Bankers and fairies

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The headline in yesterday's Business and Money section of the Sunday Times proclaimed that “City tells Reeves: we can lend you £80bn”. It’s an example of the way that the basic facts aren’t always presented in a neutral fashion, because the headline could equally have read, “City tells Reeves: We have £80bn that we want to save with the government”. In the preferred version, the banks and financial institutions are doing us (through the government) a favour by lending us money; in the alternative version, the banks and financial institutions are asking us (through the government) to do them a favour by accepting large deposits of ‘spare’ cash.

They both represent different aspects of the ‘truth’, underlining the way that what looks like a debt to one person will always look like an investment to another. But which is actually the best representation of the underlying truth? Imagine that ‘the City’ is a single corporation here, and that the Chief Financial Officer is talking to the collective board. Is (s)he going to say, “Look chaps, the government has got itself into a bit of difficulty, but I reckon that we can probably divert around £80bn from other places to lend them in order to help them out”, or is (s)he going to say, “Look chaps, there’s something of a dearth of safe and profitable investment opportunities at the moment, and the best thing that we can do would be to deposit £80bn in government funds”? When deciding how best to manage their money financial institutions are always looking for a balance between risk and reward, placing some of their money in high risk, high reward investments and some into lower risk, lower reward investments, such as government bonds. To put the question another way, when they are deciding on that balance, do we believe that they operate on the basis of a community-friendly altruism, or do we believe that they decide on the basis of what’s best for their shareholders?

Those who believe in altruistic bankers might like to come and meet the fairies at the bottom of my garden.

Anti-homeopathy: could it be fatal?

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It could simply be that I haven’t properly comprehended it, but my understanding of homeopathy is that a substance known to be harmful is added to water and then repeatedly diluted until there’s no trace of it left, at which point the water somehow retains a memory of the substance, and that memory, by being drunk, cures the original problem. It would be fair to say that opinions differ as to its efficacy. Science has, to date at least, been unable to explain how water retains a memory of a substance, let alone how that memory can then cure anything. Others swear by it.

The UK Labour government seems to be adopting a form of reverse homeopathy, whereby repeatedly strengthening the dose of the poison is deemed to be a cure. They are committed, for instance, to getting rid of the blight of child poverty, but their approach so far has been to increase the number of children in poverty by retaining the two-child cap on benefits, and now talking about withholding benefits from people deemed able to work, whether work is actually available to them or not. They are also opposed to pensioner poverty, and are tackling it firmly by deliberately reducing pensioner income. The scientific basis for the assumption that increasing poverty is the route to reducing it is even less clear than that for homeopathy, but at least drinking water, with or without a memory, isn’t actively harmful in itself.

The belief in what we might call ‘anti-homeopathy’ isn’t restricted to the governing party. The current main opposition party is suffering from its own version of the same affliction. In their minds, the best way to cure the problem of people not voting for them is to double down on all the reasons why people rejected them. The dose of ideological fervour on offer from Sunak simply wasn’t strong enough, apparently. There were reports yesterday that an opinion poll conducted by Electoral Calculus showed that a Conservative Party led by Robert Jenrick would win rather more seats than one led by Kemi Badenoch. Some foolish commentators have interpreted this as a boost for Jenrick, but they are not taking account of the anti-homeopathy which is currently rife amongst the dwindling number of party members. If what he has to offer might increase the likelihood of people voting for his party, then the dose he’s offering isn’t strong enough. It will surely be Badenoch’s chances which were boosted yesterday.

As to the real cure for this strange affliction currently infecting both parties, it appears there isn’t one. It will just have to work its way through the bodies of both parties until it reaches its conclusion. If we’re lucky, it might even turn out to be fatal.

Chasing savings from benefit payments

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As of today, none of us know what will be in the UK Budget later this month; it’s doubtful if even the Chancellor knows yet, given that work on the detail is continuing. There have been plenty of hints and rumours, though: enough to fuel endless speculation and debate about whether a particular rumoured change does or does not breach a manifesto commitment. One fairly consistent rumour, backed up in a way by today’s suggestion that weight-loss drugs will be prescribed for overweight people who are economically inactive, is that the benefits budget will be one of the targets. It’s not the most lucrative of possible clampdowns – all the evidence suggests that more government expenditure is lost to tax evasion and fraudulent accounting than on paying benefits to those not entitled to them. Choosing to go after benefits is just following an agenda set by the Tories and their media friends. Having said that, it is true to say that there is a saving to be had if benefits can be restricted to those who meet the criteria; the political question is about whether that’s the most productive target.

It raises a question about chickens and eggs. Is the saving being sought a result of a programme to assist people to find suitable employment, or is it intended to use benefit cuts to force people into work, however suitable that work might be for the circumstances of the individual? It was pretty clear under the Tories that it was the latter of the two: cutting benefits would allegedly create an economic incentive which would effectively starve people into taking low-paid (and sometimes multiple) jobs. In relation to those who see living off benefits as a lifestyle choice, there might even be an argument for such an approach, but that group is much smaller in number than anyone reading the tabloids might think, and one of the problems with it is that it can end up causing a lot of collateral damage, especially to children whose life chances are already poor. Those hit aren’t only the tiny number of workshy. There is a huge difference between that approach and an approach which looks at individual circumstances and provides appropriate help and support.

The provision of drugs to help weight loss is potentially a positive step in general terms, although there are some serious questions about potential side-effects, and whether it is merely treating symptoms rather than causes. But even leaving those reservations to one side, directing support to people who are economically inactive is a major corruption of the ethos of the NHS, which is supposed to be about the provision of health care based on assessed medical need. That’s rather a different proposition. It underlines the way in which what used to be the ‘party of the working classes’ increasingly sees people purely in terms of their economic value. There is a political philosophy based on such a belief, but it isn’t the one Labour traditionally promoted. It’s unclear whether the party intends this medication to be mandatory or voluntary, but even voluntary medication of a specific group of people based on criteria other than health needs would be something that ought to worry us. It also plays to, and reinforces, a stereotype of benefit claimants as fat layabouts, encouraging further stigmatisation of a large group whose needs are complex and varied on the basis of a prejudice about a small subset of that group.

