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.

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Labour Rediscovers Public Ownership: Bad News for RBS

Whatever you want to call us: the 99%, the working and middle classes, ordinary people, the proletariat… we’ve been having a tough time over the past 7 or 8 years. We’ve been paying for the near-collapse of the global financial services industry twofold: with the wrecking of our pubic finances to fund hectobillion bailouts, and the pinch that the rest of our economies are suffering. Consequently, it’s our living standards that are falling, our public services that don’t work, our life chances that are being salami sliced.

However, some people aren’t suffering.

Let me quote you one shocking fact: according to an article in the latest edition of Tribune, UK inflation has outstripped the growth in average earnings (at about 2-3% to 1%) on every month except April 2013, when City bonuses and pay rises distorted the national figures. The pay rises of a few thousand overpaid bankers were so vast as to outweigh the below-inflation rises of 40,000,000 workers. The very group of people who drove Britain to the brink are those who aren’t paying for it. This will only come back to haunt the banks.

So when the 82% state-owned Royal Bank of Scotland demanded the government’s consent to its paying its top bankers bonuses of 200% of their ordinary salaries, it got little public sympathy. Under new EU law (which George Osborne is trying to challenge), banks may only pay bonuses of 100% of annual salaries, or 200% with shareholder approval, meaning that the Government can no longer be a passive shareholder. If the Treasury wants Lloyds’ and RBS bankers to receive obscene bonuses, they have to vote for it.

And that’s exactly what the Government intends to do, but for a little political difficulty. The Labour Party is now calling on the Government to vote against any bonuses: a populist policy that could force the Conservative Party’s hand. Labour’s policy is a refreshing change from that of its previous leadership, which insisted on a “hands off” approach to the nation’s shareholdings. A bit of radicalism is what Labour is supposed to be about. Some have condemned the proposal as anti-business. It isn’t. It’s anti-theft.

On The Alternative Queen’s Speech

 

 

 

 

Declining recliner

 

It is no secret that the Conservative Party has a large wing that is on the right (dubbed the ‘rabid right’ by some liberal critics) of the party’s leader on many issues: these Tory backbenchers, constituency chairmen and members would feel more at ease with Nigel Farage as their leader than David Cameron. Of late, tensions between the party leadership and the backbenchers have grown further as Cameron attempts to balance the need to appease them, the electorate, and to a lesser extent his Liberal Democrat coalition partners.

Last month, a group of backbenchers published on the influential ConservativeHome blog their Alternative Queen’s Speech in an attempt to write a clear wish list of policies that they would like to see enacted through legislation. The result is an interesting insight into the mainstream priorities and aspirations of the extreme right of mainstream British politics. The proposals included measures to abolish the 45p Income Tax band; the tearing up of HS2 blueprints; abolishing subsidy for green energy; EU referenda;  the semi-privatisation of schools; lower Capital Gains Tax; union busting; and an end to House of Lords reforms. As usual with these figures, we see a combination of short-sighted and unjust policymaking, and a strange preoccupation with low priority issues such as the European Union and taxation on financial transactions. It is telling that not a single proposal was designed to stimulate economic growth.

It takes a particular upbringing to form the world view that the environment and infrastructure projects should be ignored in favour of a focus on complaining at the European Union- where the main complaint from the Daily Mail brand of eurosceptic seems to be that they advocate the metric system- and lower taxation on the elite. That, as Gordon Brown once shrewdly said, is a world view that was ‘dreamt up on the playing fields of Eton’. When a person has never had to work to get on in life, enjoyed a high-paid, low effort job at Daddy’s firm straight from Oxbridge, it is little wonder that they don’t comprehend the problems and the lives of the millions who live in what might be termed ‘the real world.

It is that tendency within the Conservatives that has rendered them unelectable. Since the country reached the height of social mobility (between 1976 and 1979 depending on which statistical indicators are used), the Establishment is not something that is looked up to. Obviously many aspire to be wealthy or famous, but as part of the youthful ‘new’ elite, not the upper classes that have dominated national affairs for so many centuries. The problem for this group is that they continue to have influence, but not with the electorate. Are they even aware that the prospect of a privatised education system is not a policy which will inspire voters to back the Conservatives? It sounds like a ridiculous question, but I don’t think the answer is the right one.

