In June 2010 many would have said Labour was going to spend a long time in opposition. The Labour government that presided over the trip to the IMF and the recessions of the 1970s left such a legacy of distrust that Labour stayed out of government until 1997. The Conservative government that entered the Exchange Rate Mechanism leading to the recession of the early 1990s has kept the Conservatives from a majority ever since. Surely, many thought, presiding over the huge boom and bust of the last decade and presiding over bank bankruptcies that no-one had seen before in the UK, would mean something similar for Labour?

Yet Labour is now regularly 10% or more ahead in opinion polls, just two years after their bad defeat in 2010. They can thank the Lib Dems for that.

It has been traditional for Conservatives and many in the media to be dismissive of Ed Miliband. I have always advised colleagues to take him seriously and not to underestimate him. His campaign over Murdoch led to the Leveson enquiry which will do damage to the Coalition with the media. His wish to change perceptions of Labour’s approach to immigration is a necessary part of his journey to reconnect with lost Labour voters.  Mr Balls has  associated them  with a growth agenda, which  is shrewd political positioning given the state of the world economy.

However, the main reason he is riding high in the polls is that a large number of Lib Dem voters have defected in despair over the Coaltion. The Lib Dems as an opposition party always faced two ways. In Labour seats they posed as the more “left wing” alternative. They gently chided Labour for failing to spend enough public money, for failing to regulate enough, for failing to take up left liberal causes. They made some progress with Labour voters who disliked Blair’s third way spray paint to have some Tory colour. In Conservative seats they posed as Tories with a conscience, as a milder version of Conservative commonsense. They aimed to be to the bigger government side  of the Conservatives, but not too far away.  Their one principled stand in both areas was on the EU, where they were always the more EU party. It was one of the main reasons they always came a poor third.

Dr Cable’s strange decision to invent and back a scheme for tuition fees was probably the main trigger for the departure of a large number of Lib Dem voters to Labour, early in the life of the government. The fact that they joined  the party that first invented and introduced tuition fees was an irony lost on them. This has given depleted Labour a additional natural bloc of around 10% of the vote. It is the main change that has happened. It has more to do with the Lib Dems than with Labour, but it is a potentially tranformative shift in UK politics.

This would not matter so much to David Cameron’s Conservatives, if the Conservative vote was holding. There should be a good 40% plus body of Conservative votes to counter the newly united “left”. However, UKIP is busy trying to split the Conservative vote for the reasons many have often produced on this site. In the 1980s and 1990s there were Conservative governments partly because Labour and Lib Dems were fighting over the big state vote,whilst the smaller state anti EU vote was united.

Mr Osborne’s political strategy work has to deal with both these problems. Can Conservatives attract the wandering Labour and Lib Dem votes as they hope.? There is no evidence that Mr Hague is about to demand the new relationship with the EU that the Eurosceptics want. He does not wish to respind to the UKIP tactics.

I asked the Department for Environment, Food and Rural affairs how much they spend on their administrative overhead, and how this is coming down under goverment plans to cut it.

I was most suprised by the answer.  I was told that Defra’s overhead was £739.9 billion in 2009-10, £735 billion in 2010-11, and £732 billion in 2011-12, a modest decline. The problem with these numbers is they exceed total public spending for the years concerned!

I guessed when composing the written answer a mistake had been made, and that maybe I should divide all the numbers given by 1000 to get to the right figures. I decided to check the numbers against the published DEFRA annual report. To my surprise I discovered the same error in that. The table states quite clearly the numbers are £m, when they are probably £000. More interestingly, the Annual Report also records that the “Net resource outturn” (one measure of total spending) for 2010-11 was just 4,736,182, (no units given) yet elsewhere in the Report this appears as £4.736 billion which is the more likely figure.

If we assume the error is a mere factor of 1000 and the rest of the numbers are right, the DEFRA overhead has remained high in the period 2008-12, but is now forecast to come down more rapidly to £646m in 2012-13. What is worrying is that many officials were  doubtless involved in compiling the annual accounts, and more in drafting the answer to my question. Ministers signed off the figures. Cutting overhead costs is  a high priority of this government. You would have thought the Treasury and the Cabinet office would be cross examining the departments on their annual report figures. Despite all this, many wrong figures have been published.  It is also clear no-one reads these publications. If I mistype a figure or word on this blog as I can do, producing it on my own often at speed,  readers usually alert me within the hour to my error and it gets corrected. No-one seems to notice these wrong government figures for weeks on end.

More interesting is where the cuts occur.