It’s not entirely clear which approach Labour favours on either of these issues, although the signs to date are not good. A party which claims it wants to eliminate child poverty hasn’t hesitated to add to that poverty to date, and has been singularly unapologetic about doing so. There is no reason to assume that they won’t continue in the same vein.

Power still lies where it always did

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The UK Transport Secretary got herself into a little bit of trouble over the weekend. As far as I can see, her sin was to repeat in government what she – to say nothing of her party leader – had been saying whilst in opposition, somehow forgetting that the whole point of being in government is to do the opposite of what they said in opposition. The ultimate owner of P&O threw a brief wobbly, threatening not to invest its £1 billion in the UK unless Starmer did a bit of grovelling, and he duly obliged.

To the enormous surprise of almost nobody, the company then decided that making the substantial profit which they expect to earn on their investment was more important to them than some very slightly hurt feelings and agreed to go ahead with the investment after all. Some important lessons have been learned, though. The first is that politicians may huff and puff when companies treat their staff in an appalling way, but they won’t bite, and there will be no repercussions for such behaviour. Short term huffing and puffing headlines are an end in themselves. The second is that the interests of capital will always prevail over those of labour, even under a self-styled ‘Labour’ government. Humiliating Starmer into buckling down and acknowledging that publicly is just a bonus, to say nothing of a marker for what we should expect over the next five years.

Waiting for the next bus?

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It's tempting to see the result of the latest ballot among Tory MPs to choose a new temporary leader as being just another display of the inherent duplicity of the species. But, whilst there certainly is an element of that involved, it seems that the reality on this occasion is that it’s an even bigger demonstration of their incompetence. Their complete absence of trust in each other has meant that they couldn’t even stich up an election where the electorate is only 120 strong. The ‘explanation’ for the result is apparently that some supporters of James Cleverly – the walking, talking demonstration of the inapplicability of the theory of nominative determinism – were so confident that he was going to be in the last two that, instead of voting for him, they voted for the one that they thought he'd best be able to beat.

They think that they’re such a clever and sophisticated electorate that holding multiple ballots eliminating one candidate each time enables them to use all the low cunning which they possess to game the system so that the final run-off is between the one they want to win and the one that (s)he stands the best chance of beating. But here’s the thing: if we look at the very first round of voting back at the beginning of September, the order in which four were eliminated precisely matches the result achieved just over a month ago. And if they’d used the first-past-the-post system, which they insist is the only democratic way of voting, to select the final two they would have ended up with the same two that they’ve actually got. A month of political manoeuvring, Machiavellianism and dissimulation has got them exactly where they could have been a month ago.

It's hard to say whether the use of STV would have produced a different result. I suspect that having to rank six candidates in order of preference might have been too big an intellectual ask of many of them, but it would certainly have been much harder to game. Maybe the result would have been the same anyway, just achieved a lot more quickly. What is clear is that, whether by accident or design, an overwhelming majority of Tory MPs have opted for a final contest to select the candidate who can do the most to wreck what remains of a once-formidable election-winning organisation. And all the signs are that the aging, white, wealthy, south-east England based membership will enthusiastically assist in that aim. But Tory leadership campaigns are like buses: there’ll be another one along shortly.

Representing who to whom?

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Following her removal from the post of Chief of Staff, Sue Gray has been appointed to a new role as some sort of envoy to the nations and regions of the UK. The precise nature of the job is far from clear. After all, the three devolved nations already have cabinet ministers allegedly responsible for promoting their nations’ interests at UK government level. They’re not very good at it, of course, and it’s obvious that they see their function as being more about telling the devolved administrations what to do than about passing views back to the centre. In theory, an envoy’s role is a two-way process, but the main emphasis has always been on representing the interests of their paymasters. In any event, given some of the reports about Gray suggesting that her expertise lies more in withholding what she considers to be unnecessary detail from the PM, it's unlikely that she is the right person to be feeding back the unfiltered views of the natives. At one point, liaison with devolved bodies was the responsibility of a senior cabinet minister, a certain Michael Gove, so it’s also reasonable to wonder whether appointing a non-politician to the role is a step forward or backwards.

But people are asking the wrong questions. The greater the extent to which a person is appointed to a non-job in the UK structure, the more elaborate the accoutrements that generally go with it. Historically, an envoy is one step down from an ambassador, so here’s the first, and most important, question: does she get a bicorn hat? And if she does, will it have a plume of feathers, or are they reserved for full ambassadors? Will she have an official residence in each of the territories assigned to her care, a place where she can host grand parties to make the great and the good of those territories feel as important as herself? Pyramids of a certain type of chocolate delicacy are optional.

And then there’s what is perhaps the biggest question of all: how long will she stick it out before quietly segueing into becoming Baroness Gray of Greyness, with a seat in the House of Lords?

Creating wealth: who benefits?

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Two of the many points of agreement between Labour and the Tories are that both economic growth and wealth creation are generally good things to encourage. On that, at least, they’re more or less right, although they often seem to miss out the important caveat that both things must happen within such limits of resource usage as are necessary to ensure that resources remain available for future generations, and that the ability of the planet to sustain life is not impaired (and that caveat is more far-reaching than it might appear). They even seem to agree, in general terms, that the route to achieving those things has to do with freeing wealth creators to do their thing by minimizing government intervention or control, and that government spending is some sort of drain on wealth – and on those points, they’re both completely misguided. I wonder if they even understand what ‘national’ wealth, as opposed to private wealth, actually is.

For sure, Starmer knows a wealthy man when he sees one (as did his predecessor but two, on a grand scale). But becoming wealthy isn’t the same as creating wealth, and nor is creating wealth the same thing as becoming wealthy. It’s perfectly possible for someone to redirect wealth in his or her own direction without adding to the total wealth of the country; and equally possible for a wealth creator to add to the sum total of wealth in the UK whilst ending up bankrupt. Becoming wealthy can simply be the result of redistributing existing wealth, something which a ‘trickle-up’ economy like the UK tends to facilitate. Creating wealth isn’t the same thing as making a profit either: it’s perfectly possible to turn a decent profit by simply redistributing existing wealth. There’s another myth as well – that somehow the public sector uses or even destroys wealth rather than creating it. But building a new hospital or school, for instance, adds to the country’s stock of capital, and thus wealth. And not all wealth can be measured in cash terms anyway, even though that’s what politicians seem to want to do. A healthy population also adds to the ‘wealth’ of a country, as well as increasing the potential for future wealth creation.

