama, and the so called “liberal” intelligentsia in the UK, a new hate figure.

           Some in the UK have sought to contrast the USA, growing a bit under current policies, with the UK, not growing at all. They have suggested this is because Obama has carried on spending whilst the UK has “cut too far too fast”. The  arrival of Mr Ryan on the scene provides a useful opportunity to remember the published  figures.

          Since 2010 UK total public spending has risen by 6.1%, with fast growth in current spending of 11.4%  more than offsetting the cuts in capital spending which the Coalition have continued from Labour’s plans. Meanwhile, in the USA Obama’s 9.8% increase in federal spending has been partially offset by  a 2.5% cash cut in State and local spending, meaning that US total public spending has risen a shade  less quickly than the UK’s.

         The big difference between US and UK policy has been on the tax side. The US has continued with lower tax rates. As   a result it has an economy which has grown faster, and done better at increasing tax collection. The US has also been quicker at fixing its main banks, which has helped.

          Listening to debates this week on whether Scotland should stay in the UK or not, I have been struck by the irony of the situation.

          Ever tolerant England agrees that Scotland should only stay in the union of the UK if most of her people are happy to do so. England will not stand in the way of a referendum for Scotland. Indeed, many English people want Scotland to get on with it and have the referendum as soon as possible. Unionists amongst us want the issue resolved, as we only want a union with volunteers. English people who would like Scotland to leave also think an early decision would be a good idea.

          Meanwhile many English people have no wish to be part of a country called Europe, governed from Brussels. Instead of Brussels encouraging a referendum and understanding English feelings, the EU does everything  it can to suppress Englishness,even  refusing to recognise the country and taking it off all its maps. The EU seeks to balkanise us, regularly criticises us for daring to be Eurosceptic, and generally conducts itself in a high handed and undemocratic manner.

         Our main political parties go along with the SNP idea of a referendum over the future composition of the union of the UK just in Scotland, and also go along with Mr Salmond’s delayed timing, as he pores over polls to see if he can ever find a time when he might win it. The three main parties also refuse England the referendum it wants on our collective membership of the EU through the UK.

          The issue of the UK’s membership of the EU is of course thrown up in the air by the possible exit of Scotland from the UK.  Technically if Scotland leaves our union, the UK has ceased to exist. Scotland says she will seek her own membership of the EU. That poses the interesting question of whether she will be able to without offering to join the Euro. That in turn raises the issue of how she could offer that as her current plan under the SNP is to remain in sterling using the Bank of England.

               Meanwhile, many politicians seem to  want us to believe the rest of the UK minus Scotland would continue with exactly the same terms of membership of the EU as the whole UK currently enjoys. Why? Surely the rest of the EU would want us to accept fewer MEPs, and the UK would need at the very least to negotiate new financial arrangements that reflected a smaller country.  In practice most English people would regard any exit of Scotland as an excellent opportunity to have a very different relationship with the EU than the UK currently suffers. The EU should not take for granted continuing membership of the residual country.

              The three main parties will discover, as the debate on Scottish independence gets on its long and twisting road, that the problem of England and the issue of the EU has to loom large in the debate. The EU may think it can sit it out and refuse to comment on the EU consequences of any Scottish withdrawal. This unsatisfactory cop out will not wash. The Scottish debate is likely to radicalise the English more. More will want England minus Scotland to be treated better, and will want to break the stranglehold of unloved EU government over the English regions, as the EU refuses to recognise the stronger sense of identity that is emerging in England as Scottish nationalists wrap themselves in the saltire.

           The many detailed complications coming out about how Scotland would leave the UK union serves to turn the spotlight on all those areas where England thinks she gets a bad deal from the existing union, as well as from the EU. England needs her identity to be recognised, and the UK needs to be properly self governing again. The Scottish debate  should allow others of us to argue that it is not just the position of Scotland in the union that is up for question, but the UK’s subservience to the ever more powerful EU and the poor treatment afforded England.  It makes the case for a referendum on EU matters even more compelling.