“Championing Sustainable development” will lose all admin budget  this year. So will Championing Sustainable development (NDPB), and “Strong rural communities”.  “Sustainable Consumption and Production falls by more than half, to £4.4m from £10.39 m last year.  These seem sensible proposals. “Adapting to Climate Change” goes up from £2.9m to £10 m, a large increase.  It would be interesting to know why.  The Department does not on this plan cut its overall overhead by the 30% of the government policy by 2014-15, but does get it down by a useful 22%.

         Thank heavens for global warming say some who have organised summer events this year in the UK. Just imagine how cold it could have been without global warming.

          Meanwhile, on the other side of the Atantic at Rio the nation states assembled agreed to disagree. In “The Future We Want”, the “outcome document” for the summit there was much exhortation but little by way of new targets and firm global pledges.  The words urge governments to  develop the green economy, to promote corporate sustainability reporting, to go “beyond GDP to assess the wellbeing of a country” and to tackle “sustainable consumption and production”.

         As the Eurozone economy teeters dangerously, with more threats to the EU banking system identified by its regulators, Rio took second place in the minds of many in both the media and governments.

        The abolition of the O level and the CSE was designed to eliminate division in education at age 16. Many welcomed the revolution, delaying dividing pupils into an academic elite and the rest until A levels or university application time.

         Others disliked the changes. The advent of more high scoring GCSE pupils in sixth forms increased the pressure to change the A level. Out went some of the “tough” two year study programmes ending in  a set of strenuous exam papers. In came more of the modular courses, where you could study and be examined a few steps at a time. In arts subjects out went some of the free ranging essays, invitations to display your erudition or ignorance, and in came right answers and multiple choice. Teachers now spend more time teaching exam techniques and less time teaching the subject. Even at elite universities some students expect to be told what points they ought to be making in their answers, and want to know the details of the “scoring system” for the exams.

      So what do you all think of the experiment? Did GCSE and new A levels work? Did they end the unpleasant divisions? Did they produce a more democratic and modern education? Or did they dumb down standards?

       Defenders of the old system of O and A levels say that they were great for the intellectual elite. Others  might agree they were no good for all those who ended up with none of either. The defenders say the need was to find a convincing set of qualifications for those who did not wish to  specialise in academic subjects examined the old O and A level way. Those in favour of inclusion would say the GSCE bridged the gap for more children.

        Whichever view you take, there remains the big problem of what do we offer children who are not going to do well at either GCSE or current vocational qualifications?  The old O and A level was fine for the academically  successful. Technical schools were fine for those who wanted to be serious technicians of varying kinds.How good was education for the rest, and how could it be better?

         The bail outs are coming thick and fast now. Greece is about to request its third in a row.  Saying they just want to go a little slower with hitting their targets means they are asking for more money on easier terms. It is yet another loan request. It’s interesting that the junior partners in the Coalition, Pasok, do not ant any places in the Cabinet. It does not sound like a close and long lasting coalition relationship.

        Meanwhile Spain may now  formally request a banking bail out, which in turn means a state bail out given the way the state is expected to stand behind the banks. Cyprus also needs help. Isn’t it time the bail out fund got busy raising serious money? That too will all be borrowed. The politicians as always are good at thinking of many ways of spending bail out money, but less good at working out who pays the bills.

Old fashioned commentators say there are just two professions – medicine and the law. The rest is glorified trade.

I prefer to see the world as full of “mysteries”or crafts. The essence of the two professions is a combination of extensive training, examination to ensure mastery of the mystery, professional standards enforced through self regulation of the profession, and a closed shop so that you need the consent of the other practitioners to be able to practise. There are many other trades or crafts with similar tendencies. Indeed, much government regulation encourages this craft or mystery approach. The medieval gilds are alive and well, and live in many an EU regulation.

Nurses in the UK now need higher educational qualifications, adopting many aspects of the professional approach. Finance specialists now have to pass exams and submit themselves to both self regulation and statutory regulation. Plumbers, gas fitters and electricians are required to master the theory of their craft, and have to register and issue suitable paperwork to back up their successful contracts.

There is much good in all of this. It is reassuring to know the gas fitter understands the gas system and has had an extensive safety training before playing around with a potentially explosive mixture. It is good to know the medical practitioner knows much more anatomy and chemistry than most patients. Good professional standards should ensure better work, and greater safety and efficacy. Part of being professional also used to mean you do not go on strike.

There are also dangers. The craft or mystery can commit itself to group think of a damaging kind. It is more dfficult for innovators, as the practitioners may be reluctant to change and hostile to new ways which threaten their remumeration or way of life. The aim of the profession maybe to raise charges as well as to ensure standards. Whilst decent remuneration is to be encouraged, a lack of price competition when fees or charges are high is not helpful to the customer. Professions can make large and damaging mistakes which are enforced as best practice for years. Which doctors would now defend purging, or the use of mercury?

