House of Comments - Episode 65 - The Spending Review Review

Episode 65 of the House of Comments podcast "The Spending Review Review" is out. This week myself and Emma Burnell are joined by Conservative liberal campaigning organisation Bright Blue's Kate Maltby to discuss the spending review and the related fortunes of the parties in its wake, the double dip that never was, royal spending, ministerial no shows and violent porn.

You can subscribe to the podcast on iTunes here.

Other podcasting software e.g. for Android can be pointed here to subscribe.

You can download the mp3 for the latest episode directly from here.

Or you can listen to the embedded episode below here:

listen to ‘Episode 65 - The Spending Review Review’ on Audioboo

If you are a political blogger and wish to be considered as a future guest please drop me an e-mail at markreckons@live.co.uk.

Any feedback welcomed in the comments below.


PS: A big thanks to Audioboo for hosting the podcast for us and especially to Audioboo's James O'Malley who has helped us out getting relaunched. James is also editor of The Pod Delusion podcast which is about "interesting things" and is well worth a listen too! We would also like to thank Kevin MacLeod from Incompetech.com for our theme music.

False binary choices

This government has chosen the wrong course on the economy.

Well, it's self evident isn't it? I mean they said there'd be 3% growth in 2012 and (according to the preliminary figures) it was flat. They've failed haven't they?

And therefore, Ed Balls and Labour were right. The coalition have cut too far, too fast and we are now seeing the consequences of their economic folly. We should have done what Labour suggested, i.e. delayed the cuts for a year and had slightly fewer of them. Then we'd have been fine.

Well at least that's what you'd think if you listened to Labour.

I'm not saying they're not right. They might be*. What I am saying is that there is literally no way of knowing. We cannot run a counterfactual where they won the 2010 election and enacted their economic plans. We cannot know if faced with another 5 years of Brown (who would doubtless have remained PM had Labour formed the government) if the markets would have panicked and interest rates would have shot up. We can't see how all the consequences of their approach would have played out. It is impossible to know. So therefore what I can say with absolute confidence is that Labour are being highly misleading when they try to present the economic situation in these binary terms. The coalition did one thing. It didn't work. They planned to another (slightly different) thing. Ipso facto that would have worked.

For all we know, neither approach would have worked. Maybe a third or fourth approach would have done the job. Or maybe the economy was so screwed by May 2010 that no economic plan would have helped. It's actually possible when you look at it like this that the current approach is making the best of a bad situation.

But I am sure this sort of nuance will not make it into the debate in the run up to the next election.  What will go on the leaflets and the in the adverts is that the evil ConDems have cut unnecessarily for "ideological" reasons "destroying our economy" in the process and that Labour know for sure that had they had been in power and enacted their plans we would have escaped our economic fate.

The fact that they can't possibly know if this is true won't get a look in.


*For what it's worth I would have put more into infrastructure investment at an earlier point but there is no guarantee that would have helped much either.

What's good for the goose....

Initial GDP figures for Q3 2012 suggest that we are now out of recession and that the economy grew by 1%.

Good news! Or so you would think.

There are plenty lining up though to claim that the "exceptional circumstances" of the Olympics are largely to credit for this and that hence the picture is still quite bleak.

They may well have a point, but I would take them more seriously if these criticisms were not largely coming from the same quarters that reacted with derision when George Osborne tried to claim last year that one off factors such as the extra bank holiday for the Royal Wedding had suppressed growth.

So it would appear that exceptional circumstances should be taken into account, but only when they contribute positively. If they have an adverse effect we're not allowed to hear them mentioned under threat of vilification for any who dare.

Can we have a bit of consistency please? Either they count or they don't.

Personally I would rather just see the figures reported and leave any exceptional stuff to one side no matter which direction. There will often be one off things going on and it seems a bit silly to constantly have these sort of arguments.

For now I'm just pleased we have some good positive growth figures. Hopefully this will help boost confidence and contribute to a virtuous circle that becomes self fulfilling.

Surely it's too early to tell on the economy?

The surprise news this week that the initial figures for Q4 2010 showed a 0.5% contraction of the economy caused a lot of comment.

