Thursday, August 30, 2012

Wealth tax. Just because Nick Clegg proposed it doesn't mean its a bad idea.

    “Don't strangle the goose that laid the golden egg”, pleaded the Tory MP, Bernard Jenkin yesterday after the Liberal Democrat leader, Nick Clegg, called for a wealth tax. Now, where exactly is this golden egg, I wonder? Could it be in the City of London, where some very wealthy people laid an egg of another kind recently that brought the country to its knees. Perhaps it is in British manufacturing, which has dwindled to 11% of GDP. Or have the golden eggs perhaps been deposited in feathered nests abroad?

It is astonishing that anyone still subscribes to the myth that the enrichment of the few leads to the prosperity of the many. It just doesn't happen. Wealth does not “trickle down” to the rest of society from the troughs of the very rich – if anything the reverse is the case. It is sucked up through the concentrations of asset wealth held by the top 1% in property, shares, bonds. The story of the last three decades is that the wealthy have become immensely, shockingly, incomprehensibly richer while the middle has been squeezed and the poor remain pretty much as they always have – at the bottom of the heap struggling to hold their lives together.

Free personal care pays for itself. Cut council bureaucrats instead.

Free personal care is again being condemned by local authority officials and newspaper editorials as a luxury "the country cannot afford'.  The reverse is true:  we can't afford not to provide medical and nursing care to older people.   The policy, introduced by the Labour First Minister, Henry McLeish in 2001,  has helped tens of thousands to remain independent, living with dignity in their own homes instead of lingering in a hospital bed at the cost to the taxpayer of £1500 a week. As the economist, Professor David Bell has pointed out, since  2002 bed blocking in the NHS has become virtually non existent, saving a large chunk of the £342m that the policy costs.

And FPC isn't just a way of allowing older people to avoid having to sell their homes. It is a myth that free personal care covers care home costs. It doesn't, and care home residents still have to pay the net £22,000 pa cost, unless they own less than £23,000. That's a means test in anyone's language. Councillors and local authority bureaucrats like to focus on free personal care because it diverts public attention from officials earning six figure salaries and getting extravagant final salary pensions. The cost of local authority pensions is equivalent to a quarter of council tax revenue. How about looking at that before destroying the security and dignity of older people. 

Sunday, August 19, 2012

There ain't gonna be a second question.

  Alex Salmond has been accused of jiggery pokery, collusion, manipulation and dishonesty over his offer to include a second “devo max” question in the independence referendum. The Scottish Affairs Select Committee in Westminster declared that Salmond only wants this as “an insurance policy against the verdict of the Scottish electorate.   The leader of the Scottish Liberal Democrats, Willie Rennie, then accused Salmond of using the Scottish Council for Voluntary Organisations as a “front organisation”, after a leaked email suggested that the SNP leader's aides were trying to prompt the SCVO leader, Martin Sime, into coming up with the wording of a second question.        With support for independence falling, Salmond is, we are told, desperately looking for a way to snatch a kind of victory from the jaws of defeat by ensuring that he gets his “second best” option on the ballot paper.

Mind you, I'm not sure this is what the Yes campaign believe is happening. It may surprise you to learn that leading figures in the independence movement are privately expecting, indeed banking, on there being only one question. The trouble with the second question on devolution max is that a lot of Scottish nationalists think, and have always thought, that it is a very bad idea. This is because it will all but guarantee that independence loses, since the vast majority of Scottish voters favour a parliament with greater economic powers. So why hold a referendum that you can't win?

Saturday, August 11, 2012

Team GB: is it game over for Scottish independence?

   And there is scarcely a dry eye in the house as Sir Chris Hoy, laden with medals, says goodbye to the fans who have followed him so ecstatically through these games. A final victory lap, wearing the Saltire of Scotland,  a true national hero retires to take his place in the pantheon of sporting fame. Promising to dedicate himself to promoting Scottish cycling as patron of the Sir Chris Hoy velodrome in Glasgow...And here comes Alex Salmond now, jogging alongside Sir Chris, weeping openly, as the crowd goes wild at these Commonwealth Games, which many are saying have ignited a new and positive sense of Scottish national identity, a New Patriotism...
Well, in your dreams, Alex. Such are the sentiments that Scottish National Party romantics hope to hear from the commentary box at the Commonwealth Games in Glasgow. They want the “friendly games” to deliver a sporting boost to Scottish nationalism in 2014, just as the London Olympics are being credited with giving birth in 2012 to a “New Patriotism” in Britain, as the New Statesman put it last week. “A soft and benign patriotism,” said the left wing journal, “quite different from the hard, defensive patriotism of the Eurosceptic right or any number of Little Englanders or some Scottish nationalists.” Mo Farah, an asylum seeker from Somalia, winning the 10,000 metres and wearing the union flag is the multicultural pin up for the New Britain.  B

Friday, August 10, 2012

Same sex marriage. We've been here before.

