Where’s Osborne’s axe when you need it?

And so, as the government recoils in terror from a cut that might get some bad headlines, I notice another exemption to the age of austerity (via Catherine Bennett).

Andrew Lansley has replied to the Commons Health Select Committee’s (highly critical) paper on homeopathy. He says that funding of this practice is to continue, despite a mass of scientific advice to the contrary. And why? Simple: “the overriding reason for NHS provision is that homeopathy is available to provide patient choice”.

Yes, you can have homeopathy on the NHS not because it works but because you might want it. You can choose to waste my money on a piece of quackery. Super. So, can you ask for any useless ‘treatment’ at taxpayers’ expense? Well, no. It seems that the power of lobby groups comes into it. Lansley says: “Given the depth of feeling on each side of the debate, it is unlikely that this controversy could be resolved by further analysis of literature or research on the efficacy of homeopathy.”

The “depth of feeling”. Is that peer-reviewed depth of feeling? Have double-blind studies been used to measure how deep these feelings are? Oh dear, oh dear, oh dear. So it’s acknowledged that scientific evidence has no bearing on people’s tendencies to fall for the homeopathy industry’s PR, and in light of that, the government will boldly let them spend our money.

But how much money? Alas, we don’t know. The Committee urged Lansley to find out, but he replied that doing so “could well require a disproportionate amount of resource”.

This sits uneasily with David Cameron’s insistence [£] this weekend that “no detail and no sum of waste is too small to escape the microscope of efficiency… we are having a root-and-branch audit of recent public spending”.

Bah. And yes, Labour funded this crap as well. It’s cross-party pusillanimity.

Many happy returns! (The happiness of your returns can go down as well as up.)

There wasn’t a single moment at which the credit crunch started, but today is a good candidate for being its third anniversary – when a major investment bank announced it was having desperate liquidity trouble, and the ECB and the Fed started large-scale support operations.

To mark this, and given that I’m not in a position to write much at the mo, here’s a self-indulgent plug for my old explanation of the credit crunch in words of one syllable. Still just about hangs together, I reckon.

The internet giveth and the internet taketh away

On Saturday my laptop was assailed by a virus that’s stopping me from opening any programs. It’s masquerading as ‘Antivir Solution Pro’, which is a big fat dirty fake, as suggested by the iffy grammar in its offer of help for the problem that it’s causing. I’ve got hold of some instructions on how to purge it from my system, but if that doesn’t work then I’ll be blogging very little if at all in the near future. So you may have to miss out on my potential series of intermittently coherent brilliantly insightful posts on what strategy Labour should adopt over the next couple of years.

On the flipside, the Times website seems to think that I’m a paying subscriber, despite me cancelling my direct debit at the end of the one-month trial, telling them I’d cancelled it and getting an acknowledgement from them that I’d cancelled it. Great business model, Rupert.

Blessed be the name of the internet.

Weapons intelligence misreports

David Cameron says that “Iran has got a nuclear weapon”.

A No 10 source said the PM "misspoke", later adding he had been talking about Iran's pursuit of nuclear weapons.

Tony Blair must be kicking himself for not having thought of that one.

Grammatical nuance and scientific methodology

Two distinctions in one:

• We looked at all the evidence, which supported the hypothesis. (Systematic review; non-defining clause)
• We looked at all the evidence that supported the hypothesis. (Cherry-picking; defining clause)

Janet and John consult on welfare reform

The DWP has produced an “easy-read” guide to changing the benefits system. These guides have been around for a few years, but I hadn’t seen any before today.

As someone with an unhealthy appetite for policy documents and a desire for more people to be politically engaged, I’m torn between thinking that these are obviously a good idea and rolling on the floor laughing like a smug overeducated git.

We want to help people to get a job and to do well in that job. We also want to look after those people who need a lot of help.


We do not want to give less help to people who really need it. But we need to make sure we are helping the right people.


But first we want people to tell us what they think about these changes. This is called a consultation.

I’m very concerned that the government may be trying to encourage less well-off people to spend their newly earned wages down the pub. I’m also worried that most of the people seem to have been doing so much coke that their entire noses, not just their septums, have been eroded.

Dominus illuminatio mea (‘Do less to illuminate me’)

I’ve had a letter from the Vice-Chancellor of my old university, probably asking for money. I say probably because I didn’t read past the moronic first sentence:

Today, the defining struggle in the world is between relentless growth and the potential for collaboration.

Sigh… He sounds like he’s on day release from Comment is Free. Maybe General Melchett was right:

“The Secretary of State may enter into Academy arrangements with any person”

So reads the first line of the Academies Bill, which the government is pushing through parliament with the kind of haste usually reserved for emergency anti-terrorism legislation. It’s expected to get passed into law early next week. And, as befits its opening, it does devote a great deal of attention to giving Michael Gove more power.

Why the rush to get it enacted? Of course a government that thinks it has a good policy on its hands wants to get it up and running ASAP, but you could say that about any Bill.

Gove has a useful political skill: he knows how to make empty bluster sound like the sharp, forensic workings of a keen intellect. In his recent interview on Today, he said that of course there has been ample scrutiny: the idea of allowing all schools to become academies had been discussed a lot over the last few years and the Tory manifesto proposal had been debated during the election campaign.*

This is vacuous tripe and he knows it. There’s a world of difference between forming an opinion on a policy in principle and the close scrutiny required to test whether a Bill will indeed achieve what it aims to and check it for unintended consequences. Parliament has just not had the chance to do this properly, and certainly the 232 new MPs hadn’t previously been able to debate it.

So, in the spirit of the big society, I’ve had a quick look myself. Of course, I have no particular expertise.

The desire to minimise consultation and accountability isn’t just a feature of the parliamentary process; it’s key to how the new academies will be set up. Under John Major, would-be grant-maintained schools had to hold a parental ballot before opting out of LEA control, but under Gove’s law, things will work differently:

(5) Consultation on conversion

1. Before a maintained school in England is converted into an Academy, the school’s governing body must consult such persons as they think appropriate.
2. The consultation must be on the question of whether the school should be converted into an Academy.
3. The consultation may take place before or after an Academy order, or an application for an Academy order, has been made in respect of the school.

There’s nothing to suggest any check on whom a governing body considers “appropriate” consultees. Themselves? Their friends? And there’s nothing to suggest that they need to abide by the views of those consulted. And what a wonderful idea to allow them to consult after the decision has already been made.

Gove himself is not required to check whether such consultation has taken place, nor to do any consulting of his own when deciding whether to approve an application, nor to make public the grounds on which he makes these decisions.

But he does appear to be a fan of consulting people after the event. The Sunday Times (paywall) reports that he is already writing to schools and approving their applications - before the Bill has even been passed.

If this is true as reported, then he’s acting illegally. I suspect that it’s not quite that stark, but rather that he’s told schools what decision he’ll make just as soon as he’s legally able to. Even so, there is still scope for the Bill to be amended, so neither he nor the applying governing bodies can know exactly what the deal will be, and no one can have been consulted meaningfully.

This Bill is not about ‘parent power’. It’s about Gove’s power to bypass local councils and parliament, and it’s about governing bodies being able to bypass parents.

Is it a good idea to change the academies programme from being a way to rescue failing schools into an optional upgrade for potentially any school? What will be the effect not just on the schools that go for it but also on the wider education system? I’m afraid I’ve not had the chance to think this through. I’m not sure who has.

* The Lib Dem manifesto pledged to “replace Academies with our own model of ‘Sponsor-Managed Schools’. These schools will be commissioned by and accountable to local authorities and not Whitehall”. Oh well.

