Gordon Brown

Britain’s EU bill explained without the anti-European hype

Labour Party

Mark Reckless, Bill Cash, Douglas Carswell and the other feral Tory Eurosceptics are quite simply wrong on the EU budget. At best they have either not bothered to do their homework or quite simply and naively believe the plethora of misinformation that surrounds us in Britain. At worst they are so utterly opposed to the European Union that they will always twist the truth to suit their own purposes.

I was particularly disappointed by an article in the Sunday Times full of prejudice taking little account of the facts. Britain actually received a £5 billion rebate back from the EU last year and will continue to get this sum adjusted for inflation for every subsequent year. The reason the UK is one of the highest contributors to the EU is that we are one of the largest member states.

What is more, the EU budget is nothing like as huge as current folk lore would have us believe. In 2011 it was € 140 billion. The average EU citizen pays only about 50p on average per day to finance the annual budget which represents only around 1% of EU-27 Gross Domestic Product

The budget is, in addition, always balanced, meaning nothing is spent on debt. Moreover 94% of what is paid into the EU budget is spent in Member States on EU funded programmes, many of which are about economic development creating jobs and generating wealth. Those who complain about EU payments to Kosovo being lost to corruption as outlined in the Sunday Times would do well to understand that this is proportionately a very small sum of money. Of course, corruption is always wrong, but the Tony Blair and Gordon Brown decision to support Kosovo was made in good faith with the aim of rebuilding the war torn country.

I get very annoyed when we are told that the EU budget and almost everything else is imposed by Brussels. The budget and, indeed all European legislation, is decided by elected politicians, in the European Parliament and in the Council of Ministers comprising member states’ elected governments. The EU never “imposes” anything on member states; it is all agreed by elected governments and elected MEPs.

The Sunday Times article sadly relied on briefing from the Open Europe think tank. They are by their own admission anti-EU as this quote from their website demonstrates: “While we [Open Europe] are committed to European co-operation, we believe that the EU has reached a critical moment in its development. Globalisation, enlargement, successive No votes in EU referenda and the Eurozone crisis have discredited the notion of ‘ever closer union’ espoused by successive generations of political and bureaucratic elites.”

While this is an opinion, it is not the only one and the Sunday Times would have done well to take on board other arguments. They tell us that 53% of those in David Cameron’s Witney constituency favour withdrawal from the EU. That means that 47% do not, enough I would have thought for their views to be taken on board.

Eurozone banking union could challenge the City of London

Labour Party

Monday’s extract from the latest tranche of Alastair Campbell’s diaries, The Burden of Power: Countdown to Iraq, published in the “Guardian” is very telling on the Euro question.

According to Campbell, Blair was well and truly thwarted by Brown. What is more, Tony Blair feared “we were making the wrong decision for the wrong reasons”.

While the bickering, not to say in-fighting, between Blair and Brown as told by Alastair Campbell makes depressing reading, there is no doubt in my mind that Tony Blair’s instincts on the Euro were right, even in the light of the current crisis in the Eurozone.

When British commentators talk about the Euro they all, almost without exception, take a congratulatory, not to say patronising, tone. The UK is deemed to have done the right thing by staying outside the Euro. We are not, after all, embroiled in the current economic problems.

Except of course, we are. The recession is deeper here than elsewhere in the EU. Britain’s double dip recession matches the economic problems of almost any save the most deficient Eurozone country. Unemployment in the UK stands at 8.4%. This is higher than Germany at 5.4% and Holland and Luxembourg (5.2%). True, there are also very high unemployment in the Eurozone, especially in the member states facing huge problems such as Greece and Spain where the rates are in the low twenties. Overall, the Eurozone total in 11.2%, more than Britain, but not much more given that the peripheral countries are in such difficulties.

As readers of this blog know, I very much support what was the Tony Blair position on the Euro in 2003, the year Campbell features. In a world where economies are intertwined, it would have made a lot of political sense for the UK to join the Euro at that time.

The UK has once again failed to join the European project at the right time. Former Permanent Representative to the EU Sir Stephen Wall is quite clear in his excellent book “A Stranger in Europe” that Britain would have not faced many of the issues it found itself dealing with regarding the European Union if we had been there at the beginning rather than leaving it until 1973 to join.