 The First Minister is in a dither about it; the cabinet is split over it; church figures call for a referendum as gay rights activists take to the streets. No, not Tuesday's aborted cabinet decision on same-sex marriage, but the Labour-Liberal Democrat cabinet in 2000 during the row over the abolition of Section 2A on the teaching of homosexuality in schools. It is remarkable that the first real split faced by the SNP First Minister, Alex Salmond, is over homosexual equality, just as it was for the late Donald Dewar.

I recall that episode very well, not least because I was close, perhaps too close, to the ministers, led by the former Communities Minister, Wendy Alexander, who were leading the campaign to abolish Section 2A. The ferocity of the response took them by surprise. They thought Scotland was a tolerant nation and that abolishing the clause would be a foregone conclusion. Then came Brian Souter, Cardinal Winning and Keep the Clause. Donald Dewar, a conservative liberal, if that isn't a contradiction in terms, found it an almost impossible conundrum.

And so, it appears, does Alex Salmond. Roll on 12 years and the SNP First Minister is caught between liberals in the cabinet led by the Health Secretary, Nicola Sturgeon who believe that homosexuals should have equal rights, and Catholic ministers like Roseanna Cunningham, who think that gay marriage might be an equality too far. Salmond clearly hasn't made up his mind and since nothing happens without his say so, the government seems paralysed.

Thursday, August 09, 2012

Catalonia. Bankrupt. Scotland next?

    Scottish nationalists could be forgiven for cursing fate this week. Both Ireland and the autonomous Spanish region of Catalonia, the two most admired constitutional role models for a post-union Scotland, are sinking under the weight of their debts. Today, Ireland's voters are expected to vote reluctantly for an EU financial austerity package that could condemn them to economic depression for a decade or more. Meanwhile, the Catalonian President, Artur Mas, says Catalonia may “not be able to pay its bills at the end of the month”. The region has already restored prescription charges, introduced tourism and fuel taxes and cut spending on infrastructure projects.

There but for the grace of god goes Scotland say unionists. What price independence if it means going cap in hand either to Madrid or the ECB for bailouts? Scotland's much safer in the UK which is big enough to withstand these economic shocks. Well, maybe. The troubles in these once prosperous corners of Europe are undoubtedly a problem for Alex Salmond, who has just launched the SNP's Yes Campaign for the 2014 independence referendum. The negative headlines from Dublin and Barcelona will discourage many Scottish voters from signing the pledge.

However they are not necessarily arguments against independence as such. Catalonia and Ireland have been plunged into crisis, not by their constitutions, but by their banks and by Europe's relentless sovereign debt crisis, now morphing into an economic depression. Neither Catalonia nor Ireland see relinquishing independence as a solution to their financial difficulties - though they are beginning to see Europe as part of the problem

Five years since Northern Rock - and no end yet to financial crisis

  Five years ago this week, on the 9th of August 2007, the world changed. That was day the banks suddenly stopped lending to each other, causing the collapse of Northern Rock and plunging the world economy into a slump from which it has yet to recover. Indeed, last week's manufacturing figures suggest that we are heading into a new worldwide manufacturing recession, though you could be forgiven for not having noticed that we had come out of the previous one.

So what have we learned in the past five years? Well, not a lot, as the latest revelations about the behaviour of loss-making Royal Bank of Scotland confirm. The global financial crisis has simply become worse in precisely the way that many foresaw. Since 2008, governments have thrown ever greater sums of public money at delinquent financial institutions in the hope that they would mend their ways and become what banks should be: engines of credit that allow industry to expand rather than vehicles for personal self-enrichment.

Tuesday, August 07, 2012

The economic living dead: misery of the middle earners.

Where is the anger?  Where is the resistance? Five years into the worst economic crisis since the 1930s and earnings – apart from those of the top ten percent - have fallen year on year. A raft of studies has shown that ordinary families in Britain are suffering the longest squeeze in living memory, yet the streets are quiet, there are no barricades, no factory occupations. People have been voting, if they vote at all, for the established political parties. The Left and even the far Right have never been more marginal, at least in Britain..