The reason that UKIP, which espouses a virtually identical set of principles, enjoys so much support is because it relates them in a populist style. It is simply more in touch with ‘working class conservatives’. For example, both the Tory right and UKIP oppose immigration, but UKIP cites the effect on the labour markets and public services. Such is the distinction between populism and elitism. The message for the likes of Peter Bone, Liam Fox and Jacob Rees-Mogg is that they should start talking about matters that voters actually care about, or embrace Cameron’s post-ideological stance.

 

Another Lurch to the Right

election battleground

After the Conservative Party was rocked by the success of UKIP in last week’s local elections, in which they lost majorities on twelve councils, senior figures have resolved to win back millions of defectors by ‘taking’ stock of the Government’s political direction. 

The party appears to have concluded that they must move further to the right of the political spectrum, and win UKIP supporters by applying matching political colours. To do so would  be a mistake, given that this assumes that UKIP won votes due to its policy platform.  That didn’t happen. People turned away from the three major parties either due to the vague sense that immigration levels are too high, or because they wanted to shake up a complacent and uninspiring political establishment. This is particularly evident given the wide gap between UKIPs policies (a flat tax, an end to environmentalism, even faster spending cuts, etc.) and the views of their voters.

The Conservatives, particularly their backbenchers, are under the impression that their string of right-wing announcements made over the past few days will be popular. It is indeed the style of the hard-right ‘shire’ MP to believe that opposition to same-sex marriage, the European Union, and wind farms is as central to voters’ lives as it is to theirs. That’s why there are actions being planned to fulfil both, though Labour and Liberal Democrat MPs will probably block such moves.

What is an unfortunate fact is that public concern about the number of immigrants, from inside and beyond Europe, is such that a large number of decent people have turned to a more hardline party to stand up for them. They cannot be blamed. One party wishes to open borders to large populations of mobile, low-skilled workers in similar circumstances to those that existed in Poland 10 years ago; whilst it was only
in 2010 that the then leader of the other dismissed Gillian Duffy as a ‘bigoted woman’ for worrying that her grandchildren were being squeezed out of the employment market. The white working class feels it has been disenfranchised over the past 20 years, and with a degree of justification.

It is easy to underestimate the political shrewdness of the Conservative Party. Though they have failed to win a General Election since 1992, they are adept at framing the debate on their terms by drawing a narrative that resonates with the public. For example, it is Labour that is on the defensive on the issue of welfare despite the cruelty of Coalition ‘reforms’. Surprisingly, it is UKIP that has beaten them at their own game, beating them to their populist support base.

The country is about to be subjected to a number of regressive policies and plans as the Conservatives attempt to reverse the drift. The unemployed, immigrants and the elderly have much to fear. This means that the Liberal Democrats have a role in denying the parliamentary numbers for any legislation (admittedly this is unlikely), and Labour needs to provide effective, in-touch opposition. If they fail, then the toxic legacy of UKIP’s rise will divide society for generations to come. 

Cyprus Calling

Map of Cyprus with EU flag

(Photo credit: Wikipedia)

On Saturday the 16th of March, the European Union and the government of Cyprus (that is, the internationally recognised state which covers the southern half of the island) quietly agreed the terms for a €10,000,000,000 bail-out for the debt-laden island. Quietly, that is, for the rest of the world. The people of Cyprus are outraged at the most draconian austerity plans ever seen in peacetime history. For it is not only the traditional pattern of regressive tax rises, public sector layoffs, and undemocratic privatisation that the islanders will be forced to accept,  but an unprecendented direct levy on all savings held in Cypriot banks.

