Honeyball’s Weekly Round-Up

Labour Party

This has been a bad week for George Osborne with attacks on his austerity measures coming from all sides. It has become clear that a majority of people believe that government’s economic policies are damaging the economy rather than helping, a new poll reveals, as the coalition government begins an internal war over how to stimulate growth.

George Osborne has ten days until he delivers his crucial fourth budget, and an Opinion/Observer poll shows almost three times as many voters (58%) believe the austerity drive is harming the economy as those who think it is working (20%).

The findings will add to pressure on Osborne to change course as the UK hovers on the brink of a triple-dip recession. Given Osborne’s form when it comes to changing his mind in the face of overwhelming evidence, I don’t have much hope that he’ll do what needs to be done.

The independent Office for Budget Responsibility rebutted claims by the prime minister that the government’s deficit-cutting strategy was not responsible for choking off growth, stating that austerity had knocked 1.4% off GDP in the past two years.

In the first two years of the coalition, most polls showed solid support for the government’s hard line on the spending cuts, though the Tory lead over Labour on economic competence has narrowed in recent weeks.

The stark poll findings come as home secretary Theresa May appeared to make a pitch for the leadership of the Tory party, arguing in a speech to a ConservativeHome conference that the Tories must govern for the whole country, not just sectional interests. May said: “We’re at our strongest when anyone and everyone can feel that the Conservative party is for them.” The speech, resembling a leader’s party conference delivery in its scope and tone, was seen as an attempt to raise her profile at a time when many Tories are losing faith in Cameron’s ability to remain as leader beyond the next election.

On top of this, a key plank of the chancellor’s plans to reform Britain’s banks in the wake of the financial crisis and the Libor rate-fixing scandal is “wholly inadequate”, MPs have warned as they reopened the debate on breaking up the banks.

The parliamentary commission on banking standards said the government’s proposal for the regulator, the Financial Policy Committee (FPC), to review the strength of the ringfence between high street and riskier investment banks was little more than the regulator “marking its own examination paper”. It said the government should include a specific provision to consider a full, industry-wide split-up of the banks if the ringfence was judged to be failing.

So the Tories look like they are singularly failing to do anything right when it comes to the economy.  And with senior Conservatives stepping forward with not so subtle hints that they might challenge Cameron for the leadership, we might be on the brink of political civil war, where the only real losers will be the British public.

Osborne Embarrassed Again Over Bonuses

Labour Party

Bankers’ bonuses for some time seem to have attracted broad consensus.  Almost everyone, on the left and the right, thinks that the bonus culture in big banks spiralled out of control and was a contributing factor to the world wide financial collapse.

So it is perhaps a little surprising to see George Osborne opposing further measures to help curb bonuses as happened last week in a meeting of Finance Ministers from across the European Union where Mr Osborne found himself the only dissenting voice in the room. He was predictably roundly ignored.  You could almost feel sorry for him if it weren’t for the fact it was another example of the Tories ‘not getting it’ when it comes to EU negotiations.  My colleague, Arlene McCarthy, put it well in the Guardian:

“Yet again, we have an example of the government’s failure to proactively engage in and influence EU policy in Britain’s national interest. Why has the UK government failed in the last 18 months to put an alternative proposal on the table, and waited until the last minute to raise objections?”

This doesn’t exactly bode well for any attempt the the Tories may make to renegotiate powers.

So we have the Chancellor fighting a losing battle on the wrong side of the argument.  And it is the wrong side, as the measures proposed are very sensible. The failure of banks to self regulate on bonuses or to exercise restraint means that we are now introducing a bonus cap with a 1:1 salary to bonus ratio.  This should help put an end to the excessive risk culture which led to taxpayer bail-outs and bank collapses.

These rules are designed to make banks safer, more accountable and ensure they focus on lending to the real economy. It will put an end an unsustainable banking model where a bail-out bank with £5.2 billion losses, £1.1 billion fines for mis-selling, £390 million fines for libor-fixing, in 2012 continued to pay out over £600 million in bonuses.

