The Power of ‘Oxi’

Yesterday a decisive 61.3% of Greek voters chose to reject the draconian terms offered to their government after fraught negotiations over bailout funds. They had been asked by Eurozone leaders to meekly accept further raids on their pensions, the only income keeping many households going after the destruction of the welfare system. They had been asked to to accept further erosion of protections for those lucky enough to stay in a job. They were told that failure to do so would lead to their expulsion from the Eurozone and the stability that the currency union is supposed to offer.

In another country, any other European country, there would have been a ‘Yes’ vote. (I expected Greece to vote yes.) Or more likely, the people would have never been offered a referendum at all. The Syriza-led government should not be criticised for consulting its people about its economic future. Greece has tried technocratic government and for obvious reasons decided that accountability was too important to suspend in times of financial difficulty.

Some in positions of power were no doubt hoping the past week would scare the Greeks of a ‘No’ vote. The country became insolvent. Capital controls were imposed, with withdrawal limits of just €60 a day from bank accounts. At the moment in Greece, you cannot buy music on iTunes because purchases count as money leaving the country. The message from ‘Yes’ supporters was clear: this is just the beginning. That message would have cut through anywhere else, but not in Greece.

As alarming as the past week has been, and the threat of effective expulsion from the Eurozone is, five years of the emaciation of Greek society has created more than enough people with nothing left to lose, particularly the young. They couldn’t be blackmailed. Voting ‘No’ offered them hopes of a better deal or at the least the prospect of economic recovery after conversion to a devalued New Drachma- a long shot at a brighter future, but at least some chance. And of course a chance to damage those who have inflicted austerity on them. Voting ‘Yes’ offered them more pain and an assurance that the Eurogroup would maybe think about relieving the country of some of its crushing €300 billion debt burden. But probably by too little and conditional on even more cuts. Who can blame them for voting no?

The resignation of the controversial Greek finance minister should be seen as a chance to reopen talks between Greece and its creditors. I hope the latter, especially the German government, will act reasonably. They know that Greece’s banks need a cash injection urgently, and they might try to demand capitulation on pain of allowing Greece’s financial system to crash. But the government now has a watertight mandate, and such a strategy will backfire as its people will not bear any cost to remain in the Eurozone. Such a Grexit would cause another financial wobble throughout the European economy and might well bring down the German government.

The best course of action is to negotiate a new bailout deal for Greece that works with the country to grow its economy and brings its debt down to a manageable level. The Greek people need to see that there is hope and a future for them within the Eurozone.

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8 Progressive Moves of the Coalition Government

I’m not exactly a fan of the last government, but given that I indulge in a lot of Tory-bashing and yet complain about excessive partisanship in British and American politics, I felt this list would be a testing and productive experiment to engage in. It is easy enough to pay lip service to the concept of rising above tribal politics but that depends on being able to evaluate the positions of your opponents on their merits. And in my own case, where I have less common ground with the Conservatives and Liberal Democrats than even many in my own party, it can be more difficult.

1.The introduction of same-sex marriage. Few people would have expected it to be a Conservative-led government to be the one to introduce same-sex marriage: indeed David Cameron took a big political risk in forcing the policy past the opposition of the majority of his own backbenchers. But now the exclusion of same-sex couples from marriage is a practice that has been buried in the history books. It is heartening to see the fight for equal marriage being won even in the more conservative parts of the Western world.

2. Referendum on electoral reform. It is already half-forgotten about, and those who do remember are largely constitutional reformers bitter about it being turned into a vote on Nick Clegg. But after a century of debate coming to nothing- despite New Labour’s supposed commitment to replacing First Past The Post- the people got their first chance in British history to decide how to elect their representatives.

3. The pupil premium. The case for providing extra funding that ‘follows’ state school pupils from disadvantaged background is overwhelming. There is so much evidence that shows such children are more likely to need and benefit from various forms of extra support that schools simply cannot provide without additional resources. I do believe the last government cared about improving educational opportunities for children. It was this vigourous enthusiasm that led to them floating daft ideas like evening classes for pupils on free school meals. (This struck me as punishing children with extra work just for being poor!) Sadly the government chose to scrap the Education Maintenance Allowance, which has rendered sixth form education nonviable for thousands of those very same students.

4. Universal Free School Meals for under 7s. There were so many obvious benefits to this policy that I outlined in this article at the time.