The real issue is not about the creation of wealth, but its use and distribution. An increase in total wealth which flows into the same few hands might look like a positive result at the macro level, but it won’t feel like one at the level of those struggling to get by. The argument that growing the size of the pie means there’s more for everyone without needing to take any away from the owners of the biggest slices only works if everybody’s slice gets bigger in practice, rather than merely in theory. If all the extra merely makes the biggest slices even bigger, then the ‘growth’ about which the government keeps banging on merely increases inequality.

Confusing total ‘national’ wealth with private wealth looks to be deliberate; and it’s no surprise given that the ‘wealthy’ have a disproportionate influence on government and opposition politicians alike. Even if there’s no direct or obvious quid pro quo, does anyone really believe that the generosity of wealthy donors is completely unrelated to their desire to continue to apply that adjective to themselves? People may not need to create wealth to become wealthy, but neither do they stay wealthy by donating part of their wealth to governments which might want to redistribute part of the remainder. But if increased wealth isn’t put to use for the benefit of the population as a whole, what is the point of it? It’s a question to which the government doesn’t seem to have an answer.

Empire trumps justice for Labour

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In defending the decision to transfer the Chagos Islands to Mauritius against Tory criticism, the PM yesterday declared that “the single most important thing” about the deal is that the US/UK military base on Diego Garcia is effectively exempted from the transfer, and the right of the Chagossians to return to the islands excludes that part of their historic territory. It’s an interesting choice of relative importance.

He could have said that, given the rulings against the UK in international courts, the most important thing was that the UK was going to abide by the rule of law. It would be a reasonably credible approach – he does, after all, claim with some justification to have spent most of his career upholding the law. He could have said that the most important thing was rectifying the injustice done to the Chagossians when the UK forcibly deported them from their own lands and homes. Justice, again, is something which he can legitimately claim to have pursued for much of his life.

But he chose to emphasise neither of those things. The priority, for him, was maintaining a military base, the precise nature and purpose of which has long been unclear, and to deny the right of the islanders to return to that part of their land in order to do that. It turns out that, when push comes to shove, maintaining the scattered remnants of the British Empire and the UK’s military reach are more important to him than either the rule of law or justice for those who were unlawfully expelled. Who needs Tory imperialists when we have Labour ones?

The imperial mindset lives on

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No empire was ever created with the active and enthusiastic participation of the populations incorporated into that empire. Empires are, and always have been, based on conquest and war, often savage and brutal. The passage of time and a combination of an influx of people from the conquering power coupled with relentless propaganda about how much worse off people would be if they actually decided to run their own affairs sometimes convinces the conquered to accept their status but, more often than not, disputes about ownership and sovereignty rumble on, sometimes for centuries. Even though they know that the territories were seized by force in the first place, imperial powers somehow end up believing that they have some sort of natural right to the possessions thus gained.

Those in the Tory Party who still have that imperial mindset (i.e. almost all of them) have been outraged by the agreement of the Labour government to transfer what seems to be partial sovereignty over the Chagos Islands to Mauritius. Handing over a few remote islands in the Indian Ocean is, apparently, an unparalleled act of treason (somewhat ignoring the fact that it was the previous Tory Government which opened the negotiations). But in truth, Labour aren’t much better. They have negotiated over the heads of the Chagossians themselves who have had no input into the process, and whose ancestral homelands have been treated as something to be traded and transferred. And, in some form or another, the transfer has been made conditional on retaining some sort of control over Diego Garcia, the large US/UK military base, from which Chagossians will continue to be excluded.

It's presented as some sort of final resolution of a long-outstanding post-colonial problem, but the reality will almost certainly turn out to be different. There is a question as to whether the negotiations have truly been conducted between equals, or whether there isn’t an element of power differential at play. And no ‘agreement’ which has been reached, no matter how well negotiated, where one of the negotiators holds most of the cards is ever likely to stick in the long term. The UK should have learned that from the case of Gibraltar, for instance. In theory, it was ceded to the UK ‘in perpetuity’ under the Treaty of Utrecht in 1713, but that treaty was effectively simply recognising that the peninsular had already been seized by force. The territory was ceded under pressure as part of the settlement of a war, but it was hardly a negotiation between equals, and Spain's claim to the territory is still live.

‘Perpetuity’ might appear to be a word with a clear meaning, but in terms of territorial disputes, it simply means ‘until the balance of power changes’. It may be a decade or two away, but the question of sovereignty over Diego Garcia hasn’t really been ‘resolved’ at all, merely postponed. And the wishes of the Chagossians will make themselves known in due course, not necessarily in the form of acceptance of the deal done between two far away governments. The British, or perhaps I should say English, Empire won’t ever be truly over until the last remnants have been disposed of, and there’s a lot more outrage still to come from those who retain the imperial mindset.

Strong opposition is not an end in itself

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Some analysis of the so-called beauty parade at the Tory Conference this week has been based on the assumption that democracy requires that any government needs a strong opposition to perform this magic function called ‘holding to account’ and that, in current circumstances, that requires a functioning Tory Party. What anything in that last sentence actually means is generally left unexplained on the basis of another assumption: that we all know what it means. But do we really?

If ‘holding to account’ simply means automatic gainsaying of anything the government says, regardless of any evidence, is it actually performing any useful function? In the Senedd, we have a whole opposition party utterly dedicated to simply disagreeing with everything the administration says – even if, in the process, they find themselves obliged to contradict either what they themselves have said in the past or else what their masters in London are saying – in pursuit of a headline or two, the more lurid the better. But the degree of luridity and the number of column inches thus gained is no measure of the usefulness of the process. Some might argue that it’s useful in keeping lazy journalists employed, although many of us might just doubt the value of that as well.