This is neither ethnical nor sustainable. The industry has had two years to sort this out and their failure to tackle the culture has resulted in these tough rules.

It’s ridiculous that Osborne sought to defend this broken bonus culture. This government says they want reform of the banking sector yet they are the only member state to defend the status quo by maintaining the current rules around bonuses.

Osborne should be embarrassed about the loss of Britain’s AAA status

Labour Party

As predicted Britain’s credit rating has been downgraded from AAA to AA1 by Moody’s Investors Service.  According to George Osborne the economic significance of this is not huge.  What Osborne would rather not acknowledge is that the symbolism is highly significant.

As I pointed out in a previous blog, being downgraded by one or more of the credit rating agencies is not the end of the world.  It happened to France and the United States without any real impact on the cost of government borrowing.  So this development is by no means an economic catastrophe, but we should not ignore the fact that it may be portentous.

Since Friday there have been no troubling signs in the market related to the downgrade, except, perhaps, the continuation of the pound’s decline in value.  Never the less, this is an important moment politically for George Osborne and the Conservative Party in general.

David Cameron, George Osborne and the Conservative party have for a long time stood on a platform of restoring economic stability, reducing our country’s debt and getting our economy going again.  In fact, Osborne stated that losing our AAA rating would be a humiliation, and as Ed Balls said in the Commons on Monday:
“The chancellor needs to get out of denial and get a new plan that will actually work on growth, jobs and deficit. Or else the prime minister will have to get a new chancellor.”

The downgrading is a further nail in the coffin of the Chancellor and this Government’s economic credibility.  It has also damaged Osborne’s increasingly shaky standing within the Tory party. The Chancellor’s decision before the 2010 election to make Britain’s triple A status a measure of his success is now seen as more evidence of poor judgment.

The Financial Times yesterday had two damning quotes from Tory backbenchers:

 “It was rank inexperience – foolhardiness verging on stupidity,” said one of his colleagues. “He would be OK if growth was ticking along at 2.5 per cent, but it’s not,” said another senior Tory, as he questioned whether Mr Osborne had the skills to cope with the persistently weak economy eroding his political capital. “

Cameron has made it clear that Osborne will remain in the Treasury until the next election, despite this latest in a long line of mistakes.  This is bad news the UK, as our economic outlook goes from bad to worse.  The credit rating downgrade might just be an embarrassment for Osborne right now, but it could also be a portent of things to come if he doesn’t come up with something to help stimulate growth.

Honeyball’s Weekly Round-Up

Labour Party

David Cameron’s trip to India was overshadowed by his refusal to apologise for the Amritsar massacre last week.

The massacre related to 1919 when 379 Indians were killed by troops under British command. Instead he used the term “deeply shameful”.

He defended his decision not to issue a full apology by saying: “In my view, we are dealing with something here that happened a good 40 years before I was even born, and which Winston Churchill described as ‘monstrous’ at the time and the British government rightly condemned at the time. So I don’t think the right thing is to reach back into history and to seek out things you can apologise for.”

Relatives of the victims said they were disappointed that the Prime Minister had not apologised. He was badly advised about this-he should have offered and apology because otherwise it’s neither one thing nor another. Rawnsley wrote a fine piece in this week’s Observer in which he warned that the Chancellor can’t afford to make any more mistakes in next month’s budget. His mistake last year was the “conglomeration of so many misjudgements,” he said.

He reminds us of one such mistake where Osborne ‘took his eye off the ball’ and was lured to Washington for dinner with the President the week before Osborne was due to deliver the Budget. “David Cameron flew off to Washington, accompanied by a large number of his staff, for a fancy dinner with the president. Mr Osborne, a great fan of many things American, did not want to be left at home staring at a Treasury spread sheet while his friend Dave was partying with the Obamas. So he crossed the Atlantic to join the jamboree,” wrote Rawnsley.