5. Rationalisation of Stamp Duty. The Chancellor has certainly made his mark on the tax system. One of the few improvements he made was the recent transformation of Stamp Duty that has been needed ever since house prices went crazy in the early 2000s. As well as quietly raising rates on expensive houses acquired by non-UK residents, Osborne did away with the ‘block’ rates. Previously someone buying a £249,999 house would pay 1% duty on the entire value, while a £250,000 house would attract a 3% tax also on the entire value. I am glad to see the back of this absurd structure in favour of income-tax style phased bands. It would be even better to go further and scrap Stamp Duty altogether on the primary residence in favour of imposing Capital Gains Tax. Would that not represent a move from taxing home ownership to taxing unearned rises in house values?

6. Meeting International Development budget target of 0.7% of GDP. It might not be popular, but the desperate poverty that exists in the world doesn’t go away because the nation’s finances need repairing. Our obligation as one of the richest countries in the world to help is not a luxury spending item we can discard, so I applaud the principled position to protect the Department for International Development’s budget from spending cuts.

7. Accepting Parliament’s opposition to intervention in Syria. Although the Prime Minister did not actually have to seek Parliament’s consent for his proposed military actions, he made constitutional history by doing so. It is to his credit that he did so and to Ed Miliband’s credit that he decided to join the opposition to war, thus defeating the government.

8. Cabinet appointments made for the long term. Gone are the days of the Cabinet musical chairs that Blair used to maintain a vice-like grip on his government. Where previously a minister could not be certain of remaining in post for much longer that 6 months, Cameron seemed to prefer stability and allowing ministers time to see their own policies to fruition. Most key people remained in position for four years of the Coalition, while the Chancellor, Home Secretary and Work and Pensions Secretary, Deputy Prime Minister and Business Secretary all remained for the full term.

Aspiration Can Belong To The Left

I have prepared the article below for a Labour-linked blog. While still reeling from the shock result of the election, with Labour making very limited headway in England and all but wiped out in Scotland, I think it’s crucial that the upcoming leadership election is not defined by the ‘aspiration’ espoused by so-called ‘modernisers’.

 

People are still working out why the election outcome was so strong for the Conservatives. They managed to more or less maintain their 2010 position and capitalise on the collapse of the Lib Dems to build a wafer-thin majority. So the question must be asked: how did Labour gain so little ground over the past five years? I don’t think the Mansion Tax lost Miliband the election: once the perception of a weak leader and economic incompetence was formed, it was fatal to Labour’s election prospects.

 

In politics, if a narrative is repeated often enough and is not challenged, it rapidly comes to be treated as fact. Within the Labour movement, one such story threatens to cloud our judgment: it is said we’ll never be re-elected unless we ‘get aspiration’. The words themselves ring true, but the idea attached to them is flawed.

 

The truly popular governments of the past were propelled into power because they understood the aspirations of large sections of society. The Attlee government promised nothing less than a war on poverty and injustice. Thatcher and Blair after her saw the longing for freedom to own, speculate and just maybe make big money.

 

Aspiration means different things to different generations. And thus in the meritocratic society governments inherited in the 80s and 90s, when opportunity and wealth (to varying degrees) was in the hands of the many and not the few, it was popular to go easy on the rich and powerful. Naturally so, when kids from council estates were growing up to become millionaire investment bankers, even the poorest support generous tax breaks for millionaires!
Some have attributed Labour’s defeat to its moderately redistributionist platform. They call for a return to the early Blair orthodoxy of avoiding anything that smacks of tax-and-spend like the plague. But to do so would be to wrongly assume the electorate of 2020 wants the same as that of 1997.

 

The young people of today don’t aspire to own a large house in Islington. They’ll count themselves lucky if they can afford a part-share in a tiny flat in Peckham. Gone are the hopes of a stable, rewarding career when today millions scratch out an existence on scraps of agency work or zero hours contract. In these and countless other ways, it seems the hopes of the many have been comprehensively trashed by powerful interests. Governments of all parties have chosen not to address these issues, leading to the toxic feeling of disempowerment and betrayal that so many would-be voters feel.

 

Labour exists to represent working people, so why don’t we get back to that job? If we show voters that we’re in tune with their most simple aspirations, they’ll respond. Our offer in 2020 should be based on aspirational socialism. Let’s promise the next generation the affordable, quality homes it needs; equal access to a world-class education and confidence in having a good job and protection from a strong welfare system. Also, our children deserve the best start in life, so let’s resurrect our pledge to eliminate child poverty altogether.