It might be argued that democracy is best served by presenting voters with alternative views of the world and allowing voters to choose between them, but that isn’t the same thing as presenting the same view of the world and merely offering a choice of implementation teams, which is where UK politics currently operates. That’s not to underestimate the value of replacing an incompetent team with a competent one, although recent events suggest that the last election didn’t even achieve that, however much it might have appeared in advance that almost anyone would be able to do a better job. Turns out that ‘almost anyone’ didn’t encompass the main opposition party.

Even if it were true that the UK’s semi-democracy is stronger where there is a strong and clear opposition party, it doesn’t follow – as much of the speculation around the next leader of the English Conservative Party seems to assume – that that opposition must be composed of the party that was last in government. Maybe, even in the case that having a strong opposition is always and necessarily a good thing, it would actually be better to sweep the last lot aside and build anew around another option which actually offers something different. Choosing the least worst new leader in the expectation that (s)he would be capable of replacing the current government with a revamped version of its predecessor and that we would be better off as a result would be another triumph of hope over experience.

There’s more to strengthening democracy than simply preparing the Conservative Party to return to power the next time the pendulum swings. Abolishing the House of Lords, implementing an electoral system which doesn’t give absolute power to one party on the basis of one third of the votes, and further devolution of power would all be better first steps. Ensuring that a party committed to none of those things can only ever be replaced by another party committed to none of those things is a recipe for continuation politics and economics. Rather than being what we need most – which is what the talk of a strong opposition seems to assume – it’s really what we need least. We should be asking ourselves whose interests are being served by restricting the choice.

When does a gift become a tip, and therefore taxable?

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A new law comes into force today regarding the distribution of tips in service industries. Some less than entirely scrupulous employers have been keeping all or part of the tips themselves rather than passing them on to employees. Whether tipping is a good thing or not is a matter of opinion; some of us would certainly prefer that the staff are paid a proper wage in the first place, even if that means prices go up a bit, rather than the staff being dependent on the arbitrary generosity of customers. Leaving that aside, tipping is currently a fact of life, but happens in two ways. Sometimes, cash goes directly into the hands of individual employees, but increasingly customers can choose to add an amount to the bill, and the total gets shared out and processed by the employer.

Tips have long been taxable (as the name suggests, income tax is a tax on income, not just on earnings), and one advantage of employers doing the collection and paying is that the tax can be, and generally is, processed through the employers’ PAYE systems. Cash put directly in the hands of individual staff members, however, is only taxed if it is properly declared to HMRC, and there must be at least some doubt as to how much gets declared in practice. As a general rule, ‘gifts’ are not taxable (although there are exceptions, especially when gifting is used as a means of attempting to avoid paying tax), but ‘gifts’ received by an employee as a result of his or her employment – which is what tips effectively are – are unquestionably taxable, although it does open up something of a grey area.

It made me wonder, though: if gifts received as a result of the job a person does (i.e. they would not be received by the same person if he or she were doing a different job) are taxable, why are gifts received by MPs not subject to income tax? It is clear that they effectively boost the spending power (and thus the ‘real’ income) of the recipients and that they are only given because of the job the individuals are doing, so why are they not treated as income? Why should a waiter earning at or around the minimum wage, say, who receives a tenner at the end of a meal, have to pay 20% tax on it, whilst a person on a substantial salary who receives clothing worth £30,000, to pick a recent example at random, pays nothing? It wouldn’t be a huge money-spinner in the scale of things, but if the Chancellor is serious about closing loopholes on tax avoidance and clamping down on benefit fraud, perhaps she should also look a little closer to home at the people around her.

Not outrageous enough?

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It takes a very special kind of delusion to look at an electoral defeat and claim that what it actually shows is overwhelming support for the losing party. Donald Trump has it in spades, of course, and is clearly keen to apply it to the results of elections in countries other than his own. Last week, as part of his ‘welcome’ for Keir Starmer, he praised the ‘real winner’ of the election, one Nigel Farage, bizarrely claiming that Reform had won more seats than they were allowed to have. From a man whose one and only election victory (to date) was achieved under an electoral system in which he won fewer votes than his opponent, a degree of confusion is perhaps to be expected.

But we have our own adherents of the idea that a defeat is really a victory much closer to home. Wales’ very own RT Davies, for example, declared this week that Wales is ‘inherently Conservative’, the evidence for which is presumably to be found in the number of seats won by Conservatives in the General Election in July. Zero is, I suppose, a nice round number, and the beautiful roundness of it can easily distract attention from its mathematical significance. He also said that, “The Welsh people reject the extreme liberal ideology of Labour, Plaid Cymru nationalists and the Lib Dems”. I’m struggling to identify which part of the mainstream Tory ideology so enthusiastically swallowed by at least two of the named parties is ‘extreme’, but that’s an aside. The evidence for this rejection is clearly to be found in the fact that the remainder of Welsh constituencies, after deducting those taken by the Tories, were won by the three parties he named. Zero for the Tories and a total of 32 for everyone else is the clearest rejection of everyone but the Tories that a Tory leader could wish for.

Perhaps he’s not mathematically-challenged at all, he just believes that election results are like some strange form of double-entry book-keeping, where every debit has to be balanced by a credit somewhere else, and the rest of us are simply looking at the ‘wrong’ side of the balance sheet. After all, a number which looks like a debt to a customer always looks like an asset to the bank. I’m not sure that I’d want him as a banker, though. Even when it isn’t rhyming slang. It’s more likely that he comes from that school of thought which believes that if you repeat an untruth often enough it ends up being believed. It’s an approach which has a long and disreputable history, but as Trump demonstrates, daily, the more outrageous the statement, the more effective it can be. Maybe RT’s problem is that he simply doesn’t have it in him to be outrageous enough. Everyone, or so they say, has at least one redeeming feature – being insufficiently outrageous could be his.

Does Starmer understand how privileged he is?