The same, I fear, will happen in relation to the Euro. If a country is not there at the start they stand to miss out on crucial decisions, finding that the architecture has been put in place without their input. This is, of course, why the UK is uncomfortable with some aspects of the European Union, especially when it comes to agriculture.

The Eurozone seems to be going in the direction of some kind of banking union. This will obviously have an effect on the City of London. Being outside whatever kind of union emerges may well prove problematic for our financial services industry. We in Britain should ask ourselves whether we really want a powerful neighbour with a unified banking system which will be able to challenge, not to say get the better of, our most important industry.

Lack of quantative easing is central to the Eurozone crisis

Labour Party

This guest blog is written by Lindsay Thomas who is Director, Sustainable Risks Ltd and a former FSA supervison director  

The Greek crisis goes on, the Euro weakens, Cameron can conveniently continue to blame the Eurozone for his policies failures while looking tough while vetoing their attempt at coordinated action. Why has the Eurozone become the centre of this on-going global crisis? And why is Greece the centre of attention?

Virtually all the world enjoyed the binge on vast liquidity and artificially low interest rates for too long. Greece is as central to this crisis as Northern Rock was to the failure of Lloyds and RBS – its small but just came first. This crisis, it’s the same one since 2007, is a global crisis – government, corporates and consumers all took on more debt than they could afford because it was so cheap and so readily available. Of course, the bankers helped everyone to as much as they could and took the vast bonuses because they were so clever and successful. When it comes to total debt not just government debt  as a proportion of GDP then the Eurozone as a whole is a poor third to the US in second and the UK well out front. So why is the Eurozone the centre stage of this crisis now? Is it basic flaw in the Euro project?

The Eurozone certainly has all the standard symptoms of advanced economies in this crisis – high debts and overpriced assets leading to insolvent banks. Well, there are flaws as they recognise and the straightjacket of a currency union has its disadvantages (the Euro gold standard) but the biggest cause for the Eurozone being so different to the US and UK is Quantitative Easing.

I describe QE as taking methadone to get us off the heroin of too much liquidity and too low interest rates. Our methadone in the UK has been £275 billion of printing money to have even lower interest rates and even higher liquidity. Brown correctly persuaded others at least to boost their economies, if not adopt QE, to avoid the cold turkey of the immediate shocks of waking up to a heroin addiction.  Methadone allows one to plan and progressively withdraw the drugs. The US adopted the same approach to the tune of $1.25tn.

But still why is the Eurozone the centre of the crisis if it had a lower debt to GDP? The answer lies in both the structure of the Eurozone and the attitude of the ECB. The Eurozone has not undertaken anything like full scale QE until just before this past Xmas when it started with a long term €500bn loan facility.  This is because the ECB does not have a mandate for propping up countries (QE was completely unforeseen when the mandate was created) and the ECB fears that QE, with it inflationary implications etc, amounts to debasing the currency and therefore should be avoided at almost any cost. A new head of the ECB has changed the attitude recognising ‘any cost’ is what they had reached. Expect the ECB to undertake at least another €1tn set of three year lending.  Now the ECB is undertaking a form of QE you will see panic in the Eurozone government bond market subside as it did forUK and US.

In summary, the ECB backed by Germany and France, bravely or foolishly, decided to go cold turkey to force as much political alignment as possible before they reluctantly took the methadone.

Whether it will promote sustainable growth is quite another matter. Getting off methadone ( I am no expert on that) will, in a financial sense, require rebasing asset values, deleveraging in the retail, corporate and Government debt (not all at the same time), allowing interests rates to rise but most of all reaching agreeing on all this between the world major economies alongside trade and currency coordination. Something Cameron does not find so convenient politically and his ‘being first to rush for the exit’ strategy brings failed captains of another type to mind. We should stick withEurope- being part of a collective solution not going it alone recognising we have achieved very little ourselves yet and we need all the friends we can get.

The Euro was Tony Blair’s lost opportunity

Labour Party

Peter Hain in his excellent memoirs Outside In recounts one of the greatest lost opportunities in post-war British politics.  According to the article on Hain’s book in the Guardian today, Tony Blair set up a secret group to do the necessary background work for a successful referendum on Britain joining the Euro.