Bradman’s brilliance, Donald’s duck

I rarely if ever blog about cricket, but Norm, whose forte it is, has drawn me in. He writes:

'For ever to be remembered as one of cricket's nearly men' - so says Rob Eastaway (behind the Times paywall) about... Donald Bradman. I nearly spilled my breakfast cereal. Bradman a nearly man? He only had a Test batting average at least 50 per cent better than all the other most successful batsman in the history of the game. Eastaway is referring, of course, to the four runs by which Bradman fell short of an average of 100. But still - with 99.94 I'd say he was more clearly way above nearly than he was nearly, merely.

Dead right. I don’t know much about the sport, but I know enough to know that Bradman stands in a class of his own. And I know enough about numbers to know when one is absurdly bigger than all the others. Here are the top 20 career batting averages:


More than 60 years on, this is still the sort of achievement that deserves to be gawped at in awe.

But in fact, I think I’d go further than Norm. Of course missing a round 100 average must have been frustrating, but I think the story of Bradman’s swansong – or ducksong – makes his stunning achievement that bit more memorable, a more captivating human story, a more bittersweet legend; it’s a flaw that give the gem more depth to its beauty.

There’s nothing objectively special about 100. But there’s a lot that’s humanly astonishing about 99.94.

How to mouth off in parliament about the legality of war and get away with it

Nick Clegg’s “illegal invasion of Iraq” moment has raised questions about whether minsters speaking in the Commons are there as ministers or as random people with opinions. Lucy Mangan has some fun, as does the Daily Mash.

Hadleigh Roberts has an intriguing theory – that George Osborne fed him the line and was mouthing along as he delivered it – but I’m not convinced. I’ve watched the clip four times and I’m not sure Osborne’s lips are doing anything more than slightly, randomly wobbling.

I think the explanation is much simpler: Clegg was using the dog whistle. He knows he’s achieving less in the coalition than many of his party would like, so (to switch canine metaphors) he threw them a bone. His statement is of no consequence for government policy, but plenty of Lib Dems will have been heartened to hear it.

Just a thought, though: a senior member of the government has made a confident and unambiguous declaration on the legal status of a war without even bothering to consult his Attorney General. I’m sure that the usual suspects are rushing to the comment pages of the Guardian and the Independent to denounce his lack of respect for proper procedure…

How big? Introducing the Societometer

I had a mild rant the other day about the phrase ‘big society’ and how the concept of society’s size makes no sense. But, like a good blogger, I’ve now done some research and it turns out that there is an accepted measure, the Societometer, that gives regular assessments of how big society is.

Historical records show that society was huge in the 1950s, tending to shrink a little in the 1960s and more rapidly in the 1970s. Apparently, due to a small fire at the Office for National Statistics information warehouse five weeks ago, no figures exist for the years 1979-97, so we cannot possibly draw any conclusions about what happened during that period and must never mention it.


But it can clearly be seen that over Labour’s time in office, society hardly increased in size at all, and has even shrunk since 2007 – although the very latest figures show that in the five months leading up to the election, society did grow by 1.7%, as Labour leadership contenders have been quick to seize on. However, Downing Street argues that this increase was due to people expecting a change of government, and so acting so make society bigger in anticipation.

The current Societometer reading, for June, puts society at 33.2 SBU (social bigness units), although this preliminary estimate is subject to revision.

David Cameron has set an ambitious target, aiming to double the size of society in real terms by 2015. He has established the Office for Societal Embiggenment to assess progress towards this aim, although its independence has been called into question after it produced a set of very favourable predictions.

By contrast, the respected think-tank the Institute for Quantifying Woolly Abstractions calculates that policies announced so far will enlarge society by little over a quarter, and that this increase will be concentrated in better-off neighbourhoods where people share the same private security firm and know each other’s interior designers’ names.

There has been speculation that the government may change the way society’s size is calculated, giving less statistical weight to poorer areas on the grounds that they are ‘broken society’ and so appear smaller than they actually are. Furthermore, given the general austerity drive, it would be more efficient to measure fewer parts of society – the larger bits are easier to do – and then extrapolate from them. Critics say that this would be fiddling the figures, but no decisions will be taken until a commission led by maverick Labour MP Mark Meadow has reported.

Bang!

SSL International, the maker of Durex condoms, is set to be sold to Reckitt Benckiser - the firm behind Cillit Bang cleaner

And in other news, I am a mature grown-up with a sophisticated sense of humour.

(I hope they get ‘Barry Scott’ to do the adverts.)

Polysyllabic misanthropy

I was reading an old Stephen Fry book over the weekend and came across this passage, in which one of the characters has just started a newspaper column:

Ashley found that he had a gift for tediously obvious opinions expressed in a formulaic polemical style that exactly suited the kind of brain-fagged commuter most ready to confuse polysyllabic misanthropy for intelligent thought. … He had in particular that peculiar journalistic gift of stating all the prevailing bourgeois prejudices in a language that represented itself as ‘maverick’, ‘daring’ and ‘unconventional’.

I’m giving serious consideration to using a chunk of that as my blog strapline.

Candidate selection and the boundary review

Danny Finkelstein (paywall) has been struck by a thought:

It takes a long time to do even a very simple boundary review, doesn't it? And the boundary review that equalises constituencies and reduces the number of MPs to 600 isn't simple. There must be a big question mark over whether the review will be ready. And this by itself will tie in the politicians to a late election.

Yes – although of course both coalition partners say they want to go the full five years anyway. The review will take a good while. Unlike Danny, I expect it will be finished in time, but its lateness in the parliamentary term will still be significant.

Two words: candidate selection.

This can’t take place until we know what constituencies there’ll be. So it will have to take place late and quickly. This will mean would-be candidates (including MPs for seats that have been taken apart and then put together with bits of other old seats) rushing to get selected by their local parties and then known to the local public. The obvious consequence is that, except where one of them is a sitting MP for a mostly or wholly unaltered seat, the candidates will be less familiar than usual to the voters come polling day.

(Many, perhaps even most seats will be unchanged. But nobody will know which until the review is done.)

But also, I think this means that local prospective candidates will have an advantage in selections, as they may at least be known in the area as campaigners and/or councillors. National party ‘stars’ and leadership favourites will have much less chance to cultivate local party supporters, as they won’t know which seats will look tempting prospects until the review is complete. And if selected, they’ll have much less time before the election to get to know the area and its people.

Finally, while sitting MPs always have an advantage over other candidates in terms of their profile, next election this edge will be greater than usual: if they are selected to fight mostly/or wholly unchanged seats, then the lateness of the selection won’t make much difference to their long-term self-promotion campaign.

Exactly how much bigger should society be?

Please imagine that question being asked by Chris Morris on The Day Today.

Because whatever you might think of the general principle, or the motivations behind it, or the policies that may be produced in its pursuit, “big society” is a bloody stupid phrase.

Before Cameron coined it, had you ever heard anybody discussing the size of society? Sure, you’d hear about a strong society, a vibrant society, an active society, a good society, a flourishing society, an open society and so on. But had you ever heard anyone complain that society was too small, or argue that society ought to be made bigger?

Yes, I understand why he went for it: “big society not big state” sounds less nasty-old-Tory than “small state not big state”, so it was an effort to change the terms of the debate. But given that “big society” also makes it sound as though English is his second language, couldn’t he have done better? I gather that many on the Tory right thought that the idea was a very hard sell during the election campaign, and that doesn’t surprise me at all: “big society” is a category mistake.