What a foolish thing to do. This illustrates one reason why he was forced into so many embarrassing U-turns after many ill-conceived plans were found to be totally unworkable.

This is what happens when you are distracted. One hopes he has learnt his lesson this year. Osborne is certainly under greater pressure to solve Britain’s economic problems after Moody’s downgraded the UK’s AAA rating. You can read Ramsey’s article in full here.

It was hardly surprising that UKIP’s sole female MEP was going to defect to the Tories, after she accused the UKIP leader of bullying and being “anti-women” and “a Stalinist”.

Nigel Farage’s response to this was typically offensive and dismissive of her accusations. He simply said: “the Tories deserve what is coming to them” and added: “The woman is impossible.” You can read more here.

 

 

UK on the Brink of Losing AAA Rating

Labour Party

There has been some discussion recently of the UK losing its AAA credit rating.

As things stand, the United Kingdom is one of a small number of countries which have retained their AAA rating since the beginning of the financial crisis.  A credit rating, when applied to a country, works in much the same as one applied to an individual.  A number of credit rating agencies, most notably Standard & Poor’s, Moody’s or Fitch Ratings, evaluate the likelihood of a country defaulting on its debt by looking at their borrowing levels, growth and spending.

The UK’s poor economic performance has led several economists to forecast that the UK will lose its status as one of a handful of countries that retain the much-coveted AAA credit rating. Investors have considered the UK a safe haven, which has allowed it to enjoy low borrowing rates. The fear in the Treasury is that the loss of the AAA rating would push up borrowing costs and make the UK’s debt payments more expensive.

George Osborne received a warning from David Riley, the head of global sovereign ratings at Fitch, that Britain could be stripped of its prized AAA status if he fails to boost the country’s economic situation in the spring budget

Mr Riley made it quite clear that the UK remains under “significant pressure” following the autumn statement in December, when George Osborne conceded that growth would be lower over the next two years and for that reason he was likely to miss one of his two debt reduction targets.

While he stressed that a downgrade was not a “decided event”, he said Britain remained “vulnerable” to fresh economic “shocks” elsewhere in the world.

Speaking on BBC Radio 4, he said:

“There is increasing concern that the fiscal consolidation is happening more slowly, that the economy isn’t recovering as quickly as we had hoped.  This does leave the UK quite vulnerable either to a worsening of the situation in Europe or some kind of shock coming from the United States or elsewhere.  It does mean that its AAA rating is under quite significant pressure.”

So unless Osborne can show significant debt reduction, Britain will be on course for a debt level at 100% of GDP according to Fitch, and that, in their words ‘is not really consistent with the UK retaining the AAA rating.’

Losing a AAA is not necessarily the end of the world; both the US and France have been downgraded by other ratings agencies without any discernable effect on their borrowing costs.  The point is that, the dramatic and painful cuts that the coalition government have been inflicting on the UK have all been in the name of reducing our debt and rebuilding our economy.  Well it’s clear now that the plan isn’t working; things are getting worse, and there doesn’t seem to be a Plan B.

Honeyball’s Weekly Round-Up

Labour Party

Yesterday Chancellor George Osborne admitted austerity measures will be here to stay until at least 2018.

And the Sunday Mirror revealed that a “rattled” George Osborne will outline plans to slash the benefits bill this week as he admits he is struggling to cut the UK’s debts.

He plans to freeze some payments for the unemployed, rather than bringing them in line with inflation and, the report says, the Chancellor will block the Lib Dems’ ‘cherished’ policy of a mansion tax.

Vincent Moss writes that “The admission is a sign that Mr Osborne may have to confess that he will not meet his pledge to make sure debt is falling as a share of the total economy by 2016.” You can read the story in full here.