 

As a country, we seem to have forgotten how to get these basics right. Solutions exist, but they will cost billions of pounds to implement. Labour will have to explain where its priorities would lie if it were elected in 2020. It would inherit a devastated public sector crying out for investment, an eroded tax base to pay for it and probably a small budget deficit to close. Labour must be frank: a just society costs money and we will expect the most privileged to help out.

 

Progressive tax rises should be intelligently designed: for example taxing unearned wealth through Capital Gains Tax or ending tax breaks for landlords is fairer than taxing wages. And above all, our emphasis must be resolutely on these taxes allowing opportunity to be shared with ordinary people. To that end, every tax increase should be linked with a spending policy to aid social mobility. That’s what aspirational socialism means: opportunity for all, ensured by everybody making a fair contribution.

Talking ‘Bout A Revolution

With Britain’s general election taking place on Thursday, the heat and noise of campaigning is now crowding out most other news stories in the media. (Which is probably just as well, as the so-called ‘news’ story of the royal birth has consequently got little more than the prominence it deserves!) But at this stage in the election, all the speeches, accusations and adverts become less important. I believe that voters aren’t listening. How could they? The sound of our politicians arguing would deafen the most earnest listener.

In the hours before polling day, the true fight moves from the national stage to the grassroots. Save for a final rallying cry or a major gaffe, the party leaders have diminishing influence on the success of their campaign. That’s my theory.

It will not surprise you to read that I am endorsing the Labour Party.

The past five years have been wearying. Injustice deeply offends me, and the Coalition Government has ensured it is in plentiful supply. Reading a newspaper has on occasion felt about as fun as a tooth extraction, as I have watched the welfare state undermined by cuts, workfare and privatisation. We’ve seen local government devastated, public assets sold off, workers’ rights threatened, legal aid slashed and our country isolated in the European Union.

Which is not to say the Coalition has not done some good for the country. Particularly in its early years, it introduced some praiseworthy measures like the electoral reform referendum and an (admittedly half-hearted) attempt to restore our eroded civil liberties. Today, nobody would argue with the ‘pupil premium’ that has shielded poorer students from the freeze on the schools budget, and universal free school meals for 4-7 year-olds.

I even have some warm words for the Prime Minister. Although I do not agree with his values, and think he is something of a bully, he is also prepared do do what he thinks is right even when it damages him to do so. For example, he made constitutional history by consulting Parliament before intervening in the Syria conflict. True, he didn’t know Ed Miliband would withdraw his support and defeat the Government, but I respect Cameron for taking the risk giving the people’s representatives a say.

Nevertheless, some constitutional tweaking here and a little education funding there is of little comfort to the thousands of homeless, the million people dependent on foodbanks and the excluded poor that shame the Coalition.

But in the age of multiparty politics, the Opposition has to work to earn its support: it can’t wait for a tide of anger with the government of the day to carry it to power. And yes, I think Labour deserves support.

Labour’s offer contains many attractive and some unappealing elements. They cannot protect the country from further austerity measures, although their failure to challenge the Conservatives’ story on the economy early enough has left Miliband unable to be upfront about his plans. His perfectly sensible plan to eliminate the structural budget deficit whilst allowing room for £30 billion annual borrowing for investment is the most prudent of those put forward. It also allows for spending cuts to be limited to £6 billion this year and just £1 billion next year, provided Labour’s plans for tax rises of the same size are implemented. Compare this with the Conservatives’ £50-70 billion worth of cuts and we see this is the difference between cutting with a butter knife and an axe.

And the difference is greater than just the scale of cuts: what happens after them is just as important. If it is a Conservative government that balances the books, do you think they are going to priorities tax cuts or regenerating collapsing public services? Austerity is not going to magically end the moment the deficit is cleared: we need a government that will choose not to make it permanent. Look at the US if you want to see what happens when a society doesn’t invest in services.

The case for Labour rests on so much more than limiting spending cuts. It’s also about values. Labour has talked a lot about the importance on being ‘on your side’ and addressing the sense that politicians don’t work for ordinary people. It could well be an empty slogan, but I think it is something deeper that Miliband has identified. New Labour, in its eagerness to look competent and please the Establishment, did nothing to stop vested interests exploiting the people of Britain. It wouldn’t have been difficult to keep house prices under control, to provide a little economic security to workers or break up the oligopolies that rip off consumers in energy, transport, banking, and so many other industries. But the Conservatives didn’t care and Labour chose not to help. I think Miliband is determined that it should never let the country down like that again.