Labour claimed that it proved the government was going in the wrong direction and that the cuts are damaging the economy. The government claimed it showed no such thing and tried to shift much of the blame onto the cold weather (although independent economists calculate that even without the cold snap growth would have been "flattish" (down from 0.6% growth in Q3)).

So who is right? Do the figures prove that the government is heading in the wrong direction and that Labour was right? Or is it a statistical blip that will be ironed out as we forge ahead.

I would suggest neither response has this right. In fact I would suggest it is far too early to decide one way or the other.

Let's look at the facts. The period Q4 runs from October-December 2010. At the start of the quarter the coalition government (AKA Teh ConDems) had been in power for just over 4 months. The CSR was not even announced until 20th October. The way people behave and the decisions they take simply do respond immediately to these anyway. It takes time. If anything it could be argued that people were still largely responding in Q4 to decisions taken earlier in 2010 and even earlier than that. I know new governments love to blame the previous administration and it does get ridiculous (I still remember Labour blaming the Tories for things in 2005 for example) but after only a few months this is surely still legitimate? At the very least it is fair to say that the current administration cannot be solely to blame for economic behaviour towards the end of the year when they only took office in May.

It will be a while before it becomes clear exactly which direction the economy is going in and whether Q4 2010 is a blip or a trend. Michael Portillo said something interesting on This Week on Thursday. He suggested that from his experience, the way the government has reacted and the other economic indicators suggest that they really do believe this is just a blip and even that when the revised Q4 figures come out they will tell a better story. Otherwise, if they really thought we were heading for a double dip they would be forced to act as it would be politically very damaging.

Having said this I return to my main point. We just do not know.

And anyone who claims Q4 2010 is at this point clear evidence one way or the other is being misleading. They don't know either.

Brown admits he got it wrong - too little too late?

So Gordon Brown has finally, finally admitted what we all knew which was that he made mistakes regarding the regulation of banks which helped contribute to the credit-crunch and ultimately recession. In an ITV interview which will be broadcast tonight he has admitted that he succumbed to lobbying and that:

"In the 1990s, the banks they all came to us and said, 'Look, we don't want to be regulated, we want to be free of regulation.' ... And all the complaints I was getting from people was, 'Look you're regulating them too much.'

"The truth is that globally and nationally we should have been regulating them more. So I've learnt from that."

"You don't listen to the industry when they say, 'This is good for us.' You've got to talk about the whole public interest."

So, far from it all being "from America" as has been his mantra for years he is now admitting that he bears some responsibility and highlighting where he went wrong. I have been saying for ages that he should have done this. The only way that someone who has been near or at the top of government for 13 years can have credibility on something as major as this is to admit your culpability.

However we are 22 days away from the general election. Brown has had years to admit this and he has left it to the eleventh hour. It suggests to me that he is panicking for him to do something so clearly against his natural instincts probably pushed into by his advisers who are now trying anything they can to boost his chances.

Perhaps the polls in the next few days will indicate whether this has helped him. I think it will be seen as too little, too late. A deathbed confession by someone who deep down still doesn't really think they have done anything wrong.

Economy squeaks out of recession - election consequences?

So it is official, the economy just squeaked out of recession in the final quarter of 2009 growing by 0.1% according to the official figures released today. Of course that is good news although the UK is the last country in the G20 to do so.

Mike Smithson asked this morning whether it could make a difference to the date of the election. His reasoning is that as we are now in recovery the narrative from Labour will be that they steered us out of recession *and* managed to keep unemployment low. The most likely date for the next election is May 6th (to coincide with local elections in some parts of the country) but the economic figures for the current quarter are due out on April 23rd. If we were to find that we had dipped back into negative growth in the first quarter of 2010 just days before a general election that would be devastating to Labour and their electoral prospects.

It could happen. The end of the 15% VAT rate is likely to have boosted economic activity towards the end of 2009 and the restoration of the 17.5% rate at the start of 2010 could have the opposite effect. The growth last quarter is only 0.1% against an overall drop of 6% since the start of the recession. It therefore would not take much to tip us back into negative territory.