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In his attempt to make his use of a millionaire’s apartment for four weeks, at an estimated value of £20,000, appear reasonable, Starmer has appealed to the sense which any parent would feel of wanting to do the best for his children. Superficially, it’s an entirely reasonable argument. Having a hoard of reporters virtually camped in the street outside someone’s house is clearly disruptive, and any caring parent would want to avoid disruption to study in the approach to a set of key examinations.

There is a problem, though. Whilst a throng of reporters might be a problem more-or-less unique to the leader of the opposition, it isn’t the only form of disruption which can occur. What, for example, of the child trying to study whilst extensive roadworks are taking place in the road outside?  (Or perhaps the building of a new housing estate, a new prison, or a line of pylons; all things which Starmer has told us people must simply put up with.) Is that somehow less disruptive? Perhaps the parents of that child should just have a word with their friend the multi-millionaire and borrow his pad for a month. Except that most of us don’t know any millionaires, let alone the ‘multi-’ variety.

We know that children born to well-educated, wealthy (or at least comparatively so) parents consistently perform better in school, including in examinations, than poorer children. They start life with a whole range of advantages not available to others. In his attempt to portray himself as just a normal, caring parent wanting to do the best for his children, what Starmer has done is to highlight another of those advantages: knowing the right people. He has also managed to show just how different his idea of 'normal' is from the reality facing most parents.

Chickens, eggs, and confused Chancellors

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There is a report today that the Chancellor is pressurizing the Office of Budget Responsibility to use planned but not yet implemented planning reforms to change its estimate of the rate of UK growth. If they agree, then she will be able to spend more money without breaking her own arbitrary fiscal rules. It doesn’t mean that there will actually be any more money, of course; merely a forecast of extra government revenue at some future date. If they agree to roll over and do as she asks, she will then spend that extra non-existent money on investment in the UK economy. Planning and implementing the spending will, as it always does, precede the actual receipt of the money (always assuming that it is eventually received), and in the short term, that spend will be presented in the accounts as though the money has been ‘borrowed’, even if it’s actually simply been created out of thin air by the Bank of England.

There’s nothing new or unusual about that as a process, it’s what always happens, no matter how much the politicians attempt to deny it. Government spending always precedes government revenue. But here’s the twist: spending the extra money will expand the economy (i.e. create economic growth), thereby validating, to a greater or lesser extent, the original assumption about higher growth. The cause of that growth may not be the one stated when it was first built into the assumptions. But in terms of the outcome, that’s unimportant. Government spending creates economic growth, which eventually leads to increased government revenue.

She could, of course, achieve the same thing by simply adjusting the arbitrary fiscal rules to which she is working. She is, however, too confused about the order of chickens and eggs, and too deeply imbued with Treasury and Bank of England orthodoxy. Maybe it doesn’t matter too much (unless the OBR refuse to play ball), because as long as she abandons her obsession with insisting that the income must precede the expenditure, she does actually stand a chance of achieving the magical growth on which everything, apparently, depends. Whether it’s the right type of growth, in the right places, is a question for another day…

Sacrifice on route to the promised land

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Marx (and for once I really do mean Karl rather than Groucho) wrote that “History repeats itself, first as tragedy, second as farce”.

Some of the most powerful political speeches made during my lifetime were by Martin Luther King, who told us that he had a dream about the future possibilities. The peak was perhaps his final speech, in which he said that God had allowed him to go up to the mountain and look over. And that he had seen the Promised Land, before adding, very prophetically as it turned out, that “I may not get there with you”. He was shot the following day.

Yesterday, Starmer told us that he too had a dream, and that he too had seen the promised land. But getting there will take hard work and sacrifice. Based on his government’s actions to date, that sacrifice will be made mostly by the old, the young, and the vulnerable. In a tragic perversion of King’s rhetoric, underlining the first part of what Marx said, it’s not so much a case of “I may not get there with you” as of “You may not get there with me”. I’d really like to believe that it won’t turn out to be equally prophetic.

The generosity is all one-sided

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Any display of excessive generosity towards a decision-maker is always likely to look suspicious, even if there is no obvious or immediate way in which his or her decisions are likely to benefit the donor. In dealing with gifts and hospitality in the context of business relationships with suppliers, the key word that was always drummed into me was ‘reciprocity’. That is to say that no gift or hospitality should be accepted if it was of a higher value than I would be able to offer, and wherever possible, reciprocation should actually take place. So, gifts such as calendars or desk diaries from suppliers or would-be suppliers were acceptable, but bottles of whisky or cases of wine were not. And if a supplier took me to lunch after a meeting, it was expected that I would take him or her to lunch after the next. It’s low level stuff, and even then can never completely erase a potential perception of buying favours, but it's a clear enough rule, and it was always fairly easy to understand where the lines were drawn.

It's that reciprocity which is completely missing in the relationship between donors and politicians. If Starmer were spending thousands of pounds on Christmas and birthday gifts for Lord Alli, it might just about be possible to say that they were simply very generous friends. There is, though, no suggestion that that was the case – and if it had been, I’m sure it would have been wheeled out as a defence by now. Whilst we’ve had a grudging decision that Labour ministers will no longer accept gifts of clothing from donors, that is just a small part of the freebies being accepted. It’s true, of course, that there’s nothing new in this. Politicians (of all parties) have been accepting freebies such as accommodation and tickets to events for years. But ‘everybody’s doing it’ is acceptable as an excuse only until it isn’t. The expenses scandal some years ago, affecting politicians of multiple parties, shows how the line of acceptability can and does move.

The line has moved again, even if only slightly, with the decision to not accept gifts of clothing, but Labour’s politicians still seem to be lining up to argue that ‘no rules were broken’, and that the key thing is ‘transparency’, even if transparency about the purpose of gifts was notably lacking in the cases of Rayner and Reeves. Reeves came up with the line that she wasn’t into clothes or shopping, so when a good friend offered to do the choosing and shopping on her behalf, she readily accepted. It’s not a bad answer – to the wrong question. The issue isn’t who did the physical work of choosing and shopping – she’s lucky to have a friend who can be trusted to do that for her – but why the friend ended up doing the paying as well. It’s a question which the answer neatly and completely sidesteps. In any event, simply not breaking the rules cannot absolve those receiving hospitality and gifts from considering for a moment whether doing so is ethical or might be perceived to be a little dodgy. Getting donors to pay for something else other than clothes may conform to Labour’s new rule, but if the effect is to put the same amount of additional spending power into the same pockets, it changes nothing; it merely relabels the same donation.