For all the talk about Ed Miliband being weak and incompetent, he would make a better Prime Minister than any of the party leaders. Yes, he’s a nerd, but does it hurt to have an intellectual running the country? Does it hurt to have a leader with integrity and passion, like him? As we’ve seen, he is exceptionally strong when the occasion demands. Incidentally, his critics need to decide if he is the ruthless schemer who stabbed his brother in the back (because David Miliband clearly had a God-given right to the leadership) or the bumbling fool who shouldn’t be left in charge of a lemonade stall.

But why should a socialist like me vote Labour and not for left-wing challenger with a more exciting manifesto? The wasted vote argument is important but well-worn, and doesn’t apply to Scotland where there is talk of the Scottish Nationalists ‘massacring’ Labour; parts of Wales where the Welsh nationalists have a fighting chance  and Brighton Pavilion where the Greens defending their single seat.

As far as the Greens are concerned, I am worried that their leadership seems more concerned with attacking Labour for not being ‘pure’ enough than defeating the Conservatives. I found the above clip from the BBC opposition leaders’ debate most telling, with the Green leader bellowing at Ed Miliband whilst he was attempting to expose UKIP’s desire to break up the NHS. My experience of my local Green Party is not positive either; their candidate’s opportunism and hypocrisy would make the Lib Dems blush!

It is easy for smaller parties like the Greens to be critical of the main opposition. When they have never been in power, it is fine to dodge the realities and hard truths that constrain major parties. That is not to say that the establish parties do not need challenging: the Greens have a vital role to play in demonstrating that public anger with the old politics is not exclusively of the toxic UKIP variety.

The SNP is not quite as radical is it likes to make out, as its cosy relationship with Rupert Murdoch demonstrates. However SNP gains at the expense of the Liberal Democrats and Conservatives enhance the prospect of a left-wing government. Also, while I am more confident as to the red-blooded socialism of Plaid Cymru than the SNP, it doesn’t make sense to vote against the hardworking and decent Labour MPs that represent many Welsh and Scottish constituencies.

Nobody will win this election. There is no prospect of the Tories improving on their 2010 seat total, and they are certain to lose seats to some extent. Labour will make respectable gains in England, but their net gains will be limited by the probable SNP landslide in Scotland. I believe the result will be close to this forecast produced by associates of Nate Silver.

If the prediction is correct, the Tories will fall about 45 seats short of the 323 needed to form a government. Labour will be about 10 seats behind the Tories. The SNP will multiply from 7 to 50 MPs, while the Lib Dems slump from 57 to around 25. The forecast is consistent with reports from campaigners that neither the Greens or UKIP will translate their increased support into more than one seat each.

If the Tories managed to unite all their potential supporters behind them, that is to say they could secure backing from the Lib Dems, UKIP and the right-wing Northern Ireland Unionists behind them, they would still have just around 315 MPs. A Tory government is highly unlikely unless they win no fewer than 290 seats on Thursday- just 13 losses. I wouldn’t bet on that.

It is clear Labour’s preference is for a coalition with the Liberal Democrats- it has ruled out so much as an informal deal with the SNP. Yet if, as looks likely, Labour falls short of 290 seats, only co-operation with the SNP provides a majority. At 275 seats or fewer, Labour would have to call on the SNP and other parties.

Miliband has said he would rather remain in Opposition than co-operate with the SNP. Yet if there is an anti-Conservative majority in the House of Commons, he won’t actually have a choice. Well, technically he could form a Grand Coalition with the Conservatives, but it’s more likely that UKIP will win the election!

I reckon the next election could arrive a lot sooner than 2020.

Labour: Is It Really ‘Anti-business’?

In the closest and most hotly-contested election for a generation, politicians are going to throw a lot of mud at each other. The Conservatives and their supporters have mastered this art very well: they believe that if they take a line and repeat it often and loudly enough, it will become the prevailing view, even if there is little evidence to support it. They’re trying that now. By screaming that Labour is stuck in a ‘seventies mindset’ and is ‘anti-business’, they hope to undermine Labour’s economic credibility.

To be fair, Labour is fighting on its most radical manifesto for a generation. Vested interests have a lot to fear from us. Labour has committed to break virtual cartels that exist in energy and transport markets; crackdown on corporate tax dodgers and exploitative zero-hours contracts; control speculation in land and housing and a large uprating in the minimum wage.

Will these measures cost businesses? Only those who are bad corporate citizens. Good businesses already pay fair taxes and wages. Good businesses add value to our economy through innovation and hard work, not profiteering. Good businesses welcome real competition.

