Some Facts about the Economy

The article by Martin Wolf in the Financial Times to which Jaime draws attention (click here) contains some interesting figures:

• The UK economy is presently operating at 10% below its pre-crisis trend (which means there's lots of idle capacity, of capital as well as people)
• the UK Government is able to borrow at a real rate of interest below 1% (which means it's not a bad time to be in debt)
• the average maturity of UK debt is 13 years (which means there's no need to panic at the moment)
• the UK's debt to GDP ratio was 68% at the end of last year, against 73% in Germany and 77% in France (which means that our so called "black hole" is rather smaller than those of some of our neighbours.)

Wolf, who as far as I know is not a rabid left-winger, concludes that "this is a Keynesian situation," there is no urgent need to cut the fiscal deficit, and that doing so prematurely risks that "the economy flounders for years."

Liberal Democrats in government, heirs to he party of Keynes and Beveridge, may be forced, as junior partners in the coalition, to stand aside as the present foolish policies are implemented, but they should be arguing against them in private and withholding vocal support in public.

Some" fings" are "wot they used t'be."

On Friday I spent the afternoon and evening wandering around the the Saddleworth and District Whit Friday Brass Band contests. These take place, and have been doing so since 1884, in several villages straddling the Yorkshire/Lancashire border up in the Pennines. Unfortunately I was unable to attend the first event of the day, a Whitsun Walk of Witness involving some 1 800 people, a walk, bands and an ecumenical service,

The band competitions started at around 4.30 in the evening, with some 100 bands transported in coaches from village to village where they each perform a march and and specialist piece, observed by a large crowd and judged by hidden adjudicators.

The event is a miracle of logistical organisation by whoever arranges the bus transport, and an astonishing level of musicianship from bands of international standing (some of which come from abroad) to local youth bands. Presumably the coach drivers are paid, but everyone else is a volunteer.

The day is evidence of hours of practice by several thousand brass band players and their conductors, involvement of local people who help organise the event and raise money for modest prizes, and genuine and orderly enjoyment from visitors.

This is an example of participatory society at its best, not on the instructions of the government, not to save money by cheeseparing the social services and farming our essential services to charities, and, in musicianship, for pleasure, personal achievement and teamwork,not to tick boxes in order to impress a government monitoring office.

Best of all, it ignores the artificial Wilsontide and the trendy Pentacost label, and still takes place in Whit Week.

A Day in the Spotlight for Local Government

Liberals and Liberal Democrats have traditionally believed in the devolution of power to the lowest possible level, and the Conservatives say that that is now their belief. It is therefore anomalous that the coalition proposes to hold the next general election on the first Thursday in May 2015, local government election day.

Elections for local government are often used as a substitute for a referendum on the government of the day, but this is surely a trend to be resisted. Council candidates of all parties and none deserve a campaigning period in which they can promote their local policies with the minimum of competition from the national scene.

Hence, if the coalition partners are serious about increasing the powers and independence of local government they should move the general election to a different date. Since June 2015 would prolong the parliament beyond five years and produce accusations of malpractice I suggest the second Thursday in June 2014, thus producing a four year fixed term for this parliament, and establishing a precedent for future ones.

The Employmnet Trap - a Solution

Ir is good to hear Tory Ian Duncan Smith speak so passionately about the absurdity of the employment trap, by which unemployed people can face marginal tax rates of "70%, 80% and 90%"(Guardian 27/05/10) through loss of benefits when they take jobs. Unfortunately his proposed solutions do not include the obvious - the Citizens' Income as proposed by the Green Party.

Briefly, under this proposal every adult citizen receives as of right from the state an income of around the present level of the Jobseekers' Allowance, with a higher rate for pensioners (to replace state pensions) and a lower rate for children. Personal tax free allowances would be abolished so that, on taking up work, even the first tranche of income would be taxed at the standard rate. Thus every individual would be assured of a minimum standard of living as a right of citizenship, and everybody who wanted more, the overwhelming majority, would benefit by taking a job.

According to the Greens the abolition of personal tax allowances would pay for the scheme. I have no means of checking this but it is certainly something the government should explore. At a stroke, to quote Ted heath, it would abolish the demeaning benefits procedures and take away some of the heat out of the anger felt by many of the employed towards those they regard as "spongers" and possibly "benefits cheats" because they are unemployed.

A fuller outline of the Citizens' Income scheme and its advantages is given at the Young Greens website.

For a while the Liberal Democrats too adopted this splendid policy, but through lack of courage or imagination it seems to have been quietly dropped. Now we are in government, with the resources of the civil service available to us, we should at least demand its serious consideration.

Full Circle, but Private

An article by Peter Wilby in yesterday's Education Guardian (Brand New World:http://www.guardian.co.uk/education/2010/may/25/free-schools-private-companies) predicts that " 'free schools' started by parents, teachers and voluntary groups...will (eventually) be run by private companies...(which)...talk eagerly of economies of scale if they can take charge of dozens, even hundreds (of schools)."

Aren't these "economies of scale" in managing salaries and appointments procedures, organising contracts for buildings, furniture, stationery and text-books, allocating budgets, etc exactly what Local Education Authorities used to do? The "free school" project is therefore merely privatisation under another name, with no evidence that the private sector can improve on the services of the now maligned public authorities.

Sadly, as today heads of both primary and secondary schools receive letters asking them to consider becoming "free", senior staff of all schools will be distracted from their real purpose of educating the young in order to concentrate their attention on debating the illusion of a brighter future (and the prospect of higher salaries?) under a new regime dominated by commercial considerations rather than the public good.

Chemical reaction

Already the alleged chemistry between Nick Clegg and David Cameron appears to be having its effect, and not to the advantage of Liberal Democrat policies and priorities. Clegg is reported as "having come round to the argument for action to bring down (public) spending this year . " (Guardian 24/05/10). Surly the correct repose for Liberal Democrats in government to this crazy policy of cutting public expenditure in the middle of a recession is to point out that:

• we are junior partners in this coalition
• our view is that expenditure cuts should not take place until economic recovery is assured
• we are forced to accept these premature cuts as one of the compromises of coalition
• it is our hope that the recession will not be prolonged as a result, as our priority is to ease the already high level of unemployment, especially among the young.

Vince Cable's citing of the Greek situation as the excuse for the change of heart seems a bit feeble to me: the Greek situation existed well before the election.

400 MPs

Since both the Conservative and Liberal Democrat manifestos contained proposals to reduce the number of MPs to 400 there is a real danger that this measure will go ahead. From the Liberal Democrat point of view this is a great mistake.

One of the few disadvantages of the Single Transferable Vote method of PR, our preferred option, is that the multi-member constitutes can be very large in sparsely populated areas such as the north of Scotland. This problem will be exacerbated if the number of MPs is reduced.

Clearly there was a lack of "joined up thinking" here by Liberal Democrat policy makers. What is more important: a "symbolic" cost-saving measure as a knee-jerk reaction to the expenses scandal or the basic requirement to facilitate the only electoral system which will genuinely transform our politics?

Against the odds, I hope this proposal will be quietly forgotten.