Oh no. I was going to leave it there but then I made the mistake of looking for the Big Society website. It says: “The Big Society is a society in which we as individuals don’t feel small.”

Think about that for a moment. Surely, the bigger society is, the smaller I as an individual am going to feel by comparison.

Doing my bit for the cuts

At first I sneered, but then I felt guilty and resolved to help out by adding my own suggestions to the government’s Cut-U-Like website.

You can read my ideas here, at least until somebody realises and takes them down. Either way, I’ve reproduced them below:

How to save money literally

1. Require retina scans to get into government buildings. All the faceless bureaucrats will be unable to enter as they have no eyes. They will have to stop drawing their salaries and get proper jobs for instance circus freaks or estate agents’ gimps.
2. Use plain coloured tape rather than red tape for regulations. This will save money on unnecessary extravagant dye.
3. Find a feckless single mum and start a religion around her based on the fact that she has become a mum without having ever had a feck. Demand a tithe from followers.
4. Put an end to the something for nothing culture. Parminides said that “ex nihilo nihil fit”, which means that nothing comes from nothing and so welfare scroungers are breaking the laws of metaphysics. We should have more people like Parminides running the country except he was a foreigner.
5. Protect front line public services. But get planning permission to move the front line to somewhere unpopulated like Leighton Buzzard and then you will be able to cut everywhere else.
6. Harness the power of the black hole in the public finances to create a space time wormhole that will allow interstellar travel and then sell it to the military of a proper country.
7. Abolish gold plated public sector pensions and put them in envelopes instead. And paper is lighter than gold so you will also save on the postage as well.
8. Stop spending so much money on waste. I produce plenty of waste especially after curry night and can sell it to you much cheaper.
9. Put a cap on immigrants. Make it a stupid one like William Hague used to wear so they will not want to come here and ruin our Green and Pleasant Land and expect us to pay them for the pleasure.
10. You should have a bonfire of the quangos but the Health and Safety will never allow it because some chav kid with so called ADHD might run into the fire and get hurt. Yet they turn a blind eye to civil servants burning our money and that creates an even bigger fire. We have a smoking ban but they forget there is no smoke without fire and I think I have lost control of this metaphor now and need to stop.

You must be careful implementing these cuts. Above all make sure that they are PROGRESSIVE by means of saying that they are.

(Thanks again to Clifford for setting me off.)

Big society, small minds, big laughs

The government’s attempt to harness the wisdom of the internet is having predictable results. The Spending Challenge website, set up so that we can tell them what we’d like them to cut, looks like Blair’s old e-petition site on steroids. And on cocaine. And on and on and on and on and on. It’s proving to be a refuge for all those people too illiterate and hateful to feel comfortable in the Daily Mail’s online comment boxes.

There are doubtless some sensible ideas in there as well, but the words ‘monkeys’ and ‘typewriters’ leap to mind.

Clifford Singer has the full story.

Balls on borrowing

Yesterday Ed Balls said:

Halving the deficit in four years by cutting public spending... I think was a mistake. In government at the time in 2009 I always accepted collective responsibility, but at the time in 2009 I thought the pace of deficit reduction through spending cuts was not deliverable, I didn't think it could have been done.

I think it’s fair enough to say, in a leadership contest after an election defeat, that you didn’t agree with your party’s policy at that election. Collective responsibility in a government matters.

But what I don’t get is why Balls hadn’t recanted sooner. Indeed, just ten days earlier, he still seemed happy with the policy:

Of course we must start reducing the deficit, but it is the economics of the madhouse to do this before the recovery has been secured. In government we set out a plan to do this with a mixture of growth promotion through our new industrial policy, fair tax rises and spending reductions.

I smell tactical positioning. But then, what’s new?

I’ve heard people argue that Balls was wrong to soft-pedal on the deficit (although he has some support), but I’m more concerned about his apparent indifference to one of the main causes of the credit crunch.

On the Today programme this morning, his interview with the increasingly useless John Humphrys shed very little light on anything, except for one point when Humphrys raised the very high level of debt in the economy before the crunch. Balls at first didn’t seem to realise that this meant overall debt (including businesses and households, not just the government), and then once Harrumph had falteringly explained this, he seemed to shrug it off, saying that “the fact is we had low interest rates, the fact is we had low inflation, and people were borrowing – we had a million more homeowners and that was a good thing”.

There’s a significant body of opinion that rates should have been higher during the years before the crash, that we fixated on consumer price inflation to the neglect of asset inflation, and that borrowing in general should have been more restrained, perhaps by law. Balls should know this and at least be willing to engage on it, although to be fair Humphrys had left little time in the interview after wittering for ages about the Mandelson book. Where oh where is Evan Davis when you need him?

Memo to leadership candidates: please stop talking to us

I am fed up with hearing the Labour leadership candidates explaining to the party what we should do over the coming years to win over sceptical voters. Don’t tell us, show us. Stop trying to win a leadership election and start acting as though you’ve already won it.

Make speeches aimed at the wider electorate. Craft your arguments and language for an audience that’s not terribly partisan and only intermittently interested in politics.

To win a general election, you need to be able to do this. So start showing us that you can.

Yes, intellectual depth and strategic analysis are important – David Miliband’s latest effort I liked, but then I’m a political anorak and a philosophy graduate. Or, in other words, a weirdo. Most people will be left utterly cold by phrases like “a compelling articulation of aspiration and hope”, which is of course not a compelling articulation of anything. And that’s a very mild example.

But while I agree with Hopi that someone needs to “stop Mr Miliband stringing abstract nouns together and calling it an argument”, I wouldn’t join him in calling this sort of thing “Cameronian”. Whatever his faults, the PM does know how to use language in a way that ordinary people can nod along to.

The Milibands aren’t as bad as Jon Cruddas, who can hardly open his mouth without the names of half a dozen long-dead political philosophers dropping out, but they’re close.

We know you’re clever. Now show us that you can engage with people.

They’re sounding more and more alike

All politicians have their little verbal quirks. One of David Cameron’s that struck me during the third election debate was this:

It is completely unacceptable what has happened, and we need to grip it very, very hard to sort this out
…
they'd know their government had listened to them, gripped it, and got it under control
…
I say, let's grip this problem
…
What you can see is two parties that won't grip immigration, and one that will.

It’s very common to talking about ‘getting a grip on’ something, or ‘getting to grips with’ something else. But I’d never before heard anyone talking about simply ‘gripping’ a problem.

Now I’ve come across someone else doing this:

He said it would have been an "act of cowardice, socially deeply unjust and an abdication of political and moral responsibility not to have gripped the crisis."

It is, of course, Nick Clegg. I hear that sometime married couples grow to share each other’s tics. I also hear that pets can come to resemble their owners.

The markets talk with money, not words

Martin Wolf’s latest piece has helped me to crystallise something that’s been floating around my head for a while. He writes:

Fiscal default is nigh, insist the doomsayers: repent and retrench before it is too late. Yet I have a question: do we believe that markets are unable to price anything right, even the public debt of the world’s largest advanced countries, the best understood and most liquid assets in the world? I suggest not. Markets are saying something important.
On Monday, the yield on 10-year government bonds was 1.1 per cent in Japan, 2.6 per cent in Germany, 3 per cent in the US and 3.3 per cent in the UK (see chart). Based on yields on index-linked securities, real interest rates on borrowing by these governments are very low (1.2 per cent, or less, in the US, Germany and UK). Investors are saying that they view the risk of depression and deflation as greater than that of default and inflation.