         Last night the BBC allowed a debate on the UK’s future in or out of the EU. Evan Davis chaired it well and allowed those arguing for the UK to leave and have a new relationship based on trade and friendship to make the case and appear sensible. The BBC format, of course, gave the main position to an avowed Europhile, who trotted out all the usual lies – apparently the EU has  kept the peace in Europe since 1945,  they would not allow the UK any changes to its current arrangements, they would retaliate successfully if we left etc etc. Sir Stephen, the pro EU anchor man,  seemed reluctant to talk about the main project of the EU, the Euro, and seemed unable to grasp the simple fact that when it comes to trade and money the rest of the EU has much more to lose from UK exit than the UK does.

               The resignation of “A” lister Louise Mensch so soon after becoming an MP has created an interesting political opportunity for the parties. Corby is a Conservative marginal. It is exactly the kind of seat Labour has to win convincingly in a by election to show they are a credible contestant to govern next time. It should be  in UKIP’s own thinking an ideal contest for UKIP to prove its own rhetoric that the public are now desperate to leave the EU and prepared to vote for that.

                UKIP contributors here are always telling me that UKIP is now poised to break through. They tell me Mr Farage is a far more electable and popular a politician than the three main party leaders. Will Mr Farage contest Corby himself?  If not, why not? In a by election like this, UKIP could expect to get more publicity than in a General Election if polls showed it  likely to they would  experience any surge in support.

                It is also of course a good test for the UKIP proposition that they are out to pressurise Mr Cameron into adopting a more Eurosceptic policy. There is always a danger for Mr Cameron in a marginal seat that UKIP could gift the seat to Labour by detaching sufficient Conservative voters to allow federalist Labour to win. My guess is Mr Cameron will not think this a likely outcome,  or will not think he should make any concession to UKIP. I do not expect him to  make any announcement offering a referendum soon or a renegotiation to get powers back.

               I suspect the Corby by election will come and go without helping us resolve the obvious need for the UK to have a new relationship with the EU, as it rushes headlong to an unfortunate political union.

2010 General Election    Conservative 42.2%, Labour 38.6%, Lib Dem 14.5%, BNP 4.5%

UKIP    polled 0.9% in 1997, 1.8% in 2001, 2.6% in 2005 and did not contest Corby in 2010. UKIP gained 16.4% of the vote in the East Midlands in the 2009 European elections and 3.1% overall across the UK  in the 2010 General Election.

                   This week the Chancellor made an important speech about energy policy. He was able to point to a surge of new investment and large projects to find and deliver offshore oil and gas,following his tax incentives in the Budget.

                      His own experience of oil and gas taxation should be an endorsement for the proposition that you raise more tax and get more success if you charge rates that companies are prepared to pay. His first chosen level of oil taxation, to get the industry to make a bigger contribution to cutting the deficit, was a turn off. New offshore activity fell sharply, as oil companies ran the  numbers and decided at those tax rates it made little sense to undertake risky marginal projects in the UK. The Chancellor’s change of heart got them to re-run the sums. With the new more favourable tax trateament there will be much more activity, and more oil and gas produced. That in turn will of course yield more revenue, from the extra production and the extra jobs it creates.

                   Seeing this work with oil taxes, the government should now ask how can they pull off this feat of cutting rates or making allowances more generous in a way which produces more revenue? Fortunately, UK tax rates on enterprises and personal endeavour are now uncompetitive, so more or less any reduction in rate is going to yield more revenue and more activity. The CGT rate is too high, so the yield is falling. The top rate of Income Tax is too high, so revenues have plunged. The government has grasped this point with Corporation tax, and is rightly cutting the rate. Their own forecasts expect Corporation Tax to be buoyant as a result. It’s time to do the same with Income Tax and CGT.

                 They need to carry on taking people out of Income Tax, to avoid the expensive overlap of distributing means tested benefits with one hand and removing money in Income Tax with another. They also need to look at the growing numbers of people on middle incomes being dragged into 40% tax rates when they need the cash to pay the family bills. The threshold for higher rate tax is now too low.