Aside from Mr Osborne’s cuts it was an important week politically, not only did Lord Justice Leveson reveal the findings of his long awaited report into press standards, but Labour secured three seats in the by elections of Croydon North, Middlesbrough and Rotherham. The Guardian provided a great analysis of the results in its editorial of the elections on Friday which you can read here. Congratulations to all three new MPs.

Back to Leveson, and a debate will ensue this week regarding the best way forward, following Lord Justice Leveson recommendation’s that there should be an independent self-regulatory body for the newspaper industry which will be backed by legislation to ensure it is both independent and effective.

In an interview at the weekend with the Observer Ed Miliband said he is prepared to fight to bring in a law to regulate the press. Miliband told Toby Helm and Daniel Boffey that this must not be ‘run into the ground, and that he is determined to ensure something emerges as a result of the Leveson report. “I think there is huge urgency,” the Labour leader said. “We’re not going to let these talks become a smokescreen for inaction and just be used as a way to run this into the ground”.

You can read his interview in full here.

Are women better off today than their mothers were?

Labour Party

Soon after I joined the Labour Party in London in the dim and distant past my Constituency Labour Party Women’s Section (yes, that was in the days when the Labour Party still had a thriving women’s organisation) held a discussion entitled “Are you better off than your mother?” I remember it to this day because it seemed such a pertinent subject and a good way of evaluating where women were going.

On the whole, we thought we were better off than our mothers, though with strong caveats. We were generally better educated, had a higher standard of living and believed more opportunities were open to us.

I am not so sure the current generation of 20 something women can feel the same. Reaction is all around us: the Church of England has refused women bishops, there is currently no woman on the board of the European Central Bank and the Tory-led coalition Cabinet has only five women out of a membership of 24. As if that were not bad enough, Prime Minister Cameron recently told the CBI that equality impact assessments are indispensible in his drive to cut “red tape”. In other words, measures that protect women are mere regulation which should be abolished.

We are seeing a damaging and destructive retrograde pattern. Forty per cent of jobs in the public sector are held by women. Cuts therefore hit them disproportionately. Quoted in Sunday’s Observer Ceri Goddard from the Fawcett Society said: ” The diminishing role of the state is going to have a significantly negative impact on women’s lives….The state as a public sector employer and a provider of services such as childcare has played a huge part in women’s progress for 30 years.”

Women are not only losing their jobs. There is also a lack of women at the top of our institutions, despite research which shows that diverse leadership creates more positive outcomes than that of men alone. For the first time women’s progress has virtually halted, a situation which may get worse rather than better.

Much of this has to do with the current ascendancy of what could loosely be termed reactionary forces. We have a right-wing government in Britain bolstered by some extremely right-wing Tory MPs. Our country’s economy is effectively in the hands of six men – David Cameron, George Osborne, Oliver Letwin, Nick Clegg, Danny Alexander and David Laws. I defy anyone to spot any real difference between these paragons. Even the dear old Church of England is now in hock to an alliance between the conservative Anglo-Catholic wing and the conservative evangelicals who came together to block women bishops.

The plain truth is that women do better under centre-left governments when progress rather than reaction is the driving force. The number of women MPs has gone up every time Labour has had a majority in the House of Commons, culminating in 120 following the Labour landslide in 1997. Tellingly of this 120, 101 were Labour women MPs out of a Labour total of 419 seats won. The Tories had only 13 women out of 165 seats in the House of Commons while the Lib-Dems won 46 seats with three women. 

The results for the 2010 were as follows: Tories 306 seats won with 49 women MPs, Labour managed to take 258 constituencies and had 81 women while the Lib-Dems gained 57 seats returning seven women.

Labour’s record on women MPs is streets ahead of the Conservatives, both now and in the past. Women do not do well when the right is in the dominant force, in politics or any other walk of life. I hope all those women who are suffering the effects of the recession and the seeming reverse in women’s fortunes will take this message to heart.

The answer to the question, “Are we better off that out mothers were?” lies to a large extent in whether progressive forces or right-wing reaction were in power across our national institutions at the time our mothers were making their way. As women we were and undeniably will be better off under Labour.