During the period just before "The election that never was" in autumn 2007, Ed Balls made the comment that the bigger risk at that stage was not going to the electorate. His basic point was that things were likely to get worse for Labour electorally and the position then might be a high water mark although he did not say it in those terms (and he was spot on). We are now potentially in a similar position again. Although Labour is much further behind now than it was in 2007 it could again be as good as it gets for them. In fact the end of the recession could give them a little electoral fillip although we won't know that for 2 or 3 weeks.

There are other reasons why an earlier election would make sense for Labour. It would mean Brown would not need to go before the Iraq inquiry until after the election. It would mean Labour did not have to have a budget as well and given the negative response to the PBR in December this could be another headache for them were they to have to do it.

In fact the more I think about it, the more it would seem that a truly brave Prime Minister would come back from Northern Ireland this afternoon and go straight to see the Queen to ask for a dissolution of parliament. He would catch his opponents on the hop and would be hoping to ride the wave of increased optimism in the economy that this morning's news could bring. He may even get some kudos for seizing the initiative and going a few months before he had to.

Of course up until now, Gordon Brown has not shown that he has that sort of courage.

Will he surprise us all?

"Gordon Brown resign" petition closes with 72,000+ signatures

The "Gordon Brown resign" petition which was still in No 1 position for live petitions yesterday has now closed with 72,222 signatures. It is now in the top 10 of all time petitions. As we all know, these petitions generally reflect much wider opinion but I think it is a decent snapshot of those who think for whatever reason that he should no longer be our Prime Minister.

Indeed it is notable that despite all his rhetoric, it had been announced today that the UK is still in recession. The only developed economy still to be in that position. This just underlines for me that even on the one thing Brown is supposed to be experienced on, the economy, he has utterly failed.

I just wanted to say congratulations to Kalvis Jansons, the organiser of the petition. I know he worked tirelessly to promote the it and I think the fact it was top of the live petitions for so long and achieved so many signatures is a sure sign that he tapped into a strong feeling across the country.

The is some MSM coverage of the closing of the petition here and here.

Why will the banks pay any attention to Darling this time?

Over the last year or so I have lost count of the number of times that Alistair Darling, Gordon Brown and myriad other government ministers have claimed that they are going to get banks lending to small businesses again at decent rates. Despite their numerous interventions and despite the fact that many of the banks are partially or largely owned by the taxpayer, so far the government has not been able to get them to change their approach. Darling was at it again yesterday.

I run my own small business but we are in the fortunate position of not needing to go to banks for finance. I shudder to think what would have happened to our business in the last 6 months if we had have needed to though. I have read so many stories about what seem like perfectly viable businesses who need temporary financial assistance either to get over a cash-flow bump or even to expand and where the banks just refuse to help or offer ridiculous and clearly profiterering rates of interest that it is now clearly desperate.

True Blue Blood published a guest post yesterday from a contributor "RussRec" whose story about trying and failing to get help with his recruitment business is all too familiar.

The thing is though that the behaviour of the banks is damaging our economy and our recovery. Every time they turn down a viable business for financial assistance or price them out of the market they are consigning more people to the dole queue and in a lot of cases it seems completely unneccessary. It is a self-reinforcing cycle where the more they delay the recovery, the longer it will be before they will feel comfortable lending to businesses at reasonable rates again.

The most annoying this is that it seems to me the pendulum is now swinging too far in the other direction. 2 years ago, banks were falling over themselves to lend to all sorts of individuals and businesses, now they will hardly lend to anyone. In both cases they were not being driven by rational motives but by following the herd, terrified of either not lending enough previously, or now lending too much.

I am not advocating that banks should be lending to unviable businesses. Of course they should not do that but from what I can see they are going way beyond excluding businesses like that with their caution.

I can understand that the government does not want to interfere with the running of the banks on a day-to-day basis but they must surely see that a quiet "gentleman's word" with those running the banks (followed by a load of spin where they pretend they have "got tough with them") has not worked on the occasions they have tried it. I am instinctively against intervention but the banks have proven themselves incapable of doing what we all (including themselves ironically) need them to do. The government has to come up with a way of changing the environment so that banks do start lending. Otherwise, what was the point in pouring the hundreds of billions of our money into the banks? They might as well have kept that money and set up their own bank to do the job for them until the recession is over.