          The Bank of England has caught up with the rest of the economic forecasting world. Yesterday it acknowledged that its previous UK growth forecasts were too optimistic. 2012 is going to be a disappointing year.

           There is almost universal agreement amongst the political parties, Central bankers and the rest of the UK financial establishment, that the UK economy needs to grow again.  Envious eyes are cast across the Atlantic to the USA, experiencing slow but sustained growth since the Credit Crunch. Their combination of lower tax rates, bigger cuts in public spending at the State level than the UK is attempting, and  mended banks, is working better than our policy mix for the time being.

          This autumn the Coalition will relaunch itself, shorn of the large problem of Lords reform. Instead of using up political capital and a lot of Parliamentary time on a reform which had many critics, they have a chance to revisit the economic policy and do what it takes to push the economy into growth. So what should they do?

        Readers of this site will know I have long favoured the strategy of cutting the deficit primarily by spending reductions. The government said this would be their approach, but they put up overall public spending  instead.  This needs to be  allied to sorting out the problem banks quickly and setting competitive tax rates that people are prepared to pay.  This still makes sense. Income tax revenues have fallen too far, thanks to the higher rate. New enterprise and business has been put off by the tax and regulatory regime. Private sector demand has been weak owing to high tax rates and higher inflation than was desirable. The government said it planned to squeeze the public sector, but squeezed the private sector instead.

           I have not been a great fan of the Bank’s Quantitative easing  programme. I have always argued that with broken banks there is no easy transmission mechanism to get the money created into the private sector to fuel the recovery. If there were then they would need to be careful about overdoing it and triggering inflation. Keeping the state’s borrowing costs down is marginally helpful but it does not send a signal that we need to shift resources and activity from public to private sectors, to tackle the deficit problem. It has allowed the state to go on spending well beyond its means. It has not lifted us into growth despite the positive contribution to growth as officially defined by the rise in real public spending. Nor is it right to say it is loans and credit, rather than money we lack. The private sector is squeezed of cash, but parts of it remain highly borrowed.

          As the Bank clearly  wishes to address the shortage of money by creating large quantities,why doesn’t it  use  the newly printed money  in the private sector instead of  providing cheap funds indirectly to the public sector? I hasten to add I am not advocating this policy.   Did they look at the Japanese experience both of QE and of giving money directly to voters to spend?           Tomorrow I will look again at a tax based stimulus, the approach I favour. This would lead to a lower, not higher, deficit.

           The Bank of England’s  downgrade of UK growth prospects is not surprising, but leaves it at variance with the Treasury forecasts published in the last Budget.  The Treasury forecast 0.8% growth in 2012, 2% in 2013, 2.7% in 2014 and 3% in 2015. This made a total of 8.7% for the four years.

            Looking at the Bank’s fan chart, they have growth well down for each of those four years, with  a total of around 5% and a peak level of around 2% not 3%.  If the Bank is right and the Treasury have to lower their forecasts next time, that will mean a further addition to state borrowing levels, as the automatic stabilisers will mean less tax revenue and more benefit spending than the Treasury forecasts.

                  As I sit in my Westminster office I can look out at a Central London where many people have decided to work from home, fearing they cannot travel in  easily to their usual place of work. It means I can get in and out of the centre much more easily than normal.

                   To many work is still defined by the old factory pattern of the industrial era. People still think a full time job entails attending a factory or office five days a week, and working around 8 hours there each day. The day starts at somewhere between 8 and 9.30 am.  Shift working means doing the same at “anti social”hours, so you might need to start earlier or finish later than the typical 9-5. Remuneration patterns may still reflect this sense of “normal” hours and abnormal hours, with “compensation” for working outside the “working day”. Overtime is paid if you need to work more than the specified hours.