Parliament often debates whether more crafts and mysteries need Statutory as opposed to self regulation. Keen regulators demand statutory, implying that all self regulation is the soft option. As often, these debates muddle the truth. All crafts and professions face a mixture of both Statutory and self regulation come what may. A Finance specialist who wants to cheat may be held back  by the thought that the criminal law would put him in prison if he stole client money more than by the impact on his position in his profession. The Doctor planning a dangerous procedure that may kill the patient may be held back by criminal law sanctions as much as by the possible threat of professional discipline. All professions and crafts are under the general law of the land on protecting people and property anyway.

What is true is that if people wish to be treated as professionals they need to demonstrate a professional approach. The old fashioned professsional never complains, works when they have to in the interests of those they serve, and does not go on strike. The true professional behaves well at all times as a matter of pride, not because there are laws and regulations.

No sooner is the G20 summit meeting over than the Rio summit starts. Then there will be another EU summit in the same month. Leaders of the large countries can now fly from summit to summit. They live in the strange atmosphere of high security and the need to draft a press release that they can all agree despite their obvious differences of opinion and the very different circumstances of their countries.

There are too many summits. The press can now always point out the hypocrisy of leaders lecturing everyone else to fly and drive less to “save the planet”, whilst being driven and flown more themselves to deliver the message. Many journalists specialise in writing about these events to highlight what the leaders eat, how much the hotel suites cost, how much the life of the host city is disrupted with a view to encouraging popular jealousy of the leaders’ lifestyles. None of this makes for happy publicity back home, particularly in an “austerity” loaded western world.

So why do they do it? Some leaders do appear to enjoy it, as it makes a break from the endless domestic political rows. It assists with their search for something new to say to entertain their local media. Some find comfort in mixing with others in similar or worse positions. Some think they can use these meetings to fashion an agenda that goes beyond their own country, with a view to claiming they are statesmen capable of influencing the world. Others see an opportunity to lay blame for their national problems on other countries that are unpopular at home.

The main reason any given leader does it, is because he or she has little ability individually to stop these meetings. If a leader recognised that a particular meeting was pointless or positively damaging, he or she could still be attacked at home for failure to turn up. The opposition might well condemn that leader for failing to represent their country, or failing to take the issue seriously that the world community was going to discuss. A bad summit is a poison pill the leader has to swallow, and just hope he can find some antidote to limit the damage.

The public usually thinks the leader will enjoy it. After all, they argue, they live a life of luxury at these events, as if they were going on the holiday of lifetime to an exotic location with all bills paid. It may get them out of doing more humdrum things at home. This can be unfair on the leader. The disruption of sleep, the need to network and work hard to try to avoid damage, the requirement to keep up with the day job back home at the same time as taking the summit seriously may make for anything but an enjoyable time. The good bedroom and food are provided and are necessary tools of the trade. Security and appearances would prevent the leader asking to check in at a bed and breakfast a mile or two away from the conference.

So who does like these conferences? Why are there so many of them? It is a combination of lobbyists and officials who provide much of the impulse for this endless search for world or regional government. Lobbyists love the opportunity to dominate the world press with their issue. A global conference can do that. They like the chance to travel themselves. They want to place their solutions in world Treaties and international law, so that individual governments are bound in. They see the opportunities for the ratchet – get some of what they want agreed at the first summit, more at the second and keep the series running.

Some officials like the idea of travel. They too see summits as reinforcing and highlighting their area of interest. They want more access to their senior politicians. Being at a summit with them for two or three days gives them that access. They may wish to bind their country in to the extra government and law the summit seeks, as they may distrust some of their politicans and parties and fear they will not want the general thrust of the policy without the international pressure and framework. Doing things with other countries gives officials more power and politicians less.

The losers of all this are the taxpayers, who foot the bills, and all those who want less government rather than more. Summits do not end up with fewer laws and less government. They are part of the process to expand government’s remit more and more. Democracy is also a big loser. Once something is embedded in a Treaty or international agreement, individual signatory governments can no longer dissent or do something different without the hassle of renouncing the Treaty. Treaty law is replacing democratic government in many areas of our lives.

Will they, wont they? The “issue” from the G20 summit is will Euro 600 or 700 million be available from the bail out fund to buy up second hand Italian and Spanish bonds in the markets, so these two countries can sell new bonds at a higher price?

You might have thought the prior issue was how do they borrow all the money for the bail out fund in the first place? All the Euro states are borrowers for additional spending. You also have to remember that if they spend the bail out fund on buying second hand bonds, the money is not there to bail out banks or states that have run out of money. The bail out funds themselves will partly be provided by Spain and Italy. What curious webs they weave.