Why Vince Cable is unlikely to ever be in government

Vince Cable has written an excellent article for The Independent today. It quickly gets to the heart of the current economic malaise with brevity and honesty and then proposes a number of measures that could be taken now to begin to cut spending.

If you read further down the article you will see that almost every comment is strongly in favour of what he is saying and several of them lament the fact that he is not, and likely will not ever be in government. One comment in particular is almost heartbreaking from someone who is terminally ill and despite having voted Liberal/Lib Dem in every election, he has never seen a Lib Dem MP elected in any of the constituencies he has lived in. Effectively he has been disenfranchised for his entire life.

The reason is because of our first past the post electoral system. The number of votes cast bear very little relation to the number of seats allocated amongst the 646 parliamentary constituencies. For example Labour at the last election got 55% of the seats with only 36% of the vote. The Lib Dems got 22% of the vote and less than 10% of the seats.

Just to highlight how utterly unfair the system is, I have put figures into the UK Polling Report Swing Calculator to see what the outcome would be if all three main parties got exactly one third of the votes in an election. I know that is a very unlikely scenario, but just as an experiment, it is very revealing about our electoral system. Here are the results:


Discounting "Others" and Northern Ireland (which are built into this calculator), there are 620 seats to compete for. As you can see, despite complete parity in the votes (33.33% each), The Lib Dems only get 106 of them or 17%. The Conservatives get 208 or 33.5%. Labour get 306 or 49.4%. So Labour would almost have enough to form a majority government. They could certainly head a minority administration. Meanwhile the Lib Dems get only a third of the seats that Labour get despite having had exactly the same number of votes!

The system is utterly broken and massively favours Labour. The only reason the Conservatives do not want to change to a proportional system is because in a good year for them, the distortion also works in their favour by inflating their share of the seats as well allowing them to form a majority government, also on a minority of votes.

This is the reason why, despite the fact that Vince Cable is patently the politician with the clearest idea of what is wrong with the economy and the best grasp of what to do about it, he is unlikely to ever be in a position of executive power and to actually do anything about it.

See Make Votes Count and the Electoral Reform Society for more information about our broken electoral system and what can be done to change it.

Spending must be cut

The more I hear about the state of the public finances, the more it is becoming obvious that spending will have to be cut in the coming years. This is surely going to be true whoever is in government.

Nick Clegg has had a go at trying to change the terms of political debate recently by identifying some areas where savings could be made and reorienting spending priorities.

I think that the Tories are so scarred by the last 3 election defeats where each time Labour went for their jugular about cuts, demanding to know how many schools and hospitals would have to close each time any attempt was made to question public spending that they are afraid to say so now.

However I think that they are in increasing danger (as politicians often are) of fighting the last war. Things have changed on the ground significantly in the last year. I run my own business and I know that people in the private sector are having to cope with pay freezes, pay cuts, shorter hours, lay-offs, reductions in benefits, redundancies etc. etc. This is what happens during a downturn. I think that a large proportion of the electorate will be affected one way or another by these things and they will in turn expect the public sector to take its share of the pain. The more they see this not happening (and the recent pay round showing modest but real public sector pay increases is an example of this), the more angry they will get.

I already sense a strong feeling of injustice regarding the public sector pension arrangements when compared to the private sector and continuing public sector expansion will do nothing to ameliorate these feelings.

Given all of this, I think Labour are wrong in thinking that they are going to be able to throw around accusations at opposition politicians who talk honestly about what needs to happen. It might have worked in 2001 and 2005 but this is 2009 in the middle of worst recession in living memory.

The rules have changed and I think that politicians who are honest with the public about what needs to happen will reap the rewards.

Mark Thomas on Newsnight

Mark Thomas was great last night on Newsnight (watch it here from about 26 minutes in). He managed to summarise what he perceives as the main problem that the G20 should tackle (tax havens) in a very short space of time. He even seemed to know more about the situation than Paxman. He made a comment that the government actually rents some of its buildings from companies that operate from tax havens and Paxman asked "Is that true?".

Unfortunately Wee Douggie Alexander did not respond to this but instead emphasised that global action is needed. He has a fair point but everything he said was hedged with "I hope we can do this." emphasising how limited the British Government's power is on this.