                     The truth now is far more complex for many of us. Highly automated factories need far less labour, but they often need to work the machines round the clock with a three shift pattern. There is no magic to the 9-5 period.  Many service sector businesses need to provide service in the evenings and week-ends. It’s no use wanting to be a retailer but having an aversion to working on Saturdays, the biggest day of the trading week.  It’s no good being in the aviation business if you want to be back home by 6pm every evening.

                     Many executives and professionals work far more than forty hours a week, but may do so “flexibly”, having some choice over where and when they get through the pile of work they have to do. My job as an MP is a good example of how work can be carried out at many times  and in many places.  I offer a reply service to emails and calls seven days a week, and regard myself as  being on call at all times if there were to be a local disaster or serious problem.  I work considerably more than forty hours, but do not sit down in my Westminster office five days a week between the hours of 9 am and 5 pm. I probably do most of the computer and email work from home, but do not have time or the wish  to keep records of how long I spend each day doing it. Indeed, how do you account for time reading newspapers or watching the news? Is that relaxation, or part of the job?  Is attending a local event work, if I go in an official capacity, and pleasure if I go of my own accord?  The dividing line between work and lesiure breaks down in busy and interesting jobs. Do Directors and senior business executives hosting corporate hospitality boxes regard that as work or pleasure?

                More and more people are now taking jobs which require this kind of flexibility. More and more jobs require professional standards and continuous training or striving for improvement. More jobs can now be carried out remotely, away from the office.  More jobs have features which people enjoy and would wish to do anyway, as well as drudgery or unwelcome tasks which have to be done.

                It is time to rethink what we mean by work, and to ask more questions about whether homeworking can become a way of raising productivity and relieving strains on the peak hour transport systems. There will always be those who think homeworking is skiving, and for some it can  be another way of being unproductive. For others it can be a way of raising concentration levels, free from office distractions, and cutting out the wasted time of travelling to a segregated place of work. We need to concentrate more  on getting the tasks done and the work performed, and less  on the hours and place of work.

          There was much grand drama, technical wizadry and fine moments in the Olympics opening ceremony.  There was also a look at history, contrasting a rural Merry pre industrial  Britain with the powerful dark satanic mills and forges of the industrial revolution.

          The UK’s attitude towards the Industrial revolution has always been complex and bitter sweet.  The Labour thesis has roundly condemned enterprise capitalism for industrialising on the grounds that factories  exploited labour, paid poor wages, and ignored health and safety. At the same time the Labour tradition has praised the emergence of unions and collective action, made possible by large scale factory organisation, and wants the UK to be a strong industrial power with more factories than we currently sport. Wiser heads in the Labour movement accept that industrialisation raised overall living standards and permitted the creation of more better paid jobs. They acknowledge that there was a big problem of rural poverty and poor living standards before the first  factories sprung from the rural landscape.

              The Conservative side was more often than not defensive of the agrarian society and critical of the new men of industry who became the new rich. Conservatives had to make their peace with the industrial interests as they became successful. There was always a strong  strand of Conservative social action wanting improvements in the regulation of working conditions and urging the abolition of child labour and other abuses, to match the work of the Trade Unionists.  

               The truth is, however, that many people volunteered to leave the land and travel to the cities to find work. By modern standards the wages were poor, the hours too long and the housing conditons unacceptable. They were, however, an improvement for some on the poverty and poor housing in rural areas.  Britain became the workshop of the world, and with it one of the richest countries on the planet, with living standards on average much higher than in the many agricultural societies abroad.

                 Today, as we survey the progress of countries from poverty to better living standards, it is normal for the successful ones to have to undergo their own industrial revolution, producing a vast increase in homes in cities and usually starting with long hours and low paid jobs in factories. If you wish to have a balanced view of the process of idustrialisation it is important to remember that many came to the cities to better themselves and raise their incomes. Industry did produce many good cheap products, to allow the poor to enjoy some of the goods and services of life that were once the prerogative of the rich.  It was not all dark satanic mills and exploiting mill owners getting rich whilst suppressing everyone else. In the UK there is a proud tradition too  of the garden city, the enlightened employer, the cleaner and more humane factory, the movement from low wages for low output to high productivity and better pay.