Within hours, EU officials (notably, not the Cypriot government itself) announced that the first  €100,000 of deposits held by individual has been taxed at 6.75%, rising to 9.9% on savings above that level. Though this has raised  €6,000,000,000 for the Cypriot government, the indirect costs this precedent  will have dwarf any ‘benefit’. Within minutes, queues were forming at bank counters and ATMs, despite the futility of withdrawing cash from accounts in attempting to avoid the tax- as with all emergency moves like these, all means of avoiding it are blocked. In this case, banks were told to pay out no more than the 90.1% net balance of people’s accounts. Nevertheless, the queues continued to grow.

Cyprus has just raised the equivalent of one-quarter of its GDP, and this will be valuable in meeting its liabilities to foreign investors. Unfortunately this means that any country in the EU which is having financial problems is likely to face a run on its banks, caused initially by fears of a tax but then becoming self-sustaining, even if there was a chance of avoiding emergency assistance. The world has just witnessed a tragic and short-sighted undermining of confidence in the safety of retail savings.

Some on the radical left have commented that, though taxing pensioners on their modest care home fund is appalling, the principle of a one-time levy on the assets of the super-rich should be welcomed. To quote Peter Mannion (the cynical Cabinet minister from the popular satire The Thick of It), it is a “political merengue: sweet, but without much real world substance”. Trust that money in the bank is as safe as cash in the hand is crucial to supporting the bread and butter finance which keeps the global economy functioning.

The implications of this levy will not appear to be a significant problem today, but it is only a matter of time until they come back to haunt Europe. And this has only happened for the sake of a fraction of a percentage of the region’s annual economic output. Unfortunately, it is too late for us to negotiate a fairer deal for Cyprus. The logic of the austerity measures has become so complex as to become self-contradictory: in order to avoid a default on Cypriot government bonds, which would damage investor confidence, an effectual “default” on Cypriot savings has taken place… which will ultimately damage general investor confidence.

Simply allowing Cyprus to default on, say, 50% of its debts followed by an EU-funded loan to any pension funds or banks affected would have been a more productive path for European officials to follow.  This is particularly true when one considers how small the Cypriot national debt is compared to the European economy- Spain or Italy might be another story.  The effects of those who have agreed to take a risk on their capital (by lending to a government) actually enduring a loss on some of that capital  would be less severe than rendering savings banks unsafe investments. How can it be that investors have come to expect fair returns on gilts, and yet expect the losses to be paid by the general population who have recieved no such benefit?

How will the EU budget impact upon the UK?

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With the recent EU budget being agreed across all EU member states, how will this affect the UK and EU relations as a whole?

“I didn’t quite get a thank you!” as the PM mocked Ed Miliband when addressing MPs on the EU Budget Summit. The Tories knew the political impact of not delivering a cut in the EU budget. Labour’s political move to vote with the rebellious Tory MPs against the Government to demand a cut in the budget; a move Disraeli would be proud of. With UKIP’s support rising, and eurosceptic MPs having the potential to cause issues for the Government, Cameron needed to secure a cut in the EU budget for not just economic reasons, but political reasons for his party too.

Although the EU budget negotiations began before Cameron’s big speech on the UK’s future in the EU (by promising a referendum in 2017 after a fresh settlement,) divisions between the eurosceptics and the more EU friendly Tory MPs were still bubbling under the surface at the time. Considering, UKIP is still strong in the polls, as long as Cameron can show himself as defending against the EU in favour of British interests,the UKIP support could burst away in a General Election campaign as the infamous wasted vote syndrome plays on people’s mind. Although the General Election is still 2 years away, events such as the EU budget negotiations can play a key part in how in particular UKIP and eurosceptic supporters will vote.

Therefore once the negotiations were underway, certain alliances and the tactics of individual countries became very clear, France and Germany in particular. In the first summit in November, the tactics of Merkel was stark, as she was “determined not to isolate David Cameron” at the summit. [1] This can be judged for tactical reasons as the German Chancellor did not wish to potentially provoke further euroscepticism in the UK if it seen that the EU was ganging up on the UK like a little kid in the playpen, taking its candy with seemingly no benefits to the UK. Merkel had the tenacity to avoid that issue by supporting Cameron’s wishes for a cut in the EU budget. However, this support also benefited German self-interests, as Merkel supported austerity, just like Cameron, as they are both from Conservative parties.