This is the moral: if you want to know what the bond market thinks, do not listen to the words spoken by any of its participants. Watch what it does instead.

Government borrowing has been consistently cheaper since the end of 2008 than it was in the couple of years before the crunch. And the recent fall can hardly be attributed to the new anti-deficit government: it dates back to the start of the Greek crisis and extends beyond the UK.

A caveat is that, as those of you with memories stretching back two or three years may suspect, the prices that markets allocate are not always right.

The perfect man for the OBR

The Office for Budget Responsibility needs a new head, as Alan Budd isn’t staying on. Various names have been suggested, but there’s one striking omission from the speculation.

The job needs someone with experience of economic policy, who knows the way the Treasury works and the tricks chancellors try to pull. It should be somebody who will be able to resist political pressure from George Osborne to do what’s convenient for the government. It should be someone who likes to be in a position of authority without having to court popularity or charm and inspire people. And it should be someone who’s probably not happy in their current position.

Well?

Oh, come on. It’d be so funny.

Predicting the next financial crisis

This has put me in a silly mood:

European regulators to publish doomsday scenarios for banks
European banking supervisors are tomorrow expected to try to assuage concerns that their stress tests have not been tough enough, by publishing details of the types of calamities banks have been asked to withstand.

I can exclusively reveal that these scenarios include:

• An asteroid heading for Earth is blown up by Bruce Willis, but all the small chunks just happen to land on the banks.


• A giant mutant lizard besieges the Santander head office after his mortgage application is declined.


• A plague of the living dead ruins the actuarial projections on which pension funds are based; unable to afford the potentially eternal payments, they collapse.


• Staff at the credit-rating agencies responsible for grading sub-prime-mortgage-backed securities finally notice that their keyboards have letters other than ‘A’.


• Derren Brown snaps his fingers and we all remember that money is an illusion.


• Hapless subcontractors at HSBC branches accidentally fill the staff vending machines with money and the cashpoints with snacks.


• President Sarah Palin.


• The euro breaks up, and the public bulk-buy Sellotape to stick the notes back together again. Higher demand makes the price of Sellotape rocket, leading to a surge in the number of gnomes employed in the tape mines. However, the now-overcrowded working conditions cause a series of industrial accidents, sparking civil unrest, government intervention and the bankruptcy of Sellotape plc. The resultant continent-wide tape shortage provokes sanctions and ultimately war.


• The traders’ braces snap and their trousers fall down just as the vicar is about to come round for tea.


• Bank TV ads finally cause a series of murderous rampages; victims’ relatives sue for compensation on the grounds that where there’s blame, there’s a claim.


• Somewhere, a small child loses faith in the fundamental goodness of the finance industry.

But I’m sure there are other potential calamities…

Public- and private-sector employment

After the row last week about projected numbers of jobs, I was going to do a post based on this chart. Turns out I can’t be bothered, but here’s the chart anyway. It shows annual changes in the numbers of public- and private-sector jobs, and the size of the public-sector workforce relative to the total.


The ONS figures are for the second quarter of each year, except for 2010, for which the latest stats cover Q1.

How could I have been so dense?

Admittedly, Wikipedia is not the world’s most reliable source, but this one from its list of common misconceptions is really incredibly obvious:

Black holes, unlike the common image, do not act as cosmic vacuum cleaners any more than other stars. When a star evolves into a black hole, the gravitational attraction at a given distance from the body is no greater than it was for the star. That is to say, were the Sun to be replaced by a black hole of the same mass, the Earth would continue in the same orbit (assuming spherical symmetry of the sun). Due to a black hole's formation being explosive in nature, the object would lose a certain amount of its energy in the process, which, according to the mass–energy equivalence, means that a black hole would be of lower mass than the parent object, and actually have a weaker gravitational pull.

A moment’s thought confirms that this makes perfect sense, and yet it had never occurred to me.

Yes, black holes have a huge gravitation pull for their size, but for their mass their pull is normal. So the reason nothing can escape the pull from inside a hole’s event horizon would simply be that of close proximity to so much densely-packed mass; by contrast, if you’re on the surface of (or even inside) a large, heavy star, you’re still quite a distance from most of the star’s mass. I think that’s right. It sounds right…

(Via Matt.)

OBR and FOI

I don’t care enough to do it myself, but has anybody thought of submitting a Freedom of Information request to the Office for Budget Responsibility?

Something like: What communications took place, on 29 and 30 June 2010, between the OBR and ministers or ministerial advisers, about the timing of the OBR’s release of its employment forecast?

The answer’s probably ‘none’, but if not it could be embarrassing.

Not just another click on the wall

The Times paywall goes up tomorrow. I’ve said my piece on this, but I’d like to add a comment on their new-look site, which has been up and running a couple of weeks now: it’s terrible. The pages are slow to load, the pictures are vast and almost all stories are now split across two or more pages – even if the last page just has a couple of lines – so that they can tell advertisers they’ve got a higher number of page views.

I may or may not go for the £1 introductory offer for the first month, but £2 a week thereafter – sorry, no.

Half-hearted satire corner

I was going to make some sort of crack about Ken Clarke being right about the need for penal reform, because the Tories have only just completed their 13-year sentence in opposition and they’re already reoffending, but I can’t really be bothered. Oh wait, I just did.

‘1.3m job losses’ looks like a non-story

I think the Guardian’s ‘Budget will cost 1.3m jobs - Treasury’ scoop doesn’t really hold together. As Peter Hoskins rightly says, the report is unclear as to whether this 1.3 million (actually a range of 1.1-1.3m) is the effects of the Tory/Lib Dem plans against Labour’s old plans or against a baseline of no fiscal tightening.

Also, you have to read a bit more to find that the Treasury thinks that 2.5 million jobs will be created over five years in the private sector – which would mean a net increase of 1.3m jobs (if we take the midpoint of 1.2m losses).

And if you do a little digging, something else becomes clear. By what probably isn’t a coincidence at all, 1.3m more jobs over five years is exactly what was predicted in the published Budget report: a rise from 28.8m in 2010 to 30.1m in 2015. The measures in the Budget are reckoned to cut employment by 100,000 relative to what it would have been, which is bad enough.

But there are three real stories lurking in there. One is the projection of 500,000-600,000 public sector job cuts, and the second is the ‘churning’ in the private sector, which will shed 600,000-700,000 jobs at the same time as it gains 2.5m. The third, though (if a colourful quote counts as news), is that the Chartered Institute for Personnel and Development thinks there is “not a hope in hell's chance” of these 2.5m jobs appearing.

(All of these predictions, of course, need to be taken with enough pinches of salt to give you seriously high blood pressure.)

Update: Anthony Painter has the right angle on this story, which is to contrast the current estimate of private-sector job creation with the rate seen before the credit crunch.

Over the eight years from 1999 to 2007, the private sector workforce grew by 1.52m, or 190,000 per year.

The current prediction is for 1.85m more private-sector jobs over five years – a rate of 370,000 per year. This does seem stunningly optimistic. Even if you include the rise in public-sector employment for 1999-2007, which one might argue ‘crowded out’ private-sector growth, that still only takes the total rate to 262,000 per year. (All these numbers are net job creation BTW.)

And when you factor in the plans for immigration to be much lower than in previous years, these forecasts look even more of a stretch. The government really is investing a lot of hope in the idea that lots of public-sector job losses will stimulate an even higher job creation rate in the private sector.

Bank capital, lending and the recovery

I am starting to worry about monetary policy.