Labour is a vibrant, democratic political movement and we exist to serve the people of Britain, not the CEOs and shareholders. Except in the City of London, people have the vote, corporations do not. Our aim should not be to prioritise business over other concerns for the sake of it (or, as with the Conservatives, because Monaco-domiciled businesspeople have given us large donations) but to help business as partners in the British economy. Labour has every interest in helping business create British jobs, innovative new products and services and drive investment. And that’s exactly what the next Labour government will do.

Would an anti-business party commit to keeping Corporation Tax rates at the lowest in the G7 economies? (Rates that are too low, in my opinion) Would it slash the business rates that are crippling small enterprises? Would it fight so hard to keep Britain in the European Union citing ‘trading benefits’? Would its Business spokesman introduce the Small Business Saturday campaign?

Every businessperson from the start-up entrepreneur to the billionaire shareholder has nothing to fear and everything to gain from a Labour government as long as they are committed to social responsibility and playing by the rules.

These are the people corrupt interests want you to imagine when they throw claims about ‘anti-business’ approaches around. They don’t want you to think of HSBC, which was caught hiding its clients’ money from billions of pounds of tax liabilities (and then given a ‘get out of jail free card’ from the same Tory ministers who say we can’t afford extra NHS funding). They don’t want you to think of Amazon, which has been shameless in its abuse of employment rights and tax regulations. And then there’s Rupert Murdoch, who has been allowed to do more or less as he likes because of his ownership of four national newspapers. Ed Miliband has so far been very bold in making that point, but the attacks on him from those with interests in this rotten section of the business world are only going to get fiercer as polling day approaches.

As the attacks intensify, Labour must not waver. Some figures from the old days of New Labour have called for ‘concessions’ and a more moderate tone. In other words, they call for abandonment of some of the more radical proposals. I think that would be a huge mistake.

British politics today is a world away from the scene that existed 20 or even 10 years ago. Today, the electorate has become tired of leaders who are too scared to act to end injustices inflicted by the wealthy and the powerful. It is all too easy to criticise the problems created by modern capitalism. But empty words and bland generalisms will no longer cut it with the voters. They want a government that is not afraid to act. I hope Labour is bold enough to be that government.

Give Greece A Chance

One week ago, Greece’s left-wing Syriza swept away the ‘pro-austerity’ establishment, riding a surge in popularity to office. Greece, Europe and the wider world are still trying to comprehend the implications of Syriza’s transition from a fringe party to a (radical) party of government. It fell just one seat short of an overall majority (parliamentary majorities have long since become a thing of the past). The new prime mininister, Alexis Tsipras (pictured) built a coalition not with the hardline Communist Party, which refuses to co-operate with any capitalist government; not with the so-called ‘centre left’ establishment of PASOK or its more successful splinter party, The River; but with the Independent Greeks. They can be best described as a party of the populist right, not dissimilar from UKIP. The new coalition could hardly be described as a natural marriage, but it seems that Syriza gets a free reign in domestic policy in exchange for handing the defence ministry to their junior partners. Appointing a redneck to run the military is not the most reassuring of moves.

Within days of taking office, Syriza has reversed savaged cuts in the minimum wage, reinstated numerous sacked public sector workers, cancelled IMF-imposed privatisations, abolished fees for prescriptions and hospital visits and restored pensions. It has also made powerful symbolic gestures, sweeping away the ministerial cars and barricades that separated the Greek people from their government. Syriza feels that if a government needs protection from the public, it is doing something badly wrong.

And as if talk of nationalisation (such as of banks and hospitals); a 75% marginal income tax band; corporate tax hikes and an emergency expansion of the welfare system were not enough, Syriza is demanding reflief on Greece’s national debt, now an eye-watering 175% of GDP. (See Syriza’s 40-point manifesto here)

The markets are having a fit.

The European Union is having a fit.

The Greek public are, for once, hopeful about the future.

Angela Merkel and the cabal of neo-liberal governments who have provided, through the ‘troika’- European Union, the European Central Bank and the International Monetary Fund, bailouts totaling hundreds of billions of euros, have categorically ruled out any renegotiation of the terms of the loans. They are, rightly, fearful than any let up in the harsh terms imposed on Greece would lead to demands from other victims debt-burdened countries. On the other hand, Greece is aware that Europe’s big threat to Greece- that the country could be forced out of the Eurozone- would be almost impossible to implement and would destabilise Europe’s (and by extension the world’s) banking system. Similarly, if the troika cancels the latest installment of loans to Greece, and the country is forced to default, the troika is hurt as much as Greece. The situation is akin to a Cold-war style pose of mutually assured destruction.