The Conservative Party remains deeply divided on Europe

Labour Party

The Conservatives are all over the place on Europe. Yesterday’s Guardian was a veritable treasure trove of Tory tangle.

Writing about the views expressed over the weekend by Prime Minister David Cameron and Chancellor George Osborne, the excellent Jackie Ashley saw through their carefully crafted comments. Cameron has said on a number of occasions that the Eurozone needs a deeper structure with further political integration. Meanwhile Osborne pointed out in the Sunday Telegraph that Britain is heavily dependent on what goes on in the Eurozone.

This much is true. However, every time David Cameron has demanded, in his very own imperious style, that the Eurozone sorts itself out, he has also made it abundantly clear that the UK could not be part of the arrangements he espouses for others. Jackie Ashley is absolutely right when she says that David Cameron is effectively advocating a super-state which leaves Britain in grave danger of being overshadowed with little control over our political, as well as our economic, affairs.

Meanwhile the über-Eurosceptic think tank Open Europe has just come out saying that Britain’s exit from the European Union would pose “unpredictable political and economic risks”. This is certainly a turn up for the books and will, I hope, be taken seriously by those who support Open Europe’s general point of view.

So we have the Prime Minister and the Chancellor advocating a European super-state without Britain which, by virtue of its size and clout, will inevitably overshadow its much smaller neighbour, the UK. At the same time an influential strand of anti-EU thought is warning that Britain would be better not leaving the Union.

As if this weren’t enough, in the same edition of the Guardian George Eustice, Conservative MP for Camborne, Redruth and Hayle and former press secretary to David Cameron, is still fighting the repatriation of powers corner. He maintains. “We can do better that just leave the EU. With the right approach, we could change it.”

Although superficially appealing, I find the Eustice line deeply hypocritical. As I have said many times on this blog, changing the EU, in other words repatriating powers from Brussels to London, is not a runner. Such a change would need the agreement of all 26 other member states – a huge task. The scale of what Eustice thinks possible can be seen if the question is put the other way; why indeed should the rest of the EU allow Britain to cherry pick?

Eustice’s plan is quite simply not feasible. If it were tried in any serious fashion, it would surely lead to Britain leaving the EU, probably slowly and probably without a referendum. The Eustice idea that powers can be repatriated is really the worst of all worlds presented as reasonable and desirable.

Cameron, Osborne, Open Europe and George Eustice do not, of course, represent the views hard-line Tories who want nothing less that immediate withdrawal from the EU. Daniel Hannan MEP has recently repeated his mad idea that Britain should transform itself into Norway or Switzerland, while Douglas Carswell and Bill Cash rarely let up on their hatred of all things EU.

All in all, there are at least four Conservative positions on the EU represented in this short blog post. The Tories are well and truly divided on what is fast becoming one of the current defining issues. It is becoming ever clearer that the Conservative Party has not resolved its internal divisions, and there has always been general agreement that a split party is not good for the health of the government.

Honeyball’s Weekly Round-Up

Labour Party

After a week off, Lord Leveson will resume his inquiry into press standards today. Today it is the turn of Chancellor George Osborne. Yesterday’s Observer revealed his meetings with Murdoch will be under scrutiny and we will learn how the Tories relationships developed with News Corp executives following private social gatherings and Swiss chalet parties attended by News Corp executives.

Over the weekend Toby Helm’s piece said that ‘Sources close to the chancellor insisted last night that it was complete rubbish “to suggest that any deal to secure Tory support for the bid had been done struck in the chalet as Osborne had not learnt that the bid was happening until well after the election.’

The Labour Party has suggested that it will call for a new system of independent regulation of the press.

What exactly will emerge as a result of the  inquiry remains to be seen, but any new system of regulation will have to be robust and have power’s to impose sanctions on anyone falling foul of the rules.