              To understand modern Britain we not only need to celebrate social progress through campaigns and Parliamentary action to raise standards and guide conduct. We also need to understand just how important industrialisation was to advancing living standards and giving the UK a leading place in world markets. It was not just dirty chimneys but also china plates, metal cutlery and colourful clothes for all.

           When I stepped out of my car to pay the car parking charges in Windsor on Saturday morning I was full of apprehension. There was a person in LOCOG clothing watching me. I had ringing in my mind the many officious emails I had received as someone who had dared to buy a ticket to go to the Olympic rowing.

          I had been told on no account to go by car. I had been told there would be nowhere to park and nowhere to drop off by the games. Was I going to be sent back to the Maidenhead park and ride?  I had been told to buy my railway tickets early, even though there was no obvious way for me to get there by train at the early hour in the morning they told me I had to go. Indeed the railway website routed me via London the night before.  The railway company of course stayed silent, failing to contact me as a potential passenger. Probably they failed  to do so as they knew that as they were putting on no specials from anywhere near me there was no point. I would explain patiently if asked that I had examined the train option and found there wasn’t one which worked.

            I had in my mind that I could not take a large umbrella even though it was clearly going to deluge.  Surely the umbrella I had selected was small enough to squeak by? Had I perhaps offended against the rules on what I could take with me?  I had made sure there was no bottle of more than 100ml with me, but was she worried about the bulge of the binoculars in my pocket?  Perhaps taking a mac as well as a jacket was against the regulations? I readied myself for the questions and the likely official mind seeking to find fault with my preparations to be a spectator.

             The first suprise I had was the empty car park and the absence of any prohibition on parking there for the morning. I did not have to retrace my drive to Maidenhead as I had feared. The second amazing surpise was the lady in the official clothing  smiled at me, and called out that I should walk following the pink signs to get to the rowing!  She wanted me to have a nice day, did not object to my way of travel or dress, and was trying to help. It made my day.

             It made me realise just how cowed we have all become by the endless petty minded officiousness in our daily lives in  the snooper society.  The Locog emails and literature had seemed just like that – the worst kind of airport bossiness, treating  spectators out to have a good time as possible threats to the planet if they dared to use a car, and possible threats to security if they came with a bottle of water in their bag.  Instead I found an army of volunteers helping us spectators on our way to the games, as we walked the thirty minutes from Windsor to the venue. They were cheery, encouraging, friendly. They did not voice a single criticism of how we were turned out. There were people with big umbrellas and large bags filled with all sorts of things that probably offended against the email holy grail, but no-one seemed to mind.

               As we got nearer the venue the trickle of walkers became a torrent, a happy flow of people out to have an enjoyable morning watching great athletes at the top of their game. We watched empty buses rushing by, with no stops along the walk to pick any of us up. We walked past an enormous car park, presumably reserved for officialdom, and past the car and taxi drop off point which did not exist for us.   I thought the walk was an enjoyable start, given the friendliness of it all. The security post was well manned and allowed us through easily, making the necessary checks. Despite the large number of people, the security posts did not create a queue when I went through, as there seemed to be plenty of entry points, personnel and scanners. The army personnel manning them were polite and efficient.

               We endured a downpour in the early races, but everyone remained good spirited. The volunteers were everywhere trying to help the visitors,  were polite, happy, positive and informative. Instead of criticising spectator choices, they told you where the queues for food were shorter if you needed to know, told you how far you were from your destination, or helped you find your seat. The spectators were happy and in good voice. I was close to Australian and New Zealand supporters, who cheered their teams strongly to the general aproval of the many Brits in the crowd.

                The sun came out just in time for the four big medal winning races. Team GB was in the first three, and  powered to two golds and a silver. It was a great event, with the sport well managed and the competitors in good form.

                 Please can officialdom learn from the volunteers? They made the day happier and easier for all concerned. It was such a relief to be allowed to enoy yourself, instead of feeling you were competing in  the compliance hurdles.