Blair was, it appears, intent on the UK joining the single currency in 2002 or 2003. In the middle of 2002, according to Hain, the Prime Minister “talked discreetly to key pro-Europe individuals about raising funds for communications research, focus groups, opinion polling and detailed research.” Pro-Euro business figures raised £200,000 very easily for this enterprise.

A small, select and seemingly secure group which included the pollster Philip Gould and Blair aide Pat McFadden, now an MP, was formed to look at the whole question. Secrecy was paramount as Gordon Brown would never have agreed to join the Euro and had therefore to be kept away from these initial discussions.

Secret cabals in politics are rarely a good thing – they have no actual power and are unlikely to be kept under wraps for any significant amount of time. Something ended up going horribly wrong with Blair’s Euro group in that the whole project was stymied when Gordon Brown devised the five economic tests for joining the Euro and then declared the UK had not met them.

 You cannot help wondering whether Brown had heard what was going on and devised a way to kill any idea of a referendum on joining the Euro stone dead.

Despite current orthodoxy, I remain convinced that Brown’s opposition to the Euro was extremely short-sighted.  Given that the UK economy is so tied up with the Eurozone and Britain gains considerably from the EU single market, being in or out of the Euro makes little difference economically. Indeed George Osborne has recently agreed another tranche of funding to contribute to the additional $500 billion the International Monetary Fund says it requires to protect the world economy from the European debt crisis.

The UK quite simply cannot ignore the Eurozone in its hour/day/week/month/year of need. What is more, there is little difference between UK and Euro interest rates.

Britain is also suffering as much as the Eurozone with rising unemployment and poverty. Indeed, this Tory-led coalition is increasing the burden on the sick and vulnerable and would, I am certain, be doing the same whether or not we were in the Euro.

Economic arguments aside, what is truly unacceptable about Britain’s status as a non-Euro country is that we are unable to be a major player in the European Union while we sit outside the single currency, a fact thrown into even starker relief by David Cameron’s walking out of the recent European summit during the small hours of 9 December last year.

In order to be a power in the world, the UK has to be a power in the EU. Unpalatable as this may be, it is undoubtedly the case. In the 21st century the world power is the EU, not Great Britain. True, the United States remains up there, but our transatlantic links are weakening and Britain is very much the underdog in the modern “special relationship”. That leaves the emerging powers of China and India, both of whom are racing well ahead ofBritain in the world power stakes.

Thus being outside the Euro has huge national and international implications forthe UK. Outside the Euro with David Cameron we really are not much more than Norway. I have never bought the UKIP argument that it would be good to be like Norway. Excellent country that it is, it is not really significant in the scheme of things, does not take part in major international decisions and appears to be content to sit at home avoiding power and responsibility.

As a British patriot, I do not want the Norwegian option for our country which ruled the waves only 100 years ago. I want to be where it matters. That is at the heart of the European Union with a seat at all the tables and the power due to us as one of the second largest EU member states after Germany. In order to be where we should be, Britainhas to be a member of the single currency. It’s as simple as that. We ignore this at our peril.

It was, therefore, a tragic shame that Tony Blair did not take us into the Euro. Apart from giving Britain a place in the world, it would also have sealed his legacy, a legacy which became so damaged by the Iraq war. As a strong Blair supporter, I believe he deserves to be better remembered than seems to be the case at present. This may have been the reality not just something on my wish-list if Blair had found the courage to put our country well and truly at the economic and political heart of Europe.

The True Consequences of Exclusion from Eurozone Decisions

Labour Party

As expected Eurozone leaders have reached agreement. The three-pronged arrangement means that private banks holding Greek debt will face a loss of 50%. Banks must also raise more capital to protect them against losses resulting from any future government defaults. The final part of the deal approved a mechanism to boost the Eurozone’s main bailout fund to one trillion Euros (£880bn; $1.4tn) with the framework for the new fund to be put in place in November.

From a UK perspective there is one thing above all which should send alarm bells ringing. The UK government was not at the table. The Tories have completely blown it. True, Cameron was allowed to be on the fringes of the preliminary get togethers, but when it became real he was excluded. This is a massive body blow. Britain is a major economy and the City of London one of the most important financial centres in the world. Decisions taken in the Eurozone are fundamental toBritain’s economy. 