This German interest to support the UK also included other nations to voice their support in cutting the EU budget, such as the Netherlands, Sweden and other Northern European countries who pay more into the EU than they receive. Although this is a significant amount of support to Cameron, and shows that he is not isolated in the EU, it is highly likely that any EU budget cut would not of came if the Germans did not give their support and in particular Merkel’s tactics of ensuring Cameron would not be isolated against the aggressive moves of Barroso and Van Rompuy in trying to push the British into a corner.

Furthermore, the negotiations in the EU budget highlighted the key divisions in the increasingly strained Anglo-French relations, with Hollande threatening the UK rebate, with demands for a £3bn cut in return for any agreement in a EU budget cut [2] Hollande even went to the extent of staying away from a meeting with Cameron and Merkel in forging a compromise a couple of weeks ago. [3] We can therefore see a potential new Anglo-German friendship based on similar ideological beliefs (Conservatism, austerity) and quite possibly alienating the Socialist French leader if it benefits both the UK and Germany.

Although the economy, NHS and Welfare and more likely to be more important in the 2015 General Election, the EU will still play a crucial part in regard to how many votes UKIP receives. If The Tories are too eurosceptic they could alienate possible centre-ground voters, and if they’re not eurosceptic enough UKIP’s vote could soar and ensure Ed Miliband waddles into 10 Downing Street as the new PM.

 

Written by Lily Jayne Summers.

[1] – http://www.guardian.co.uk/politics/wintour-and-watt/2012/nov/23/eu-davidcameron
[2] – http://www.telegraph.co.uk/news/worldnews/europe/eu/9699877/French-threat-to-UK-rebate-as-EU-budget-talks-collapse.html
[3] – http://www.guardian.co.uk/world/2013/feb/08/david-cameron-hollande-merkel-negotiations

On The Robin Hood Tax

Robin Hood Tax tug of war at the Barclays AGM

Robin Hood Tax tug of war at the Barclays AGM (Photo credit: Robin Hood Tax)

Since the idea was first widely mooted in 2008, most of us have dismissed the Financial Transaction Tax (or Tobin Tax or Robin Hood Tax)  as a wonderful idea that would not work due to the globalised nature of our financial services industry. Sweden introduced such a tax in the 1980s, and it crippled the nation’s financial services industry. Whilst a tax of 0.1% on the proceeds of any sale of shares, bonds and gilts sounds relatively insignificant, when one small country in a world of fluid capital attempts to impose it, that country becomes very uncompetitive (how I loathe the word- it is used as if a race to the bottom on tax rates is something nations should be taking up with gusto). If only it could be made to work, over £50 ($75) billion could be raised for EU governments. A similar sum would be raised in the US alone.

However, Britain has, thanks to the wisdom of Thatcher, Major and Blair, an economy dependent on financial services due to our lack of a strong industrial base. This is why I’m not surprised that our political leaders rejected an EU-wide FTT to fund EU spending, pointing out the convenience to our Continental partners that 80% of the revenues would come from Britain. I’m no friend of the bankers, but I see no point taxing them to our national disadvantage. Until we’ve rebalanced our economy (a long and expensive process that will take decades) we have to resist the temptation- and, I will freely admit, the moral pressure- to raise taxation way above the international standard.

But this does not mean we must abandon the idea of a FTT. Indeed, the policy only needs a little tweaking, which is what is happening now. 11 European states are working on an agreement to impose the tax within two years, creating a much more essential market for investment banks than Sweden’s lone market.  Crucially, the revenue will be retained by the respective nation states. In this way, they are testing the waters on behalf of Britain, the US and perhaps Japan.

I propose that Britain signs up only when the United States agrees to. In a time when increased tax receipts are badly needed by governments struggling with stubborn budget deficits, I doubt the Obama administration would need much persuasion- particularly when there are moves towards an EU-US, or “Atlantic” Free Trade Zone. Perhaps with the co-ordination of action by the governments of 800 million people, 45% of the global economy and the largest centres of scientific and economic innovation in the world, we have a hope of protecting our current standard of living against the demands of competition with slave labour in China, low tax rates in the Cayman Islands, a lack of regulation in poor African states, and all the insecurity that is created by their poverty.