The word coming out of the G20 summit and from the Bank of England is that banks are going to need to build up a lot more capital in their reserves so that they’ll be better able to weather another financial storm. This is sensible. But it means that they’ll be less willing and able to lend at decent rates – in effect, tightening monetary policy without the Bank of England raising its base rate at all – which will reduce consumer spending and business investment.

Sure, nobody is proposing that new capital requirements be rushed in, but given that we’ve got some hefty fiscal tightening every year as far as the eye can see, when is going to be a good time to squeeze the monetary side too?

According to the Institute of International Finance, the new rules would cut GDP across the USA, Europe and Japan by 3.1% by 2015. Admittedly, that number looks like it’s been pulled out of a complex series of hats, but the risk is there.

And what’s more, the Bank for International Settlements reckons that central banks should be raising their base rates sooner rather than later; the unprecedented near-zero levels were appropriate for the recession, but now there’s a risk of another asset-price bubble and “discouraging needed reductions in leverage, thereby adding to the distortions in the financial system and creating problems elsewhere”. We already have one MPC member who wants higher rates.

I hope this turns out to be unduly gloomy, because with the pound rising against a troubled eurozone, an export-led recovery’s less likely as well.

Clegg’s tax credit claims

I’ve transcribed part of the exchange between Nick Clegg and John Humphrys on the Today programme last Thursday. It raises interesting philosophical questions about whether a government deserves credit for those of its predecessor’s policies that it hasn’t undone, and whether it deserves credit for unspecified policies that it might introduce in the future.

Humphrys had just mentioned the Institute for Fiscal Studies findings that the measures in the Budget would have the greatest negative impact on the poor – whereas the Budget report itself had suggested quite the opposite, but by including measures previously introduced by Labour as well:

JH: It says, perfectly clearly, that it is going to hit the poor harder than it is going to hit the rich. You dismiss their claims entirely, do you?

NC: Well, to be fair to the IFS, look, I’ve actually read the report and it says, very very clearly, that they’re making that claim if you don’t assume that you also carry over and incorporate some of the changes from the previous government: the new 50% income tax rate, the tapering away of the personal allowances for very high earners and the pension system, and also, as they recognise in their report, by not making any assumptions that we will continue to try and instil fairness in everything we do in future budgets.

JH: Well I think you’ve rather turned on their head what they’ve actually said. What they said was that the reason the measures looked so fair, that enabled you to say that they were fair, was because you took into account precisely those measures that had already been announced by Labour: higher taxes on income, the clampdown on rich people’s pension regime and so on. If you take those out then your measures are even less fair.

NC: Well, I actually just simply disagree. If you look at –

JH: That’s what they say.

NC: Well they’re not. They’re saying, they’re using the word regressive if you exclude those other things. If you include them, if you –

JH: The overall impact of the budget’s measures was regressive. That’s what they say. I’m quoting.

NC: If you exclude other measures which we are including, and if you disregard what we’re going to do in future budgets. Can I just –

JH: No, no, sorry, but even that isn’t right, you see. What they actually say is if you include some of the other things you’ve done, it becomes even more regressive, because it hasn’t included some of the things you had. It hasn’t included housing and disability benefit cuts. It hasn’t even included the cuts in public services, which will be enormous.

NC: Nothing is included, of course, future changes which we will make, will show, as we have done in this budget, that we’re going to take very exceptional measures to ensure that fairness is instilled.

Well now.

All incoming governments inherit a set of policies that, overall, they’re not happy with; some they’ll change or abolish ASAP, others later on, and some they’ll be satisfied to leave in place. A first Budget is only ever going to be ‘a step in the right direction’, so in one sense Clegg is quite right to say that the coalition’s efforts are not complete. All the same, it’s ludicrous to argue that we should be giving them credit for the undefined things that they hope they’re going to be able to do in years to come (Sunder Katwala is playfully scathing on this point).

It’s quite reasonable to judge a new set of policies based on their specific effects. Of course they won’t take us straight to the promised land, but are they a step in the right direction or not? In this case, by Clegg-Cameron-Osborne’s declared standard of supporting the poor, they aren’t.

The same approach bears on whether we should include previously enacted policies in our evaluation of the new ones. A government doesn’t write onto an empty statue book: there’s already a large body of policy that the new ones are going to add to. So if we want to know how redistributive a tax and benefit system is, we include all current measures, not just the new ones. But again, if we want to know what’s changed, and whether things are going in the right direction, we look exclusively at the new ones.

So we might look at all policies together, or at the new ones in isolation, but what I can’t see a case for is looking at the new ones in combination with a limited set of others that have been legislated for but are yet to come into force (e.g. the NI rise), as well as some that have already come into force (e.g. the 50% income tax rate). Clegg is cherry-picking from someone else’s tree to sweeten his argument.

The new government looked at the system it inherited, saw that this was becoming more progressive (in the technical sense rather than the woolly ‘nice/caring’ sense), and decided to slow this down. They wanted to save/raise more money, and have done so in a way that steers us towards a system less progressive than the one Labour left on statute.

It’s possible that they genuinely wish to move in a pro-poor direction over the next five years, but their actions so far don’t support this. Are they pulling back a bit to get a good run-up? I don’t think policymaking works that way.

I’ll meet Clegg halfway: I won’t praise the government for not scrapping various pre-existing policies, but I won’t blame it for scrapping them. And I will take into account future policies… but not yet.

Incapacity

I totally agree with the government that we need to cut payouts to those who are unfit for work.

England’s coming home

On this black day, The Daily Mash speaks for the nation:

England are heading home from the World Cup today after state-of-the-art video technology showed the ball crossing their goal line many, many times.
…
The use of television has been a source of controversy in the sport, but experts insist it offers a fool-proof method for determining whether a team is good at football or whether it is simply a collection of absurdly over-compensated, second-rate commercial brands with ghastly, vulgar wives, locked in a sado-masochistic relationship with a cretinous media that merely reflects a society that has taken its natural intelligence, its sense of perspective and its values and violently drowned them all in a bucket of piss.
…
Meanwhile, central defender John Terry finally arrived back in England's 18-yard box last night only to find that everyone else had gone home. He eventually got out of the stadium after climbing over a fence.

Tactical memo, FAO the Labour Party

Attacking the Lib Dems for their links to the Tories is the thing most likely to make them bind themselves closer together. If there are going to be splits, these have to grow from within.

IFS: Labour hit the rich, Tories and Lib Dems hit the poor

Forget the spin that yesterday’s Budget was “progressive”, with policies that make “the richest pay more than the poorest”. Actually, don’t forget it: denounce it as a filthy lie. The exact opposite is true.

It’s been well noted over the last day that George Osborne is guilty of subterfuge in publishing a distributional analysis that ignored policy changes applying after 2012-13, that included Labour’s NI increases, and that omitted some of the new policies in the Budget.

And now, thanks to the Institute for Fiscal Studies, we have a clearer picture. And it’s stunningly different. This chart shows the impact on different income groups, by 2014-15, of the tax and benefits changes Labour introduced since the financial crisis broke and also the effects of the policies announced yesterday:


Labour’s are textbook egalitarianism, hitting the richest hardest and the poorest hardly at all. Yesterday’s Tory/Lib Dem policies are the exact opposite.

The IFS adds that it hasn’t been able to take into account “cuts to housing benefit, DLA [disability living allowance] and reforms to in-year changes to tax credit awards”. But: “These are all likely to hit the poorest half more than the richest half.”

Funny how it doesn’t get called ‘class war’ when you attack the poorest.