Before Mark Thomas even opened his mouth I knew he was going to go for tax havens. I have been listening to his podcasts recently which are very much focussed on the recession within the context of fairness and tackling corruption. He clearly thinks that the crisis is an opportunity for fundamental reform and I agree. For each podcast he interviews a different person such as Vince Cable, Caroline Lucas and many other activists. They usually make for fascinating listening and I have learnt plenty I did not know before. You can get them on iTunes or from here.

Brown has shot himself in the foot - again!

Back in January I posted about how for all Brown's supposed political acumen he seems to have a knack of shooting himself in the foot.

I cited the examples of the government's bullish predictions for the economy recovering from recession half way through 2009 (although announced by Darling he was doubtless a cipher for Brown). This always seemed very unlikely and they will have these predictions thrown back at them time and again in the run up to the next election. I also referred to his constant claims to have abolished "boom and bust" through years of boom until we hit the bust.

My point was that he always seems to favour short term tactical advantage over the opposition to properly thought through strategic positioning. They are also usually hitched to hostages to fortune.

It has happened again in the last few months. He has been banging on for a while now about how there will be global action to tackle the crisis and took every opportunity to rub David Cameron's nose in the "fact" that mainstream world opinion was with him and his fiscal stimulus plans. From my perspective it was never clear to me that world opinion was on board with him and it has become ever clearer in the last couple of weeks that world political opinion is moving against him (e.g. France, Germany and a fair proportion of the political classes within the US although Obama is still vaguely with him).

The G20 which was being puffed as a great event to sort the problems out has been downgraded again and again through his rhetoric to now being something approaching a photo opportunity which is all it will really be but it is too late. His previous attempts to spin the meeting are already on record and it will now inevitably be a damp squib.

I just wonder how many more bullets he will be allowed to fire into his own foot before he gets stretchered off the field of battle.

Has Oborne discovered a Bank of England scandal?

In Peter Oborne's column in the Mail yesterday he reported the following:

At the end of 2006, the Bank of England pension fund made a sudden and very extraordinary decision. It sold all the equities in its portfolio and invested them in index-linked gilts - even though it realised that such a move would increase the annual cost of the pension fund by some £45million.

Looking back, this was a brilliantly farsighted decision because shares have since fallen in value by almost 50 per cent. It seems clear the the Bank of England fund managers understood the nature of the looming economic crisis well before anyone else.

At the time, they said their decision was based on concerns about 'unsustainable' positions in credit markets and the consequences of a possible credit crunch. When I put this story to a Bank press officer yesterday, it was dismissed as 'absolute nonsense'.

This does indeed pose some intriguing questions and I am surprised that there has not been more coverage of this in the MSM and on other blogs.

If there turns out to be any truth in this then I think it will increase the anger of ordinary people who are all sufferring, especially those who have recently retired or are due to very soon but who were not in a position to be able to forsee what was going to happen and thus make the decision to move out of equities in 2006.

Welcome move by Cameron

David Cameron's decision to apologise for the Tories not having done better in spotting what was going wrong in the run up to the current recession is a welcome move. Hopefully it will mean his party can accept what needs to be done (like Vince Cable has been advocating) rather than feel hidebound in any way to the existing system. Sometimes an apology is necessary and it allows political positions to be changed.

It contrasts sharply with Gordon Brown's complete inability to accept any responsibility for what has happened. It is clear to me that public wants the government and Brown in particular to show some contrition and that if he does not (as seems likely) then he has zero chance of recovery.

However, John Prescott's reaction to Cameron's apology on his blog shows the danger inherent if Brown were to offer an apology. Prescott straight away jumps on this and asks Cameron to also apologise for Black Wednesday. Unsurprisingly, my view is that this is a pathetic political ploy to distract attention from the current situation but just to address this briefly:

1) Black Wednesday was almost 17 years ago (virtually a political lifetime ago) and has no relevance to the problems of today.
2) As Prescott well knows, Cameron was in his early - mid twenties during this period and was a junior adviser to Norman Lamont. This is the equivalent of demanding that a branch manager of RBS apologise for the AMB Amro merger decision.
3) If Brown won't apologise for all the decisions he has taken over the last 12 years and that have in some cases directly led to or exacerbated the current crisis, why the hell should Cameron apologise for something like this given points 1 and 2 above?