If we want to improve the prospects of the peoples of the developed and developing nations, we need smart governments that reject the exploitation of cheap labour in the Third World and consumers in the First by corporate interests. Their cherrypicking will, left unchecked, threaten us all.

 

We need more representation not less

Today’s post was written by guest blogger and author Stephen Liddell, who can usually be found on his blog stephenliddell.wordpress.com. I strongly recommend that  you see that site for similar political and apolitical reflections and musings.

With the recent talk of David Cameron leading us out of the European Union, much has been made of the fact of the lack of democracy in the European institutions with even politicians in France and Germany admitting that the United Kingdom being the last country in Europe that needs to take lessons in democracy.

As agreeable and perhaps rare as it is to be so openly praised by some of our European friends, it does seem to clash somewhat with the recent vote to reduce the number of Parliamentary constituents.

While it is only fair and right that each constituency should have similar numbers of potential voters and that a vote in the poorest districts of East London or Tyneside should be worth no more or no less than a vote in leafy Oxfordshire or Kensington surely there is something that has been forgotten.  Almost a level of hypocrisy though far be it from me to claim our esteemed Prime Minister may be guilty of this.

With the well publicised and blinding obvious sharp increased in the population of our nation, should we not be looking to increase the number of constituents rather than decrease them.  It is hard to believe that cutting 20 MP’s out of Parliament is going to save that much money despite their ever increasing salaries and as such a small increase should not be too large a strain on the public purse especially in the name of democracy.

For example the population of my own constituency in Watford has increased by 13.3%.  There was a similar increase in the 1990’s and with the amounts of flats and houses being built the population is only going to soar by 2021.  As such my own feeble but valuable vote has gone from approximately 1 vote out of 60,000 (assuming the population only consists of over 18’s and non-criminals) to one which will soon be over 90,000.  My vote is not worth as much as once was and my MP now has a large proportion of extra people to represent.

On a national level, this represents an increasing democratic deficit and with every million increase in the population of our country so the voice and vote of each of one of us becomes not just less relevant but lost amongst the sea of other equally valuable but also less relevant voters.

As such surely whilst we should be aiming for equal number of constituents in constituencies  if we want to have a democracy that isn’t one day as lacking and unrepresentative as the EU then we should be demanding more MPs.

I commend this motion to the House.

Hold A Referendum And Stop Banging On About Europe

This week, the Conservative Prime Minister David Cameron announced that his party would hold a referendum on Britain’s membership of the European Union “within the first  half” of the next Parliament, should they win the 2015 election. In what was a risky move, Ed Miliband ruled out the prospect of One Nation Labour supporting Cameron’s new stance. Fortunately for us, the public do not seem to have held this against him, granting Miliband an even higher poll lead after the speech.

The so-called “eurosceptics”, more accurately described as europhobics on the Tory backbenches are guilty of extreme windbaggery about the European Union. Ultimately, the effects that its institutions have on our country are a mixed bag; the EU is neither the mind-bogglingly expensive red-tape dispenser that the Daily Mail imagines nor the basis of a progressive, affluent super-state as the europhiles would have us believe. Here are the key points that I would make:

  • British funding for its institutions equates to a mere 2.5% of public spending 
  • Most proposed green regulations get watered down until they are nearly useless.
  • Most of its components are not sufficiently accountable.
  • It has been over a decade since auditors have approved its budgets- there is certainly corruption.
  • Britain can enjoy free trade from outside the EU via the European Economic Area.