We would do well to compare Britain’s exclusion this time round to the events in the autumn of 2008 when the world banking system was in meltdown. The Labour Prime Minister at the time, Gordon Brown, was a key player in the Eurozone summits in Paris, preparing a common European position for the G8 and G20 meetings. Brown received recognition from all quarters for the leadership he showed at that time. All Cameron and Osborne have achieved is damaging exclusion.

The Tory leadership continues to make a virtue of not being there, viewing the EU as some alien body which is out to get us. In fact, the opposite is true. It’s the Tories who are out to get us. When they talk about repatriation of powers from the EU to theUK- a near impossibility in itself – what they are really seeking is the unravelling of social protection.

The Tories want to take back powers on health and safety, environmental standards and consumer protection, amongst other things. The EU has, over the years, maintained and improved conditions at work, introduced legislation on water and air quality and set up a system of food labelling, to name but a few measures which benefit all of us. The Tories view this kind of social legislation as expensive and unnecessary. They want to repatriate powers to do away with many things which are of great benefit to the British people.   

It was this same antediluvian attitude that led the Tories to take themselves out of the mainstream centre-right political group in the European Parliament, the European People’s Party, and ally with what Nick Clegg described as “a bunch of nutters”. This knee-jerk move to secure David Cameron’s leadership of the Conservative Party greatly angered centre right leaders inEurope, including Angela Merkel. Indeed, the current government’s exclusion from the Eurozone decision making process may have something to do with this history. The Tories cannot have it both ways. If they choose to attack the EU they will surely come a cropper.

However, it’s not just the Conservative Party who will suffer. Since they are the major governing party, it is the British people as a whole. It’s becoming ever clearer that the Tories want to do away with so much of what we as a country take for granted and take us backwards fast. That would be extremely bad new for the vast majority of us who live and work in the United Kingdom.

Cameron and Osborne should support Gordon Brown to lead the IMF

Labour Party

I find David Cameron’s rejection of Gordon Brown’s bid to lead the IMF quite appalling. I always thought the Conservatives claimed to be patriotic, until recently singing “Land of Hope and Glory” at their annual conference. We now know they do not put Britain first, living up to Winston Churchill’s damning condemnation of a former Tory Prime Minister, Stanley Baldwin, whom he accused of putting party before country.

Since many believe Gordon Brown has excellent credentials for the IMF post, Cameron and Osborne’s attitude comes not from a desire to support the best candidate, but rather from narrow party advantage.

This Tory-led government would, indeed, find it difficult to blame Gordon Brown for Britain’s economic crisis while at the same time putting him forward for a high-level international economic job. If they came out for Brown, Cameron and Osborne may just have to admit that the global economic crisis had something to do with the parlous state of our economy. Since every Tory and coalition spokesperson has taken all possible opportunities to blame the last Labour government for our economic misfortune, the Tories would lose a major plank of their attack strategy were they to allow this particular rug to be pulled from under their feet.   

Quite simply this Conservative-led coalition prefers to support Christine Lagarde, the French Finance Minister rather than a former Labour Prime Minister in order to be able to attack Labour’s economic record. Gordon Brown is one of us, i.e. British, and should, I firmly believe, be our candidate for the IMF top job. There are times when country comes before party and this is one of them.

I completely agree with James Wolfensohn, former Director of the World Bank, quoted in the “Independent” today following his article in the “Evening Standard”, who said “Gordon Brown has proved that he has the leadership skills, the vision and the determination to bring the world together”. Gordon Brown has also been endorsed by Lord Skidelsky, a cross-bench peer and economic historian, not to mention Labour MP Tom Watson.

Calamity Clegg Closes Down Electoral Reform

Labour Party

I’ve left commenting on the result of the AV referendum so late because, to be honest, I haven’t had the heart to put pen to paper, or should I say fingers to keyboard.

As regular readers of this blog will know, electoral reform is a cause I have campaigned for over many years. It now looks to have been stopped for in its tracks for many more years to come. I take no joy in pointing out how appalling Nick Clegg’s judgment has been on this matter.