Any disruption to the convention of debt-stricken countries being asset stripped by international bankers and the costs being passed on to the weakest through the wholesale dismantling of public services and welfare systems is going to be fiercely resisted. On the other hand, Greece simply cannot pay its debts. There will be a renegotiation of sorts. Greece’s first bailout was agreed amid talk of setting interest rates to ‘punish the Greeks’. The obscenity of such talk is clear to see now, when every basis point added to the interest rate of Greek debt is a thousand homeless pensioners. It was not long before the interest rate was reduced to 3.5%.

It is a pity that the troika cannot see that intelligently designed debt relief would get the weaker EU economies back on their feet so much faster and cost lenders much less in the long run.When the internal politics of the European bloc are concerned, concepts like ‘logic’ and ‘reality’ become much harder to pin down. The EU would not survive if two countries with directly opposing interests could not both emerge from negotiations brandishing a compromise that they describe as a resounding victory for their side. This is has been called  ‘Eurofudge’ , and its made the EU into what it is today.

The talks that Greece’s new government has opened now will result in an epic Eurofudge. I think another extension of the repayment period on its loans and a reduction in the interest rate to, say 2% would be the minimum concession needed. That’s what Greece will get, provided its creditors can leave talks saying that it will still repay every penny of the bailout loan.

Syriza is not waiting for a debt deal to begin rebuilding Greece. In a week, Syriza has achieved a lot more than a left government would be proud to accomplish in a year. However, only the financial certainty that a deal will allow will give Greece the space it needs to grow.

Socialist Government Dissolved Following Calls For Socialism

The whole world is begging us to put an end to these absurd austerity policies which are burying the Eurozone deeper and deeper in recession and which will soon end up with deflation. We must have the intellectual and political courage to acknowledge that austerity policies are making deficits worse instead of narrowing them.

Former French economy minister, Arnaud Montebourg

French President Francois Hollande has accepted his Prime Minister’s invitation to dissolve the Parti Socialiste government. The French government, led by arch-centrist Manuel Valls, was thrown into crisis after its Economy minister gave an explosive interview to Le Monde in which he attacked the leadership’s commitment to the Eurozone-wide austerity policy. Thus far, the government’s attempt to reduce its budget deficit to the Eurozone target level of 3% of GDP has only succeeded in suppressing economic growth and propelling the unemployment rate to 11%. In these harsh conditions, it is little wonder that the far-right National Front and the Left Front (signature policy: 100% top rate of Income Tax) are going from strength to strength whilst the President’s approval ratings have sunk to a jaw-dropping low of 17%.

Within a matter of hours, the Education and Culture ministers expressed their support for Montebourg, prompting Valls to offer the government’s resignation- a move aimed at settling the crisis before it forced a dissolution of the entire parliament. Hollande has said he will use the opportunity to exclude all left-wingers from the new cabinet  appoint a government “consistent with the direction set for the country”.

This marks the completion of Hollande’s selling out.

Back in the 2012 presidential election campaign, Hollande promised the French people an alternative to the austerity and the dictatorship of financiers that the previous government had tolerated. France was asked to elect a man with clear radical leanings. The Socialist candidate promised progressive taxation, increased education spending, and professed his dislike of “the rich”. Hollande even said:

My real adversary will never be a candidate, even though it governs. It is the world of finance.

It took just a few months in government for the new President to betray his people and surrender to demands for premature spending cuts and tax rises. As the economy reeled from these blows, the President’s political self-confidence visibly evaporated. He revised his ideology, stating that he was now a ‘social liberal’ (the French equivalent of a neoliberal or New Democrat). He backed a €30,000,000,000 tax cut for corporations whilst raising the tax burden on ordinary workers. Of course, Hollande follows in a fine Parti Socialiste tradition in promising radical change in opposition and then moving sharply rightwards in power (ahem- Mitterrand!) Unfortunately, this time such backtracking has failed to revive the French economy, with the consequence that the President is now distrusted by the Left and the Establishment that he has embraced.

It is difficult not to feel sorry for the French President. His premiership has been marred by adverse economic conditions that he inherited and can only partly control. His poor decisions following his ascent to the Presidency were made with good intentions, even if they are the wrong way to achieve economic growth. It is also true that he has invested so much political capital in enacting the Eurozone’s fiscal pact that he cannot retreat on the policy now.

Yet it is also clear that France must adopt a fiscal stimulus package- consisting primarily of tax cuts aimed at increasing consumer spending- as the Socialist left have been calling for. If France’s national interest is at odds with Hollande’s remaining in authority, it is obvious which must give. It is also a false choice, given that Hollande will be forced out of office if he cannot halt France’s economic stagnation. There appears to be no realistic scenario in which the President’s political career survives beyond the 2017 election.