So yes, I would lean towards supporting a vote for withdrawal from the European Union. But there’s little need to bang on about it: it’s a moderate irritant, not a terrible problem. The fact that our political elite has spent so long denying the British public a chance to hold the EU to account is what has been encouraging the supposed “little Englander” mentality. Polling data shows that, whilst support for a referendum is high, support for withdrawal has been falling dramatically now that it has become a real prospect… wait a second, it hasn’t. It would need the Conservatives to win in 2015, and that looks blissfully unlikely. I would ask Labour to match Cameron’s pledge, though: it is the right thing to do and it will shut the likes of Peter Bone up for a good 20 years or so/

Will Osborne Listen Now? [Spoiler Alert]

economic step decline ahead

Economic Steep Decline Ahead (Photo credit: Leonard John Matthews)

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The past 72 hours have been eventful in the British political scene. Not only have the Tories made an historic pledge to hold a referendum on our country’s membership of the European Union by 2017;  a parliamentary motion backing Votes at 16 was passed by an impressive 2 to 1 margin (Stephen Williams MP is confident that he will be able to pass legislation by the end of the year); Labour has announced radical plans to improve health and social care services; A-level qualifications are to be overhauled; and the long overdue Bill legalising same-sex marriage has been published. These are all important topics that I would wish to discuss at more length at a later point, for today the economy is the pressing issue.

This morning, the Office for National Statistics released its preliminary GDP figures for the last quarter of 2012.  The news is dismal: Britain’s economy declined by a further 0.3%, meaning that we are three months away from entering a triple-dip recession. Yes, our nation’s recovery from the 2008 financial crisis is even slower than that of the Great Depression of the 1930s.

For as long as I have been politically aware in any meaningful sense (though I do recall being about 7 years old and remarking to a friend that I preferred Tony Blair to the then Tory leader Michael Howard because Blair “wants to spend more money on schools and hospitals”. What distant, prosperous times!) the economy has been stagnant or contracting, with the exception of the short-lived recovery left behind by Gordon Brown. We have endured almost six years of falling living standards and prosperity, with the Coalition Government being responsible for the latter two recessions. I barely remember a time when our public services were secure, when unemployment wasn’t so widespread, and when we had a popular Chancellor of the Exchequer.

Nick Clegg, the Liberal Democrat leader, conceded yesterday that his government had cut capital spending too quickly. Nationwide, Keynesian economists all yelled at their television screens, asking why the hell he didn’t recognise the fact at the time. But any relief one might have felt, picturing the Coalition abandoning plan A for the disaster that it is, was quickly banished. For on the same day, the real second most important man in the Government, George Osborne, told the World Economic Forum that “cuts must continue”. Even the monetarist IMF, as I have written about before, disagrees with Osborne on this, having urged a stimulus package should the economy fail to grow in 2012.

There is no contradiction between the two men’s public views yet, as Nick Clegg did not urge more capital investment in the present. But rather than appearing confident and capable, the Coalition’s economic team look increasingly incompetent the longer they maintain this disastrous economic policy. Nevertheless, we must try to live in hope, so I outline my Five Point Plan for the Coalition to implement Plan B in a way that is semi-compatible with their right-wing ideology. They will not listen, but here is my constructive offering combining sensible policies and perks for the Tories’ friends:

  • Cut National Insurance by 1p for employers and employees, and instate a 10p Income Tax band between £9,000 and £12,500. This is a major tax break for their corporate pals, and it is a several hundred pound tax break for almost every earner. The tax savings will directly boost demand and thus investment,
  • Provide state finance for a mass home building programme. As construction is the most effective stimulus that can be provided, imagine the potential benefits of the state using its low borrowing costs to bankroll investments by parasitic landlords and property developers.
  • Expand HS2. I am aware that the Tories hate public transport, but if they could build railways through Labour constituencies it would help in keeping the plebs off the privatised roads.
  • Invest more in the sciences. If the state then finds out it is the owner of the patent of a perpetual motion machine, it can then sell it at a reduced cost.
  • State-funded chauffeurs for everybody paying the 45p tax rate. Just go down to the job centre, grab an oik and give it a suit and car keys, then pay it the minimum wage to act as a doormat for the upper class. Everybody wins!

Alternatively, we could ask the Government to resign and allow us to elect a government that knows what its doing. It’s your call, Messrs Cameron, Clegg and Osborne.