Donations have always been an important part of political funding in the UK, and short of a system of state funding of parties, they will continue to be so. Maybe it’s just that there is more reporting and visibility, but there is certainly an impression that the extent to which those donations and gifts are going into individual pockets rather than just into party campaign funds seems to have increased. As far as we can tell, there is no obvious quid pro quo for the generosity of Lord Alli, but the question that the recipients should have been asking themselves is a very simple one: ‘if I were not Leader of the Opposition / Deputy Leader / Shadow Chancellor, or even just MP, would I be getting this hospitality or gift?’ There can only be one honest answer to that question, and no amount of transparency or rigid conformity to ‘the rules’ can change that. At some point, maybe not yet because the stench isn’t strong enough, the rules will be changed. That reciprocity test would not be at all a bad place to start.

Spotting the fatal flaw

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Apparently, there is a plot afoot to change the policy of the self-styled ‘Welsh’ Conservatives to support abolition of the Senedd. I wonder when or even whether they will spot the fatal flaw: the Senedd doesn’t have the power to abolish itself. It doesn’t matter one iota what the ‘Welsh’ Conservatives think, because the issue is reserved to Westminster, meaning that only the English Conservative and Unionist party could enact abolition (assuming they ever get back into power). A ‘Welsh’ party asking its English masters to abolish the Senedd wouldn’t exactly be a good look, even if that probably wouldn’t worry them greatly.

If they’re serious about this, they should probably start by demanding more devolution – specifically that the power to abolish the Senedd be devolved to the Senedd. However, they may find that that would accidentally confer a range of other additional powers on the Senedd, albeit that they might in consequence receive a surprising degree of support from pro-Senedd parties. Otherwise, ‘all’ they need to do is (1) ensure the return of a Conservative government in England and (2) persuade the people of Wales, with their consistent and repeated pattern of rejection of the Tories, to vote to abolish their own parliament by electing a Tory majority to the Senedd under an electoral system which makes a single party majority highly unlikely. It’s probably not the sort of cunning plot over which we should lose a great deal of sleep. But Tory self-destruction might make for a good spectator sport.

Yes, but which women?

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The chancellor, Rachel Reeves, has said today that she wants to use her time as the UK’s first female chancellor “to improve life for women”. It’s a worthy aim, and one in which, in principle, I wish her every success. There is much to be done still. I can’t help wondering, though, which women she has in mind, and how general her concern is. It’s clearly not for those over pension age, whose lives she’s already decided to make worse by reducing their disposable income. And it’s not those on low incomes who have more than two children, who she has already decided should remain in poverty, with no relief in sight. And clearly, it’s not the women of tomorrow either, if they happen to be girls growing up in a household impacted by her decisions on benefits.

Given that her remarks were associated with promoting the Investing in Women Code, and that the Treasury has backed up her remarks with statistics suggesting that, despite being a majority of the population, women “…represent only 21% of business owners, with less than 6% of active equity backed companies founded by women”, we can make a reasonable stab at guessing which subset of women she’s actually talking about. It is clearly a travesty that women are so under-represented in that particular sphere, but it’s also the case that the minority of women who are represented will tend to be the more well-off and better-educated overall. What one might call middle class. There is no doubt that this is an issue which needs to be addressed, and not all business founders and leaders become rich, but it does look as though the target group whose lives the chancellor wishes to improve are those whose lives are already better than average anyway. People a bit like the chancellor, perhaps, reflecting once again her detachment from the real problems faced by many, problems she is making worse. The aim is a worthy one, and the initiative deserves to succeed. But if the aim is to improve the lives of women more generally, it isn’t exactly the most obvious starting place, and it’s being undermined by other decisions which she has taken and is threatening more of.

Can Wales learn from Estonia?

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There was some speculation last week about whether the UK government would take up an opportunity to fly criminals to Estonia so that they could serve their time in an Estonian prison rather than an overcrowded British one. The speculation didn’t last long. But the question that I found myself wondering about wasn’t so much whether the UK should seize the opportunity as why the opportunity existed in the first place. Why are there so many unused places in Estonian prisons that renting them out looks like an opportunity?

The numbers aren’t enormous anyway. With a population of less than one and a half million (too small to be a country at all, according to many unionists) Estonia only has around 3000 places, and a majority of those are occupied by people incarcerated by Estonian courts. Any difference it could make to the UK’s current problems would necessarily be marginal. Conditions, though, tend to be better than those in the UK, although that would be an obvious problem for the UK’s tabloids who seem to dictate government policy on the issue.

Asking why Estonia has spare places leads us to a question about why the UK is imprisoning so many people in the first place. Debate on crime has become something of a contest between the two main UK parties to see which can promise to imprison the greatest number of people for the longest periods for the greatest possible range of offences. And demands for ‘justice’, and ‘bringing people to justice’ often sound more like a demand for retribution and punishment; true ‘justice’ is a rather more nuanced concept. Punishing people who have transgressed against the rules which society has laid down (leaving aside here any question as to whether those rules are themselves fair or reasonable) is one reason for imprisoning people, but prison is only one possible means of punishment. Locking up persistent offenders may prevent further offending during their period inside, and that’s a second possible reason for using prisons. Rehabilitation and re-education is a third, but the extent to which that happens in overcrowded, underfunded and understaffed prisons is limited to say the least. Then there’s deterrence, but the extent to which lengthy sentences deter people from committing crimes is debateable. Many crimes are ‘spur-of-the-moment’ rather than preplanned, and deterrent only works if potential criminals are carefully analysing the potential outcomes before deciding to commit a crime. And that analysis would necessarily also include the chances of being caught – when criminals know that understaffed police forces will simply fail to investigate many crimes, the power of deterrence is significantly weakened. We also know that many of those incarcerated have real problems with mental health or substance misuse, for neither of which are there adequate services available, and for neither of which is imprisonment any type of solution.