It is possible something important happened last week at the Bank of England. Parliament, of course, has not been told of any change of policy and has held no debate. The media have largely ignored it. The Sunday press did pick some of it up. Some of the change was in the Mansion House speeches of the Chancellor and the Governor, which attracted some brief attention the next day.

I have long supported the government’s stated aim of tight fiscal policy and loose monetary policy to generate a private sector recovery and to bring public and private into better balance. I have also long argued that for the first two years of the Coalition money policy was too tight, and public spending kept on going up, in real terms as well as in cash terms.

Last week the government and the Bank at last acknowledged that money policy had been much tighter than planned. The use of Quantitative easing has meant artifically low interest rates for the public sector, but not for the private sector. It has meant plenty of credit for the government, but not enough for the rest of the economy. Banks have been prevented from lending it on to the private sector by tough banking regulations. I have argued against QE, and in favour of allowing banks to lend more against their current stronger balance sheets, whilst we generate some growth to restart the cycle. I have also argued for more banks, to introduce competition and to have some banks willing and able to lend to individuals and smaller busiensses.

We heard at the Mansion House the Governor and Chancelllor announce two schemes to put some more mmoney into the banks. One was just to lend them more cash as they need it to make sure they are liquid in illiquid times. That is the minimum a Central Bank should do against good security, and is welcome. The second was a scheme to help banks finance new lending for good projects.We still need to see the details of how this will work.

In a way the more important potential change is the one that was not mentioned that night, but which appeared over the week-end. The Bank now thinks commercial banks are being made to hold too much cash and to keep too much in government bonds, and will allow them to use more of this cash. We need to see the details of how they intend this to happen. They will need to change the regulatory requirements. They will need to reassure the banks that the permissions will not be suddenly removed. They also need to reassure taxpayers that proper checks and balances for all these schemes will not leave taxpayers losing money.

It is good news there is some new thinking. We will need to study the detail before being able to decide if the balance is right. It needs to be cooked for Goldilocks. There needs to be enough real relaxation to allow sensible levels of lending to good projects, without overdoing it and leaving bad debts or inflation in the system. I have always thought it is more a question of how the banks are regulated, than a need to inject loads of newly printed money into the banks. There’s plenty of high powered money, but there has been a broken transmission mechanism domestically limiting its impact on activity.

          The spin was fine. The Greek people had voted to save the Euro. The “right” parties had enough seats and votes to form a government which would support the loans which support the Euro membership. The spin was designed to reassure markets that the Euro is safe in our time.

         The markets did not see it quite like that. Initial sharp rallies petered out. The cost of borrowing for Spain and Italy rose further. In Spain’s case the cost of 10 year money remained clearly above 7%, the level that many say makes it unaffordable. The battle for Spain is now more important than the rows over Greece.

         The politicians gave out differing messages when interpreting the Greek election results. The Greek “victors” sounded more like the Greek opposition, saying there now had to be changes to the loan agreements to make it easier for Greece to survive economically. Germany repeated the mantra that Greece had voted for the Euro and for the disciplines embedded in the loan agreements.  In the days ahead Greece has to form a Coalition government, that government has to seek changes to the loan terms, and the rest of Euroland has to respond. If they are too generous to Greece they may find other nations with special programmes want better terms. If they are too tough they make it difficult for the new Greek government to sell it to the Greek people. If they are too generous to Greece they call into question the disciplined framework which many- not just in Germany – think essential to Euro success. If they demand too much austerity with no currency or monetary relaxation possible to compensate, the Greek economy could continue to fall badly, making it impossible to pay for all the remaining debts.

        Most of this is theatre. It is based on an unlikely set of assumptions.  The Greek loan agreements for the period up to 2020 are based on the assumption that the Greek economy starts to grow from the beginning of 2013, and carries on growing for each of the seven years up to the end of the decade. Few private sector forecasters would endorse such a forecast for such a long and unpredictable time period. If by any chance the Greek economy does not soon embark on a steady and long period of growth, all the numbers of the loan agreement will be wrong. Tax revenues will be lower, state spending higher, and Greece will need to borrow more to get through.

          It all asumes  that the Greek banking system copes well with the pressures. Let us hope it does. However, some in Germany are nervous about the extent to which  large German bank surpluses are being lent via the European Central Bank to the weaker members of the currency union. Somehow the deficits on trade accounts need to be financed. Somehow plenty of money needs to be supplied to banks in  weaker economies to meet demand for cash withdrawals or transfers as they arise. The surplus countries have to allow this to happen and to be happy with it for the union to flourish.