Anyway, as I feel duty bound to point out I hold no candle for Cameron but I just get very annoyed when I see silly political games being played like this. I get the feeling that people like Prescott are so embedded in this sort of mindset that they cannot even see now ridiculous they look. No wonder people are put off politics.

Some more blog reaction here and here.

Brown has shot himself in the foot

There is a perceptive comment piece in the Times today by Rachel Sylvester.

This part in particular stood out for me:

In truth, it is too soon to tell whether the Government's rescue package has worked. Indeed, success will itself be difficult to define. “If we are back in growth by the first quarter of next year then I think you can say it has worked,” a Cabinet minister says - but even that relatively benign outcome could be classified as failure, as the Chancellor predicted in his Pre-Budget Report that growth would resume in the second half of 2009.

Mr Brown's problem is that he has - for noble economic reasons, as well as less noble political ones - downplayed the likely impact of a recession while talking up his own ability to tackle it.


Brown has a long history of doing this sort of thing, leaving himself exposed to hostages to fortune for short term political expediency. It is exactly this sort of attitude that led to him claiming to have abolished "Boom and Bust". It sounded good to him at the time and allowed him to paint himself as being the answer and the opposition as linked to the old way of doing things. Of course now we are in a bust and it is clear that we were previously in a boom engineered by Brown, his former statements on this look ridiculous. It is made worse by his absolute inability to admit his mistakes or even that he said those words previously.

The same problem will happen again with his and Darling's predictions for the economy this year. It doubtless seemed politically expedient to say in the PBR last year that they thought the economy would start to recover in Q3 this year. I am sure there were many treasury man hours taken up putting the bess gloss possible on the figures and being as optimistic as they could get away with to achieve this end. And whilst it may have made some people feel slightly better on the day, no serious economists or commentators believed that this would be the case. Now it is looking extremely unlikely that there will be any recovery before 2010 at the earliest but the government will struggle to take any credit for this (even if it is due) because of the cack-handed way they have spun this situation against themselves.

For a supposed political genius, it seems to me that Brown is far too often found with the gun pointing directly at his own foot and he seems unable to stop himself pulling the trigger.

Jeff Randall gets it Spot On

Jeff Randall's piece today in the Telegraph seems to me to sum up one of the main problems today with political discourse in the UK today. It is an excellent article about why people in public life rarely tell the whole truth about things or even attempt to answer questions put to them. It also covers some occasions when politicians have tried to step outside the narrow bounds they set for themselves and end up commiting a "gaffe".

This state of affairs has concerned me for quite a while now. Peter Oborne's latest book The Triumph of the Political Class covers this subject matter and related topics in great detail and is a very good read for political junkies like me!

I have lost count of the number of times I have been willing politicians when they are being interviewed to answer the question, engage with the issue, resist the opportunity to distort or make cheap partisan points and been left disappointed. It is just part and parcel of the usual discourse unfortunately.

A good example of this is what happened with Andrew Lansley a couple of weeks ago (Randall makes reference to this in his piece). He made some comments which were in response to claims that the recession could be bad for people's mental health. His comments were pertaining to the potential upside of a recession and that there is evidence that because people tighten their belts they tend to eat more healthily and drink and smoke less. That is exactly the sort of interesting and sensible observation that ordinary people would be interested. I certainly was and I thought it enhanced the debate about the current situation. However there was an outcry stirred up mainly by Labour politicians and others in the media about how heartless this was and how "TEH TORIES THINK TEH RECESSION IS GOOD FOR US!!!11". Complete lack of any attempt to engage with the substance of what Lansley was saying and just an opportunity for cheap political point scoring. Pathetic. Tom Watson MP's comment on his blog is typical of the sort of reaction I am referring to.

Once it became clear that the media narrative considered it a "gaffe" Lansley was forced by David Cameron to apologise for his remarks. Probably the next time Lansley has an original and interesting insight into some issue of the day he will keep it to himself. And the homogenisation continues as the standard of political debate in this country step by step gets a little bit poorer.

*Edited to correct a couple of mistakes.