Hollande is free to lock out the left from his new cabinet, knowing that the same group will not dare to vote against a right-dominated ‘Socialist’ executive in parliament for fear of provoking an election in which the party will be routed. However, clinging even more firmly to invalid monetarist economics will not get to the root of the political problem.

 

Hands Off Our Charities

Just when you think that the Coalition’s attitude and policies on welfare cannot get any worse, they manage to surprise you with something even more horrible.

Now some parts of the Government are attacking charities.

In the past week, we learned that a “senior aide” to (Work and Pensions Secretary) Ian Duncan Smith threatened the head of Trussell Trust that his charity could be “shut down” for its supposed political opposition to the Government. Trussell Trust runs most of Britain’s foodbanks, whichhave now sprung up in almost every town in the country.

This comes hot on the heels of a successful call by a Tory MP, Connor Burns, for the Charity Commission to investigate Oxfam for a poster warning about the “perfect storm” of economic conditions and benefit cuts and the consequential surge in poverty in the UK. Burns said that Oxfam was guilty of partisan campaigning. Oxfam countered that discussing poverty “should not be a party political issue”.

It is disappointing that the Conservative Party, having done much to demolish the invaluable Welfare State in the past four years, now appears to be turning on the organisations which fill in the gaps left by their policy programme. If the foodbanks weren’t there, we’d be faced with a growth in crime as desperate families sought to feed their children. Or worse, we’d be faced with a surge in homelessness or even starvation. So it’s fortunate that there are no serious moves by the government to impede the work of foodbanks. However, the hostility towards them has been amply demonstrated in the past, with ministers refusing to accept EU aid for foodbanks.

My understanding of the classical right-wing view of the welfare system is that it should be run by charities, funded by donations rather than taxation. To that end, many Tories have worked well with charities. Whatever you think of the idea, at least they are consistent in their approach. Unfortunately, their representatives in the Government seem to be hostile towards both the state and charities.

Courtesy of “Downtowngal” under Creative Commons license

If it is alleged partisanship by the charity sector that annoys the Coalition, their anger is unjustified. Oxfam would campaign against poverty-inflicting measures if it was a Labour government imposing them. The same applies for a UKIP or Monster Raving Loony government, for that matter. All that these charities have pointed out is that poverty is on the rise, and certain decisions by the Government have contributed to it. Yes, it’s political. Charities are political; their very existence says that there is a need the rest of society is not fulfilling. However, it is not party political.

Do Conservative MPs want to intimidate charities into keeping quiet about the hardship that is befalling so many people? Even if they can, that won’t blinker the public. The signs are everywhere, visible to all without the need for campaigns, studies or statistics. For example, I’ve noticed that there are many more homeless people on the streets.  It is now rare to go a day without coming across somebody lying on the pavement in a pile of dirty blankets, totally cut off from the rest of society. I don’t know if this is a widespread phenomenon, but authorities have responded with cuts to emergency housing services; studs on the ground to deter rough sleepers; the removal of streetside benches; and the infamous Bedroom Tax to price people out of social housing. And homelessness is just one symptom of a sick society which is neglecting its people.

The public will notice increased rough sleeping; the opening of a local foodbank; and the anecdotes about people living in crumbling flats. They don’t need it pointed out to them. So proponents of the ‘austerity agenda’ shouldn’t worry about the public learning of the new social problems Britain is imposing on itself. They should focus on ensuring that the public don’t care. It can be done: remember how easy it was to turn the welfare system into a toxic issue? And that is what the rest of us must guard against.

Osborne Knows Who He Is Helping

Yesterday’s Budget was one designed to boost the Coalition’s standing in the opinion polls before the general election campaign begins. George Osborne is in fact a shrewd political calculator, despite the omnishambles of several of his previous Budgets. Thus this Budget made few new spending cuts: you’d have to delve into the small print to uncover the scale of pre-planned reductions, and that several new unspecified cuts have been pencilled in for the next couple of years. No, this was a budget of hidden cuts masked by tax giveaways galore.

Some of these were absolutely predictable: another penny off Corporation Tax, so large businesses now pay about half as much in Britain as in the US. Backtracking on the carbon price floor, so that green taxes are limited just as they begin to yield results. Others were not so predictable: a shake-up of ISAs (tax-free savings accounts) so that anyone can save £15,000 a year without being affected by Income Tax. Pensioners are to be wooed with the option of buying National Savings & Investments bonds paying above market interest rates.