I wrote a post here in September 2009 which is a little prescient looking back now. Gordon Brown had just committed the Labour Party to AV and this became part of Labour’s subsequent manifesto. I argued then that the way to secure electoral reform would be for the Liberal Democrats to work with another party which had the same objective. Quite why Nick Clegg and others thought the Conservatives would not fight a hard campaign against AV is beyond me. There is a touching naivety in their complaints about lies and negative campaigning. Can these Lib-Dem politicians be the very ones who used to put flakey bar charts on their election leaflets inflating Liberal Democrat chances of winning, not to mention their penchant for dirty campaigns when necessary? I have experienced negative Liberal and Liberal Democrat campaigns for 30 years.  Now they’re on the receiving end of criticism they seem quite unable to take it on board.

I remember saying in 2009 that almost every seat the Liberal Democrats won in 2005 from Labour had a substantial student population who voted for them as a result of the cocktail of Iraq and university tuition fees, which, of course, no longer exists. How true this proved.  In the 2010 General Election Liberal Democrats gained two seats from Labour – Redcar and Burnley. Both of these gains were based on local issues and campaigns.

What is more, the shattering Scottish and Welsh results last week show that any Liberal Democrat in a seat with a large student population should immediately start looking for alternative career prospects. Now with first past the post re-established the only question surely is whether the Liberal Democrats lose a half, two-thirds or maybe even more of their current seats. Nick Clegg in the 12 months before the 2010 General Election fantasised that the Liberal Democrats would make considerable gains from Labour. In the end Labour gained one seat overall from the Liberal Democrats.

Nick Clegg’s strategic mistake was of monumental proportions. He could have seized an opportunity to work with Labour to secure AV. Labour made a manifesto commitment that would have seen Liberal Democrats at the next election hold perhaps 80 seats, now it is likely to be 20. That’s a massive blow to any party. I am unconcerned about Liberal Democrat prospects but I did want to secure a fairer voting system. So like many Liberal Democrat activists I am very disappointed at how badly Nick Clegg misjudged matters.

Honeyball’s Weekly Round Up

Labour Party

So what exactly did happen to Gordon Brown since he opened the door and walked out of Downing Street with Sarah and his two sons in May this year?

The Guardian interviewed him yesterday and while it wasn’t the most revealing interview – there were many things he just wouldn’t be drawn on – it did reveal he is a man of integrity. He has absolutely no desire to take on a big corporate role, or head of into the financial world as many thought he might, instead he is working diligently for his constituents,  doing the work you’d expect of any other back bench MP. 

Although it’s difficult to really weed out his true feelings from this interview he seems to have taken Labour’s defeat in his stride, but he does feel responsible nonetheless. The full interview, here, is worth a read even though it doesn’t reveal as much as I’d have liked, such as more about his next plans, how he moved on from the election in what must have undoubtedly been a painful period and if he’ll stay on in Westminster beyond the next election. Still the photographs show him to be relaxed and smiling from ear to ear, something we’ve not seen in  a long while.

I was troubled to read today about the effect closing NHS Direct will have on the country.  In a bid to save millions of pounds the Heath Minister is planning to replace the successful NHS Direct with a  cut price version ‘111’ which is manned by call centre staff. In today’s Sunday Mirror a senior nurse exposes the new system and threatens it will be a disaster.

The whistleblower nurse who had worked on a trial revealed that the cost cutting measures led to a culture of incompetence in which, the report alleges, unborn twins may have died because of advice given by 111, Call-takers with just 60 hours of training failed to spot the ­symptoms of life-threatening strokes and epileptic fits and that 111 call takers panicked and sent ambulance staff to non emergencies.

What on earth is the minister thinking allowing the good work and highly efficient and successful NHS direct be phased out and replaced by something which is at best incompetent and at worst out right irresponsible. There are some things which should not be messed about with and this is one of them. Aside from the obvious lack of training these call workers have there is a serious issue that untrained staff have access to millions of patients data.

Earlier in the week I wrote how Panorama exposed leading FIFA officials over allegations of bribery. Whether or not it scupperd our chances of securing the hosting of the 2018 World Cup is irrelevant. First it was right that the journalists exposed the wrong doing when they did. Second, if the allegations are true the body must work hard to restore the faith it has lost, and this, I fear, will take many many years to restore. One suggestion is higher regulation, which I am in favour of and which I made suggestions on in my blog which you can read here.