We know that sending people to prison has a number of consequences for both the individuals and their families. But it also has economic consequences – not just the costs of keeping people in prison, but also the economic loss if people lose their jobs and stop paying tax, an effect which can last long after release, during which time the benefits bill also rises. The impact on families can be severe; absence of a parent coupled with a reduction in household income can seriously affect children’s life chances, even if the family remains together post-prison. Sometimes, there is little alternative to a custodial sentence, but the political trend seems to be increasingly seeing it as a first resort rather than a last resort. Coupled with a reluctance to spend money on buildings or facilities for anyone in need in society – let alone for criminals – the Labour-Tory impetus to be seen to be tougher than the other leads inevitably to the sort of crisis which we now face.

It doesn’t have to be that way, though. Improved mental health and drug abuse services would help to avoid many crimes, and alternatives to imprisonment would not only reduce the costs but also help to maintain cohesive families. Perhaps there’s even a revenue opportunity for Wales opened up by the Estonian approach. If Wales were independent, or even if criminal justice were fully devolved, we could adopt an approach leading to reduced use of prison sentences, maybe even leaving us with spare capacity to rent out to the prison-obsessed English government.

Left hands and right hands

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The new UK government isn’t the first to talk about wanting to change the NHS from a sickness service into a health service, with more emphasis on prevention rather than cure. And it won’t be the last. Nor will it be the first to talk the talk but fail to deliver – and yesterday’s announcement by Starmer has impending failure written all over it, for at least three reasons.

The first is that many of his proposals – worthy and sensible though they might be – are necessarily long term. For sure, tackling obesity and reducing the consumption of sugar and junk food will reduce the demand for health care, but even if assorted campaigns and new legislation to do those things are both implemented consistently over many years and succeed in achieving their aims (and neither of those things are guaranteed), the impact will be negligible at first, only building up to a significant level over a decade or two. They do nothing to address the crisis facing the NHS now, which doesn’t have the resources to tackle that crisis.

Secondly, whilst they are entirely correct to be placing more emphasis on primary care in the community, there is a little problem of chickens and eggs. In previous attempts at health reform, we’ve seen health boards cutting the numbers of hospital beds on the basis that care would be better provided in the community. But what we’ve not always seen is a corresponding increase in the provision of that care in the community. Any approach which depends on cutting first in order to free up the funds for the required investment in community care is inevitably going to make the problem worse in the short term – even if they do eventually get around to improving the community care element, rather than just banking the savings. The investment needs to come first, but the statement that there will be no new money until after the reforms have been implemented is setting the whole approach up to fail from the outset.

Thirdly, it looks a lot like silo thinking, as if the NHS can reform itself in the desired ways in isolation from all other policy decisions. What they say they want to achieve needs a ‘whole-of-government’ approach, and it won’t work if other departments (and especially the Treasury) are pulling in a different direction. The most obvious and immediate example concerns the effect of poverty on health care. We know, from study after study, that poor health and poverty go hand in hand. It isn’t just a case of poverty ‘causing’ poor health; it isn’t quite as simple as that. But a lack of money can limit lifestyle choices – giving people a choice between heating and eating, for example, can lead to people choosing the cheapest rather than the healthiest options. Educational level is another factor in such choices as well, of course – and we know that the level of education is also closely associated with levels of income.

Taking a deliberate decision to withdraw funding from some of the most vulnerable pensioners without assessing the impact, and taking a deliberate decision to leave hundreds of thousands of children in poverty are not decisions taken by the health secretary. But they are decisions which will directly impact the demand for health services in the very short term. By a margin which it is impossible to calculate accurately, they will make things worse. It is, or should be, the job of the PM to ensure that his ministers are working to a joined-up agenda, but allowing one minister to take decisions which will increase the demand on health services whilst instructing another not to increase the supply of those services underlines that it’s not a job which he is currently performing.

There is a lot for which he can justifiably blame his predecessors, but none of that excuses deliberately making things worse.

Defining what news is

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There is an old adage in journalism that ‘man bites dog’ is more newsworthy than ‘dog bites man’. The point, of course, is that it’s the unusual which is of interest, not that which happens daily. But defining what is usual or what is expected is not always an easy matter; it depends on our frame of reference and our expectations based on our own priors and prejudices.

The Guardian today headlines one story as ‘Up to 50 Labour MPs could rebel over cut to winter fuel allowance’. The framing presents that as being unusual and unexpected. But the converse is that other Labour MPs are going to go along with the government proposal in the vote this week. There was a time when, based on the man bites dog analogy, the headline would have been ‘350 Labour MPs to vote for reducing pensioner incomes’. It would have been news – unusual, out of the ordinary, surprising even.

Starmer chooses to hide behind the formulation that he can guarantee that the annual increase in the state pension “will outstrip any reduction in the winter fuel payment” and Labour MPs are being encouraged to repeat the same line. Well, yes, that’s true – but it’s mathematically flawed. An increase of £400 less a cut of £300 is, indeed, still an increase – but the net increase is less than the rate of inflation. The bottom line is still that a Labour government is deliberately planning to reduce the living standards of most pensioners, and no fudging of the figures can disguise that intent. It says a lot about what the Labour Party has become that voting to reduce pensioner incomes is regarded as normal, and the unusual, the ‘news’, is that a handful of Labour MPs might decide to sit on their hands.

Wishing carefully

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The problem with being tough for the sake of being seen to be tough when taking a decision is that the more people criticise, the easier it is to underline just how tough the original decision was. All those people piling in to offer advice to the Chancellor on why her decision on the winter fuel allowance was silly, unnecessary and downright mean are merely reinforcing her original motivation which, I suspect, was nothing to do with saving money and everything to do with deliberately taking an unpopular decision just to show how tough she could be. The suggestion by the Guardian’s economics editor that she would be wise to reverse a “mean and politically inept” decision is absolutely right, but irrelevant if performative meanness is the objective.