Ed Miliband isn't offering any radical alternative to austerity, just slightly slower cuts. Francois Hollande, the new socialist President in France, who calls himself “Mr Normal”, is actually promising greater austerity. He says he will legislate for a balanced budget in France by 2017, in a country that hasn't had a balanced budget since the 1960s. Here in Scotland, the Scottish National Party is promising oil-fuelled growth and better public services but its leader, Alex Salmond, is behaving increasingly like an economic conservative.

As for popular resistance, all we have seen so far are token stoppages like the rather damp demonstration by civil service workers in defence of their pensions – pensions which of course are denied to the vast majority of workers in the private sector. But closing a few libraries and museums isn't exactly a red revolution. Last year, the Occupy movement, inspired by the Arab Spring, seemed to be building some kind of international movement against global capitalism, but the tented communities that sprang up in Wall Street, St Paul's and in Edinburgh's financial district have moved on.

But the inequalities of wealth that motivated Occupy – the 99% as they called themselves - are as real as ever. According to the Sunday Times Rich List, published last week, the top 1,000 wealthiest people in Britain now own a combined £414 billion, equal to a third of the National Debt. The top 1% of earners in Britain syphon 15% of national income, a figure that has doubled in 30 years thanks to lower income tax. Down at the other end of the salary scale, the bottom ten percent 10% saw their real earnings fall by 4.1% last year, according to an analysis last week by the TUC. This is because inflation is worse for those on the margins. The rate of inflation in essentials like foods and fuel is around 6%, whereas if you're buying flat screen televisions, computers or air travel prices are actually falling. Whoopee!

Wednesday, August 01, 2012

Pound, euro, groat - what currency for Scotland?

Whatever happened to Braveheart?  Time was when the debate about Scottish independence was all about heroic issues like freedom, national destiny, culture. Even the mild-mannered former leader of the SNP, Gordon Wilson, used to talk of it being a “revolutionary” party.  Not any more. Nowadays the independence debate seems to be all about the small change, literally, of national liberation - the currency.

   Right now, the biggest issue in the referendum campaign is whether or not Scotland should keep the pound.. Arguments about  North Sea Oil,  the armed forces, Trident etc have  been eclipsed by a row over whether or not Scotland could, or should remain in monetary union with England, as the SNP wish.    The former Labour Chancellor, Alistair Darling, who will be launching the anti-independence Better Together campaign on Monday, claims that Scotland would suffer “economic serfdom” if it retained sterling after independence. And anyway, he says, England wouldn’t allow an independent Scotland to keep the pound. 

  Nonsense, say the Nationalists.  Wha’s to stop us keeping the bonny pound?   Scotland will prosper in a new Britain as Scots and English share a common monetary destiny.  At least for the time being.  Not everyone thinks this is plausible.   Professor John Kay, a former member of Alex Salmond’s council of economic advisers, suggested this week that Scotland might have to consider setting up its own currency, like Norway or Denmark, rather than remain under the heel of the Bank of England    Nobody seems to talk about joining the euro any more, for obvious reasons, which is unfortunate because there is an argument that, if EMU survives, Scotland could benefit from being in it.

Lost in London during Boris's games.

   Driving back from Dover from holiday, we decided to let the satnav do the job of getting us round London. Yes, I know – you just head north on the M25, but we'd heard it was jammed because of the Olympics. Anyway, the satnav lady, in her digital wisdom, decided to take us straight into central London on the A2 and, before we knew it, we were in the middle of the Olympic Games complex and panicking in case we never got out again. But we did. In fact, we sailed through central London with uncanny speed because there was practically nothing on the roads. I have never seen London so quiet. It was like the sequel to 28 Days.

What has this got to do with the political prospects of Boris Johnson, who added to his buffoonish reputation yesterday by being left dangling from a zip wire during a photo-opportunity in London's Victoria park? Well, the success of London's traffic management during the Games is being seen as both another feather in the cap of the London Mayor and another nail in the coffin of David Cameron. The lack ot traffic congestion in central London, though an administrative achievement, is apparently helping to plunge Britain into what is being called a “triple dip recession”, presumably because economic activity has been damaged by people staying at home and watching British athletes failing to win anything. And Cameron will get the blame.