Ireland – Labour’s Double Opportunity

Labour Party

The Irish economy is in a mess. I’ve seen little mention of how effective the Irish Labour Party has been in holding the ruling Fianna Fail government to account. Thire talent and ability comes as no surprise to me working alongside Irish Labour MEPs Nessa Childers, Alan Kelly and Proinsas de Rossa. People in Ireland are turning to the Labour Party and it is riding consistently high in the opinion polls. At times for the first time ever it is the most popular party.

Irish people are rejecting the financial policies of Fianna Fail which George Osborne has praised. A great opportunity for the Irish Labour Party and I hope they make substantial gains and form part of the government after the forthcoming general election.

There’s also an opportunity here for the British Labour Party. The coalition government have been successful in starting to establish a political narrative which says that the British economic problems are a result of Labour government. It’s not true, any economic literate person knows that it was the “banks wot caused it”, but you can’t blame them for trying, especially as so many of the Conservatives have close links with bankers.

Philip Stephens writing in the Financial Times on Tuesday about the Irish bail out said:-

“As it happens, Ireland’s property-boom-turned-banking bust had little to do with its membership of the single currency. Ireland is not Greece. The closer parallels are with Iceland and dare one say it, Britain. Gordon Brown got precious few things right as prime minister, but Gordon Brown’s bank rescue package probably saved Britain from Ireland’s fate.”

Indeed you do dare say it Stephen, and I think there’s no doubt about it, Gordon Brown may not have saved the world, but he did save Britain. Labour should be proudly stating this.

Labour should also be posing the question if Labour/Gordon Brown is responsible for the current economic problems, why is Greece in such a mess? Why has Ireland just been bailed out? What happened in Iceland? Why is Portugal nervously considering the possibility of a future bailou,t with Spain being talked of as the biggest country to face similar problems. Or put another way, how did Gordon Brown create such a mess in the Greek, Irish, Icelandic, Portuguese and Spanish economies? And of course the answer is obvious even to the economically illiterate, he didn’t.

Are all these crises unrelated? Of course not. Was it some international political conspiracy, or was it international bankers? British Labour needs to achieve some of the political confidence of Irish Labour to loudly proclaim the dangers of economic austerity packages rooted in ideology not practicality. I’m grateful to Proinsas De Rossa for the link to this explantion by Mark Blyth Professor of International Political Economy, Watson Institute for International Studies, Brown University. It’s well worth a view, or maybe even two!

Honeyball’s Weekly Round-Up

Labour Party

Another week and more disappointment: This week it was in the form of Michael Gove, the Education Secretary, who announced he would scrap the £162m budget which had been set aside for the national PE scheme. Instead, head teachers will decide how much to spend on PE. The last government had worked hard for 10 years to improve the teaching of physical education… but Gove insists a ‘school Olympics’ will be even more effective at increasing participation.

I find it difficult to understand how he can defend such a stance when we have such a problem with obesity and specifically childhood obesity. Our children are some of the most inactive across Europe and have similar obesity levels to the United States. So we must educate them and encourage them at every opportunity to become more active. You can read the report in today’s Independent here.

It was a busy week for the minister who also came under fire for his decision to scrap modular GCSE course and replace them with a single examination at the end of a study period. The plans were revealed in his radical white paper which also includes details of how the department see teacher training developing in the future and, discipline and accountability.

Gove said: ‘Instead of GCSEs being split into bite-sized elements we think it’s important that at the end of the GCSE course, the student should be examined on everything they have learnt at one time.’ His argument is that we modular courses ‘dumb down’ learning and the testing of ability. But ability may be tested in different ways, and students have different ways of showing they have learnt.

To expect everyone to be able to perform in a single exam following two years of teaching is simply peculiar and will disadvantage all those who simply don’t perform well in exams but can express their knowledge in other ways such as through essay based tests. You can read Patrick Wintour’s full reporting the Guardian which has further details of the government’s white paper, here.

Over the last couple of weeks rumours have been abound that the former PM, Gordon Brown would resign his seat. But he has set the record straight and told Vincent Moss of the Mirror that there is nowhere quite like Parliament. ‘It’s unique,’ he says. Having set the record straight he went into the chamber and attacked Tory cuts which have affected ship yard workers in his constituency. I can imagine that this would’ve been a difficult speech to give, his first as a backbench MP.

But he is working hard for his constituents rather than standing down, fading into the background or taking a lucrative job elsewhere, and this we must applaud.