Cuts and cats

Chris writes on the way politicians will frame a debate so that they turn their own political views into background assumptions. It made me wonder how widely the technique could be used...

Mr Speaker, I didn’t come into politics to drown these kittens. And I do it with a heavy heart. But this is the unavoidable felicide. While the party opposite protests, they forget to mention that the kittens were conceived and born as a result of their mismanagement of the neighbourhood tom, and they have singularly failed to explain how they would kill the kittens instead. Drowning them is tough, but fair. We will all share in the sadness at their deaths. We’re all in this together. Although not in the actual sack, of course.

VAT traps every coin

Via George Eaton, a reminder that it’s not just the Lib Dems who’ve been utterly shameless on the VAT rise:


I’m reminded of an anagram I came up with many years ago, when I was a nerdy teenager and the Tories had just extended VAT to domestic heating, a couple of years after raising the rate from 15% to 17.5%:

CONSERVATIVE PARTY = VAT TRAPS EVERY COIN

(Those of you who are confident that Alistair Darling was quietly planning a VAT rise as well can now claim for the hypocrisy triple.)

The Budget: consequences

I’ve not had time to pay much attention to the Budget, but here’s a quick table summarising (without comment) some of the key economic changes to result from the new policies. Comparisons are between the Office for Budget Responsibility’s projections made before the Budget, based on Labour’s plans, and those made in light of it now.

The big caveat is that there are margins of error around all of these numbers, particularly those further in the future.

Clegg was right about VAT

He tried to warn us...

The Times paywall

I’m not one of those people who’s complaining about the Times website’s imminent paywall; I don’t like it, because I like getting stuff for free, but I don’t think it’s in any way illegitimate for them to do this. I don’t intend to be paying, so I’ll just have miss out on Danny Finkelstein, David Aaronovitch and Anatole Kaletsky’s columns (the three best things about the paper). We do have a copy in the office, so I may just see if I can grab that instead.

But today I discover that the Times’s network of blogs will also be moving behind the paywall. Again, fair enough, but I think this in particular is a mistake (assuming that the paywall itself doesn’t prove a mistake). The blogs, particularly their main Comment Central, provide a nice taster of Times writing and offer highlights on what’s in the paper/website ‘proper’. It’s a valuable marketing tool. But not if they make people pay for it.

The domino theory of spending cuts

Sunny may have a point: complaining about damage to public services and unfair harm to the poor will only go so far as a critique of the Budget’s spending cuts. He says that “instead of just defending the public sector, the arguments should be reframed to talk about [the] whole economy in general”. Here’s a stab at a more accessible narrative that does that:

The Tories seem to think that the public and private sectors are each other’s enemies, and that the state’s existence just gets in the way of the market. But in fact, the whole of the economy is deeply interdependent, and public-sector cuts will echo throughout the private sector.

The employees who get paid by the state don’t just bury this money in a hole. They spend it, like the rest of us, mostly in the private sector. Doctors buy furniture. Teachers buy DVDs. Police officers buy broadband. Even bureaucrats buy groceries.

Cuts that hit them will spread through the economy. Like dominoes, if the government knocks some people down then the businesses that rely on their custom will be hit too. If you work for a firm that sells something to these millions of ordinary people, then there’ll be less demand for your work.

The recession officially ended, but the economy is still weak. And with our biggest trading partners in Europe getting into new difficulties, it’s clear that now is not a good time for our government to slam on the brakes.

We do need to reduce government borrowing over the next few years, but we’re not facing the desperate ‘emergency’ that the Tories talk about. The markets have been a lot calmer than the rhetoric, and in fact borrowing has already been coming down a bit as growth starts to return. A rush to make big cuts now will prove a false economy if these tip us back into recession. Growth is a precondition to getting the deficit down, not an alternative.

(OK, it’s a tad weak on nuance, but you can read someone like Martin Wolf if you want an more sophisticated explanation of how ‘crowding out’ is far less of a risk under conditions of low private-sector investment and high unemployment.)

Greek myths and Obama’s double-dip warning

The latest exhibits in the case for why the UK public debt ‘crisis’ is over-hyped are two graphs from the Federal Reserve Bank of Atlanta (via Bill McBride).

On the left, ten-year government bond spreads relative to Germany – this is a pretty common yardstick for the interest paid on government borrowing. On the right, five-year credit default swap spreads – roughly, the cost that buyers of government bonds pay to insure themselves against the risk of default:


Both tell the same story. The brown line going crazy is Greece; the red line calmly plodding along the bottom is the UK; wobbling in between are Italy, Spain, Ireland and Portugal. The lower the better, so the markets view UK public debt as being pretty safe.

The tumult centred on Greece has been hurting other parts of the eurozone, but not us. Why the Lib Dems have chosen to use the Greek crisis as an excuse to change their minds in favour of bigger and faster spending cuts is a question I can’t answer. (The charts also appear to show total indifference to the arrival of our new, deficit-hostile, market-friendly government.)

In fact, the main risk that the European trouble poses to the UK is that if their economies suffer, it’ll become harder for us to shift our exports, thus hitting our own economy again.

On that wider subject, and on the subject of what David Cameron calls the “international consensus that dealing with our budget deficits is vitally important”, Barack Obama yesterday wrote to his fellow G20 heads of government:

Our highest priority [at next weekend’s summit] in Toronto must be to safeguard and strengthen the recovery. We worked exceptionally hard to restore growth; we cannot let it falter or lose strength now. This means that we should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong. … In fact, should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed to avert a slowdown in economic activity.
…
We need to commit to fiscal adjustments that stabilize debt-to-GDP ratios at appropriate levels over the medium term. … We must be flexible in adjusting the pace of consolidation and learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession.

Yes. We can.

The deficit is already coming down

Alistair Darling quite despicably hid from us the real truth about the public finances: government borrowing peaked in February and has been falling, albeit slowly, since then.

This graph shows the rolling 12-month total for public sector net borrowing as a percentage of GDP (using a combination of NIESR monthly GDP estimates and official ONS figures on quarterly GDP and monthly borrowing – a bit more explanation here):


If you’re sceptical about my blend of two different sets of GDP figures, that’s fine: a clearer fact is that the simple cash total for 12-month borrowing peaked in January, at £146.6bn, and has fallen every month since then, to £141.9bn in May. And during this time, GDP has been growing, so the ratio will have been falling too.

It’s still a very big number, and it needs to come down more quickly.* But as far as the ‘borrowing crisis’ goes, it looks as though the worst has passed without the bond market going nuts and without any maelstrom of extra spending cuts. An ‘Emergency’ Budget next week? No: it’s a choice.

* Update: it's just occurred to me to wonder exactly how quickly the deficit is falling right now. I make it a drop of 0.14% of GDP per month since the peak. So over five years, that rate would bring the deficit down to 1.7% of GDP and eliminate it completely in six. Pretty good.

I. Told. You. So.

Is there a name for the special feeling a blogger gets when a national newspaper publishes something that confirms what the blogger said several days beforehand? It’s a sort of doubled-edged feeling, a mixture of smugness at being proved right and resentment that far more people will notice the newspaper article than the blog post, and it blends lofty disdain for the mainstream media with an eagerness for their validation.