But most significantly, Osborne has liberalised rules on pension funds. It will be easier to withdraw money from your pension, whilst upon retirement there will no longer be any requirement to buy an annuity with your maturing pension fund.  The logic behind the most radical overhaul of pensions for a generation is that, following the roll-out of the flat-rate state pension in 2017, savers can act safe in the knowledge that they will not fall beneath a minimum income in retirement. Therefore, the argument continues, the government can trust people to decide what to do with their own pensions. So if they need to dip into their pensions in middle age, they can. If they opt to draw down their pensions rather than take an annuity upon retirement, they are convered even if the money runs out.

These reforms will work a treat in tempting disheartened UKIP supporters, with a few years and a few hundred thousand pounds behind them, back to the Conservative fold. And the principle of giving people more choices as to their financial futures is a noble one. Yet the price of these benefits is more financial instability for the government, for working people and in private investment. “That’s a big claim!”, I hear you say. But consider the facts: pension and annuity providers are financial powerhouses, second only to governments and central banks. Now pension funds will have to account for much earlier withdrawals, whilst the annuity market will shrink dramatically. That means pension funds will have less to invest, and will have to make shorter-term investments. Annuities will become more expensive and specialised as only those who anticipate living for long will buy them.

If both industries have less money, they cannot buy low interest gilts (government bonds) in the bulk that they used to. The consequence will be higher costs for government borrowing- not ideal when the National Debt is set to top £1,500,000,000,000. Pension funds are the only really long-term investors other than the government, which will now have to replace lost funding for infrastructure projects.

And then, even more importantly, pensioners in the future will now have to pay a premium for annuities, perhaps the most secure pension product there is. So we face a choice of greater risk or lower incomes in retirement.

So much for this “Budget for the savers”.

Why The Left Will Gain From Labour’s Transformation

There was something surreal about the Special Conference of the Labour Party that was held this weekend to radically alter the party’s constitution. The reforms, which include the abolition of the electoral college for leadership elections; the revamping of the new “registered supporter” category of membership; and changes to the financial relationship between trade unions and Labour. That Conference would approve the changes was a forgone conclusion: Conference is just an elaborate pretence that the grassroots have any influence over the party.

Yet the reason the reforms passed with 86% of delegates’ backing is because most parts of the party think they stand to gain from them. Trade unionists and their allies (I include myself in this category) note that affiliated union members are likely to be better integrated into the party, enjoying a bigger share of the vote in leadership and mayoral selections, and with the new right to get involved in Constituency Labour Parties (CLPs). Blairites calculate that slashing payments made by union members to Labour will reduce the supposed influence Unite, the GMB and Usdaw unions have over the party. Also, the party’s right wing assume that they can flood Labour with new Registered Supporters who will help guarantee the awful centre-right domination of our party that was shattered by Ed Miliband in 2010. That’s why the likes of Tony Blair and even David Owen (who I will turn to later) were delighted with the changes.

I think that they’re wrong on both counts.

Firstly, trade unions and their members will be more important than ever to the party now: the effect of slashing donations to Labour from automatic affiliation of union members will be to boost unions’ “Political Funds”- pots of money allocated for political activities that are under control of union executives. More often than not, the bulk of this will go to the Labour Party- but with strings attached. Gone are the days in which union members fund large donations to a party that consistently marginalises them. No, unions will expect Labour policy to be firmly rooted in the need to support hardworking Britons, and that is no problem in my view.

The second miscalculation of the Labour right is that Registered Supporters will automatically side with them. “Blair’s heirs” work on the flawed assumption that the wider electorate all gravitate towards the centre, and that Labour’s winning formula is a combination of betraying its socialist roots and “selling” the party as a brand. But we do not live in the 1990s.anymore. Britain wants a party of substance, one that is not afraid to stand up for it. The same uninspiring old plan of slicing, dicing and diluting our ideas to build a suitably bland platform not only doesn’t cut it any more: it’s killing our politics. Turnout has dropped through the floor because voters are turned off by the weakness of our leaders. That’s why Registered Supporters could well side with figures who show the conviction and originality that voters are crying out for.

“Ordinary” folk do not think along left-right lines, but that doesn’t make them centrists.

In short, I think we socialists have everything to gain and nothing to lose from Labour’s constitutional reforms. It is our responsibility to build a labour movement fit to lead the nation- and the world- towards a fairer society despite the challenges and economic issues posed in this era of change. Let’s not blow it.