That said, a free and independent press is something Britain rightly prides itself on and that must remain the case, but with a proper system of independent regulation. You can read Toby Helm’s piece here.

Meanwhile with the Olympics just 46 days away, Brooke Magnanti- better known by her alias ‘Belle de Jour’, is supporting a campaign which has written to the Mayor of London addressing fears that police tactics are compromising the safety of sex workers. The letter believes the raids are part of a clean-up operation which target sex workers working in establishments across London in the run up to the Olympics.

Police tactics must be proportionate and this is a sensitive area of policing.  Vulnerable women must not be deterred from reporting crimes or from coming forward to seek help and support.

Support must always be the ultimate goal and outreach work must never be compromised. You can read the article in full here.

The “immediate plan” for the Euro from David Cameron and President Obama is an illusion

Labour Party

As David Cameron met German Chancellor Angela Merkel, on one level it is reassuring to know that the Prime Minister thinks decisive action needs to be taken in order to underpin the Eurozone, as reported in the Guardian yesterday. The quote from the Prime Minister’s spokeswomen goes on to say that confidence in the markets is essential, and in order to regain that confidence decisive action needs to be taken.

The unfortunate aspect of the story is that Messrs Cameron and Osborne are in no position to take any kind of decisive action. By waltzing out of the last December’s European summit which established the fiscal pact, David Cameron threw away any hope the UK may have had of a voice in the future of the single currency. Although this may not be a bad thing at the present time since another voice supporting austerity would not be helpful for the Eurozone, it leaves the UK powerless when it comes to the Euro. If Cameron leaves any lasting legacy, he will go almost certainly go down in history as the Prime Minister who sold Britain down the river.

Mr Cameron’s is now following a long tradition of British Prime Ministers turning to the United States of America. Apparently in a telephone conversation the night before last reported in the Daily Telegraph, Cameron agreed with President Obama that there is a need for “an immediate plan” to resolve the Eurozone crisis. Mr Cameron seems to view this weasely statement as significant, strong enough to make sure the British media knew about it.

Of course the problems in the Eurozone need resolving; no-one would disagree with that. The UK’s economic woes also need sorting out. Even the United States itself could do with a bit of economic firepower. There are two points to be considered. One is that the world is now a very small place and economic difficulties can never be confined to one country or region.

The second point is more specific. Neither President Barack Obama nor Prime Minister David Cameron has competence to deal with the Eurozone’s affairs. The G20 summit in Mexico later this month will discuss the Euro and many other economic issues and will more than likely seek to find an acceptable way forward.

However, the power to make decisions on the future of the Euro, how the Eurozone is governed and what will be done to improve the current situation, such as introducing Eurobonds, will be for the members of the fiscal pact to decide. Britain is not there. Lecturing Eurozone leaders about what they should or should not do makes no difference as the power has already been conceded. Cameron’s hectoring only further alienates other EU leaders and is therefore not a wise long-term policy.

President Obama has, of course, been much too sensible and rational to lecture the Europeans. He no doubt views talking to the British Prime Minister as a courtesy and probably keeps close to Britain as much for old time’s sake as anything else.

That really sums up the UK’s current standing with the United States. We are, of course, still strong allies, share a common language and go back a long way. Nevertheless, the relationship these days is all one way, the way of the USA. Britain has little real power in relation to its transatlantic ally, and now very little power in the Eurozone which is bound to lead to an erosion of influence in the European Union.

David Cameron could not have done better if he had wilfully set out to reduce Britain’s standing. Much of his anti-EU shenanigans has been to placate his feral Eurosceptic backbenchers. On Wednesday’s Newsnight Tory MEP Daniel Hannan sang the praises of Norway and Switzerland telling us how they thrived outside the European Union. With the greatest respect to both of these countries, they are happy to be isolated and have never sought any position on the world stage. Britain, I believe, still wants to be a leading international power. The only way to do this is to play a full and leading role in the European Union.