Anyway, I said that Tory plans to cut immigration would lead to lower growth and tax receipts than the Office of Budget Responsibility was projecting. And now the FT agrees:

David Cameron’s proposed cap on immigration will stunt economic growth and cost families around £300 a year in higher taxes or lower public spending, according to the government’s own forecasting models.
The prime minister’s pledge to bring net immigration down to the level of the 1990s will hit output by as much as 1 per cent and cost the exchequer £9bn a year in foregone tax revenues by the end of the Parliament.
…
To ensure the independence of the OBR is not challenged, it will have to cut its assessment of the potential growth rate to reflect slower growth in the population

Basically, I’m brilliant. And very reasonably priced.

Sheeeeeeeeeea-rerrrrrrrrrr!!!

One of the advantages of hanging onto my old WHSmith pocket diaries is that I can do things like this:

Ten years ago from exactly as I post this, I was dancing with my friends in one of the fountains in Trafalgar Square.

England had just beaten Germany 1-0 – our first competitive win over them since The Year That Shall Not Be Named* – and we were very, very happy.

Objectively, the game wasn’t all that good, but a win is a win. Shearer scored not long into the second half, and then an increasingly tense German side repeatedly just failed to equalise. This prompted us to set the pub off on a chant (to the tune of ‘You’re not singing any more’) of ‘Now you know how it feels’.

Then, after Collina, the maestro of all refs, blew the final whistle, we sauntered/staggered from the White Lion in Covent Garden down to Trafalgar Square, where a fantastically good-natured buzz coaxed us into the fountain.

Strange looks from people in the Tube on the way home. Sod it. Great day.

* I’m not counting the three-nation Azteca 2000 Tournament in Mexico in 1985. Really, come on.

Borrowing could destroy our way of life within 45 minutes

I was very taken with this analogy by Steve Richards:

The way the Government is attempting to manipulate voters into accepting savage spending cuts reminds me of the build-up to the war in Iraq. There was then, and is now, an attempt to create a sense of… inevitability.

And after a while I remembered that I’ve used a similar one myself, three months ago:

The quality of public services should be treated… not a sad but inevitable piece of collateral damage in the War on Debt. Intelligence reports suggesting that the ratings agencies possess weapons of mass destruction are deeply dodgy. And so is the argument that we have to inflict the mass destruction on ourselves to appease them.

Now, Richards has obviously come up with this independently, and he’s done more with it than I did. And, now I think about it a bit more, there are quite a few parallels between the anti-war narrative and the current situation:

• Something that everyone agrees is a problem but not on how urgently or how forcefully it needs dealing with.
• A government whose motives stretch more broadly than the official ones.
• A favoured approach that could end up harming us rather than making us more secure.
• Official reports showing that some progress is being made and is indeed accelerating, but provoking angry impatience from the government.
• Monstrous yet dubious warnings about the dangers of delay.
• A coalition, the smaller partner of which is clearly less happy about the way things are going.

In this narrative, someone like Fraser Nelson (via Bob and Luke and Will) plays the role of the hawkish ideologue who’s not really concerned about UN resolutions, and even fears a peaceful, diplomatic solution, because he just wants a righteous war:

Sir Alan [Budd] said yesterday that Alistair Darling was being too pessimistic: on almost every measure, the public finances look like being in better shape. Unemployment, he said, will be almost 200,000 lower than had been feared. Economic growth will not be quite as strong but the tax revenues – which are far more important – will come in much more strongly than Mr Darling gloomily forecast. Something is going badly right.
In many areas that were not included in Sir Alan's report, the British economy is doing remarkably well. Manufacturing is bouncing back – helped, of course, by the weak pound. The Bank of England is no longer buying British government debt, but demand remains strong – keeping bond yields low. Banks are lending, and money supply is increasing. Just as the economy sprang a volley of nasty surprises as we entered the crash, it's yielding pleasant surprises now.
So when Mr Osborne declared yesterday that "it's worse than we thought" he had precious little to point to. The so-called structural deficit (the amount of overspend that will not be eliminated by an economic recovery) is a little bigger than had been estimated. But crucially, Mr Osborne's election goal – to abolish "the bulk" of the structural deficit by 2014 – would have been easily achieved had Mr Darling remained in place. No more taxes need to be raised, or budgets cut, to honour this Tory manifesto pledge.
…
But Mr Osborne will have to change tactics. He cannot credibly play the worse-than-we-thought card if Sir Alan's team – on whom he has bestowed Delphic authority – disagrees. Instead, he will have to focus on something from which he shied away in opposition: the moral case for cuts; to argue, on Budget day, that even if Britain could keep on borrowing it would be reckless and wrong to do so.

No analogy is perfect, and it’d be easy to take this one too seriously. But there’s a more general reason that there’s some ring of truth in it; it’s the same as the reason I was never particularly surprised about the revelations of dodgy government manoeuvres pre-war. I think that almost any major contentious policy, with some definite downsides and the risk of others, gets justified to the public with some level of dishonesty. It’s deplorable, but hardly exceptional.

Anyway, cue George Osborne’s Mansion House speech tonight.

Superficial hustings review

I’m a good way off deciding who I want for Labour leader, so all I’m going to say about yesterday’s Newsnight hustings is a few tiny remarks on how they came across (IMHO).

David Miliband is making an effort to seem prime ministerial, and his model for that is Tony Blair. I got that same sense of ‘I see your point of view but the truth we have to face is such-and-such’ from him. He pulls it off competently, but is it what we want?

Ed Miliband is looking and sounding even younger. I would never have guessed from that performance that he was 40.

Andy Burnham looked like a puppet wearing eyeliner.

Diane Abbott and Ed Balls are, in their very different ways, insufferably smug.

As for their actual political positions, the format – five of them in little over half an hour – didn’t do much to draw these out. I remain unsure and uninspired.

Tory immigration policy undermines OBR forecasts

Another item of interest from the small print of the OBR’s report:

we assume net migration of 140,000 a year

Which stands in contrast to the government’s immigration policy:

we will reduce net migration back to the levels of the 1990s – tens of thousands not hundreds of thousands

If the OBR takes this into account, it will mean a smaller workforce, less GDP, lower tax receipts and higher borrowing. Probably not a big difference, but worth noting.

OBR: openly uncertain, but no more accurate than the Treasury

The Office for Budget Responsibility has spoken! And, if you duck past the headlines about growth predictions being a bit worse and borrowing predictions being a bit better, one or two interesting things emerge.

The first is that the OBR is wholeheartedly joining in with the Bank of England’s campaign to put uncertainty at the heart of economic policy making. The Bank has popularised ‘fan charts’ showing a probability distribution of outcomes. The OBR is doing the same:



I love these charts. I am, if you can resist the urge to hunt me down and kill me for making such a laboured pun that’s both crushingly obvious and startling feeble, a fan. They grab you – the public, the media, the politicians – by the lapels, shake you and yell “It’s not that simple!” Hopefully this will make us all grow up a bit and stop demanding certainty and/or pretending to it. (Well, OK, I’m not holding my breath…)

And while both the central projections in these charts are lower than the figures in Alistair Darling’s Budget in March, those earlier forecasts are still well within the bounds of what’s likely. For instance, the 3.25% growth figure for 2012 on which Darling’s fiscal plans were based is higher than the OBR’s central 2.8%, but it’s still lower than a bit over a third of the range of the fan chart.

Another nice little nugget for the anoraks comes in Appendix A of the report, explaining how the OBR worked out the probability distribution of the fan charts:

We could take one of two possible approaches to quantifying uncertainty at this stage. The first is to choose parameters that reflect our subjective view of the distribution of risks. This has the advantage of flexibility but it may be difficult to explain how the parameters have been chosen. The second, which is the approach we have taken, uses the distribution of past forecast errors made by the Treasury to quantify the probability distribution around our forecasts.