Here on planet Earth, reviewing a decision taken in haste without a proper analysis or understanding of the likely consequences would be seen by many as a sign of strength and wisdom, but on planet Westminster, a U-turn is axiomatically a sign of weakness, regardless of how sensible it might be. I suspect that nothing will make her change her mind: whilst continued noise merely strengthens her resolve, silence would remove any pressure on her to change course. The sensible thing to do is demand change, but demanding change makes it less likely, and not demanding it makes ‘no change’ a certainty. “That’s some catch”, as Joseph Heller might have put it.

Maybe the deliberate leak of the fact that the pension is likely to be increasing by £400 a year next April because of the triple-lock will be enough to silence the mathematically challenged, although the more aware will realise that that was going to happen anyway, and a triple lock which protects the basic pension is meaningless if the government then claws most of the increase back elsewhere. Quite apart from the fact that that increase won’t be received until after the bills which the fuel allowance is intended to mitigate have already been paid. Adding prestidigitation to toughness might look like an expansion of Reeves’s otherwise limited skillset, but only if we don’t see the hands moving.

There has been one suggestion that Reeves should simply reframe the proposal as a measure to address a perceived imbalance between generations, and use it to appeal to the young. Blaming one demographic for the problems of another is certainly continuity Toryism of the sort which seems to appeal to Labour these days, and might even work electorally. It doesn’t, though, help to achieve a harmonious and balanced society and its practical (as opposed to political) impact is negligible.

The government have now promised that there will be a formal vote on the question next week. Perhaps Reeves will have a change of heart and back down; perhaps enough Labour MPs will find that they do indeed have a backbone and vote against it. But the likeliest outcome currently appears to be that the government will use its massive majority to win the vote, and that large numbers of Labour MPs will find themselves voting for something which will reveal only that party loyalty triumphs over conscience and principle. Those Labour MPs who’ve demanded a vote may yet come to understand the meaning of being careful what they wish for.

Not criminal enough. Yet.

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With the elimination of Priti Patel from the Tory leadership race, the party has lost what, on the face of it, appeared to be one of their best chances of continuing the run of selecting only the naughtiest of candidates for the top post. Being sacked for conducting her own foreign policy and being found to have bullied civil servants (even if let off by her then boss) are the sort of misdeeds which ought to have elevated her to the top of the list given her party’s recent predilection for rogues and rule-breakers. She might have been pretty nasty in her period as Home Secretary and rather too fond of Farage, but amongst the Tory Party membership those were supposed to be assets.

Whilst May’s naughty doings – or at least the ones she owned up to – were limited to running through a farmer’s wheatfield, her successor set the bar high for those who would follow. And Johnson, of course, did indeed set a really high bar. Being sacked for lying – twice – being involved in a (failed) plot to beat up a journalist, making up stories for newspapers, to say nothing of being fined for breaches of his own Covid regulations: it was a tough act to follow. Whilst his successor, Liz Truss, had what has subsequently been revealed to be a somewhat tenuous grip on reality, to say nothing of a weird obsession with cheese, she really couldn’t compete. That was probably one of the factors in the brevity of her tenure in the role. Sunak did rather better, being fined for both breaching the Covid regulations and the seat belt law, even if his household benefitting from non-dom tax rules didn’t amount to a crime in the eyes of the law (I wonder who made, or failed to change, the law?).

Given Jenrick’s past record in relation to the Covid regulations (even if he somehow escaped a prosecution or fine) and granting what some might think was dodgy planning consent to a Tory donor, he is justifiably leading the field after the first round of voting. It’s not exactly on the Johnsonian scale, and may owe more to the so-far apparently clean character of the competition. But if any of the other four are serious about wanting the job, they need to either come clean about any past misdeeds, or get out there and start committing some. They can hardly expect the diminishing Tory membership to vote for someone who might turn out to be a fine upstanding citizen after all. Any expectation that they can win on that basis is showing a colossal misunderstanding of the values of the party they seek to lead.

£16,000 is a whole pile of new shirts

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There is an old joke from the Soviet era about Brezhnev showing his mother around his world. He showed her his enormous office and his luxury Kremlin flat, and then took her by chauffeur-driven limousine to see his country house on the outskirts of Moscow before showing her pictures of his dacha on the Black Sea coast. When he finished, his mother said, “It’s all very well, Leonid – but what happens if the communists ever get back into power?”. It’s not only dictators and would-be dictators who can be swayed by the trappings of office; it can happen even in so-called democracies like the UK.

Boris Johnson was, of course, famous for the extent of his freeloading on ‘friends’. From holidays to weddings, from wallpaper and furnishings to somewhere to live: all were fair game for a man rarely known to pay for anything very much himself. It’s an attitude not limited to Tories, however; Keir Starmer also seems quite happy to enjoy the benefits of the job as well as accepting a range of gifts and freebies from friends and supporters, as Owen Jones discussed in the Guardian last week. It’s not on the same scale as Johnson, nor does Starmer seem to suffer from the same degree of casual indifference to properly and accurately declaring things. There is no suggestion that any rules have been broken, to use the much-loved response of politicians caught doing something which might look a little bit dodgy to some people. But that merely outsources the issue to those drawing up the rules.

It does raise some questions of judgement. Why does someone being paid £128,000 a year need someone else to buy him £16,000 worth of ‘work clothing’? (Even more pertinent to many of us, how would one even set about spending that much on clothes for the office anyway?) And whilst there’s no suggestion of corruption – no hint of any direct quid pro quo – why would someone even want to buy shirts for such a well-paid friend? There is a somewhat shadowy area between a corrupt relationship and a wholly professional one, and expensive gifting falls right into it.

It’s the same issue which led to the downfall of Vaughan Gething here in Wales. It isn’t about being corrupt, it isn’t about doing favours for the donor, and it isn’t about breaking any rules. It is about the potential perception that someone who gives expensive gifts to someone in, or with the potential to be in, a position of power might just have some sort of unvoiced expectation associated with it. It’s about whether someone on a high salary who doesn’t even have to fund his own clothing out of it might have at least a little difficulty in understanding how much difference a loss of £300 in income might make to a pensioner on a low income. Above all it’s about why someone in that position can’t even understand why anyone might ask questions about such gifts. Judgement is about more than following the rules.