In other words, the OBR is operating on the assumption that it will be no more or less accurate in its predictions than previous, ‘politically fiddled’, Treasury forecasts. That’s one in the eye for George Osborne.

Obama to invade UK (and then some other unrelated country two years later)

I was going to blog about the deficit numbers, but then this rather bigger story caught my eye:

US President Barack Obama has said the oil disaster in the Gulf of Mexico will have the same impact on the US psyche as 9/11.

I think we’re in trouble.

Poor sustenance

There’s a talk at the Cheltenham Science Festival today titled ‘London 2012: The Most Sustainable Games Ever?’

No. The 2012 Olympics will last from 27 July to 12 August, and then stop. They will not be “sustainable”.

(The blurb for the event also asks: “Construction of the Olympic site is well underway, but is the sustainability agenda on course for a gold medal?” Ah, it’s that kind of subtle blend of inhuman corporate jargon and leaden sporting metaphor that makes me proud to be a speaker of this fine language of ours.)

The bond market is barking

I was going to start by saying that the bond market has been the dog that – so far – hasn’t barked, but of course it has been. Whether in the form of fund managers warning that UK government debt is riskier than juggling with chainsaws, or credit-rating agencies trying to persuade us that they’re still worth listening to despite their minor mistakes over securitised sub-prime mortgages, or a Chancellor and PM who want to create a sense of emergency, there have been plenty of yaps and growls warning that the cost of public borrowing is about to shoot up.

But the bark has been worse than the bite.

This handy chart in today’s FT shows that UK government borrowing costs have changed very little relative to Germany and the USA since before the credit crunch – and in absolute terms, they’re down. This is despite our surging deficit, the end of quantitative easing, a period of political uncertainty, the resignation of whatever that guy’s name was, and the recent turmoil in Europe that Nick Clegg claims has converted him into a high-speed cutter.

Past performance is not necessarily a guide to future performance, but one does suspect that there’s just a teensy bit of scaremongering going on here.

Tom for leader!

I would like to announce my last-minute candidacy for the leadership of the Labour Party.

My name is neither Ed nor Miliband, I have never been a government adviser, I have never shared a sofa with Andrew Neil, and I have never been John McDonnell. I have no record of serving in an unpopular government nor of being a disloyal backbencher.

Our great party needs radical change, and what could be more radical than picking as our leader a total unknown with no experience of electoral politics and quite frankly a deep dislike of both politicians and voters?

If elected, I promise to slap my forehead, ask you what the hell you were thinking, and resign.

Furthermore, when the Conservatives held a leadership contest in 1995, I telephoned their Central Office on the day nominations closed and tried to nominate myself (true story; I was 18 and, if memory serves, still drunk from the night before). They refused me, and went on to catastrophic defeat.

We cannot afford to make the same mistake. Vote for me!

1pm update: Bah. I have been thwarted by the ridiculous rule - clearly designed to keep me out - that requires candidates to have more than zero nominations for MPs.

The myth of the spending splurge

A very carefully crafted statement from David Cameron:

We had a significant deficit problem way before the recession. In fact, much of the deficit is structural. A problem built up before the recession, caused by government spending and planning to spend more than we could afford. It had nothing to do with the recession. And so growth will not sort it out.

The first two sentences are each technically true, but the link that he then draws between them is sleight of hand.

Distinguishing structural from cyclical factors in the deficit is, shall we say, a fine art, requiring estimates of how the economy is doing relative to its potential, and these are always debatable. But here are the numbers the March Budget gave for government borrowing, both actual and adjusted for the economic cycle:

(The 2009/10 estimate is already out of date, as the deficit turned out lower than expected.)

What this shows is that, yes, Brown was running a pretty much entirely structural deficit during the good years, of 2-3% of GDP. And yes, most of the deficit now is structural. But these two facts don’t really connect, because there’s been a huge rise in the structural deficit - not as a result of irresponsible spending but because the recession caused structural damage to the economy as well as reducing output across the board. (In particular, the housing and finance sectors took a big hit.) This caused a sharp drop in tax revenues, and was accompanied by a mild increase in public spending.

About 80% of the deficit has appeared since the start of the recession.

The fact that the structure of the economy (and of the taxes it produces) changes all the time, particularly during a sharp recession, illustrates why untangling the structural and cyclical aspects of the deficit is a tricky theoretical exercise. No doubt the recovery – assuming that the recent European tumult and the looming spending cuts don’t derail it – will see more structural changes, as some sectors grow faster than others.

Fewer MPs, more constituents

Jack Straw makes a decent case against cutting the number of MPs, covering a number of points that I’ve made before (although his opposition to this has as much partisan interest as the Tory support for it does).

Today I just want to illustrate one consequence of the proposal to shrink the Commons. If the number of MPs is cut by 10%, as the Tory manifesto proposed (the Lib Dems wanted a 25% cut), and if the electorate grows by half a million over this parliament, as has been the average recent trend, then the number of voters per constituency will shoot up:


When you hear someone in government saying we should have a smaller Commons, ask them why they want their own constituents each to be able to have less access to them.

On women, and other kinds of people

I’m sceptical about Harriet Harman’s desire for the shadow cabinet to have a 50% female quota – more so than I am about quotas aiming at 50% female representation in parliament.

In the latter case, there’s a 50% female population (in fact a bit more) to draw on, so there should be no problem finding good women. But for the shadow cabinet, the pool is the Parliamentary Labour Party, which is 31% female. A 50-50 shadow cabinet would therefore have to use disproportionately many of these, leaving few on the backbenches to speak out freely and to sit on select committees –important roles in their own right.

But there is a case for pushing against this sex bias, and in doing so from the top. So maybe, if we really have to have a quota, it could be for a figure somewhere between the PLP level and the population level – 40%?

(NB Evidence suggests that voters are no less satisfied with female MPs selected through all-women shortlists than those selected against men.)

However, if we’re concerned about a disproportionately male politics, what about other under-represented demographics? If we start thinking about ethnicity, age, class, disability and so on, we could find ourselves with a horrifyingly complex quota system.

Me, I’m far more concerned about the personal qualities and political views of politicians. Could we have quotas for diligence, courage, imagination, humility, honesty and intelligence?

Oh, and if we feel like scoring a lazy point at the expense of a certain pair of parties, we could have a rule that at least 50% of the shadow cabinet have to be non-millionaires.

The chopping forecast

Shorter David Cameron on public-sector cuts:

I will do such things – what they are, yet I know not: but they shall be the terrors of the earth.

And I like Don’s shorter Nick Clegg.

It would be a huge mistake for the "centre-left community" to oppose our plans to cut jobs for young unemployed people, cancel the most successful savings scheme ever for low income poor families, cut the number of university places, take money away from schools, cut training for childcare workers, stop families on low incomes getting laptops, cut programmes which help children learn to read, cancel summer playschemes, close playgrounds, cut youth offending teams, and take away support which helps parents get jobs.

We have to do all these things, because otherwise it will be our children and grandchildren who suffer.

'Win One Lose One' by Mitch Benn

Mitch Benn has come up with an England World Cup anthem for mildly patriotic realists (video by Kenny Ellaway):

Conlibdemolition

I’ve been wondering what to call the new government. I think that Steve Bell has the answer:

Bold, principled, progressive, green, tough, caring, credible, new, reforming, reconnected, internationalist, mainstream, radical, doubleplusgood

The invention of the internet has today been made worthwhile by Hopi’s use of it to publish this sentence:

Leading isn’t compiling a list of adjectives that describe a popular party.