The Toff Business

Jonathan Freedland has an article in the Guardian where he says that class war does have an impact on politics - but only if it is handled very very carefully.

He points out that the Tories are very sensitive to charges of elitism. For instance they managed to get the owners of the infamous Bullingdon picture to stop granting further publication (though luckily organisations such as the Telegraph, which got permission to publish before the ban, still display the picture - you can see it here). And he quotes a remark in the FT:

As Stefan Stern wrote in the Financial Times last week: "If David Cameron is so proud of the 'great school' he attended - it was Eton, by the way - why does he never mention it by name in public?"

Also, it's no accident that the last three Tory prime ministers - Heath, Thatcher and Major were all state educated - they acted as a cloak for the elitists in their party.

So why has the Labour toff campaign failed? In part because it was too crude and heavy-handed. People don't mind wealth if it has been earned. And people don't mind eccentric clothes either, which is what top hats and tails is - this is Britain after all, you can wear whatever you like no matter how silly.

What they do mind is if it is perceived that they are being shut out of a club. The real criticism of the Bullingdon club for instance was never the silly clothes. It is that they refuse to let jews or black people join (still, even though it is 2008). And because the club exists to harrass ordinary people by smashing their property and enjoying the distress this caused before the victims were compensated (what a jolly jape, as Boris would say).

Unfortunately the Labour campaign has focused just on clothes and not on deeds.

It's also instructive to see how the Tories counter charges of elitism. Their main charge against Tamsin Dunwoody was that she had a large house/farm in Wales and was listed in DeBretts and claimed therefore she was a toff too, (though her circumstances are far removed from Timpson's £53 million fortune). Elsewhere, in the Guardian, among the comments you get frequent assertions that "the Labour party is a middle-class party", "the majority of the Labour cabinet went to public school", "the majority of Labour MPs went to public school" and a variation of this "the majority of Labour MPs went to grammar school, then they abolished them, what hypocrites". And it's clear that these untrue prejudices are widely held.

Therefore the first thing the Labour party should do is counter these untruths. Actually, as detailed in my previous post, 82% of parliamentary Labour MPs are state educated (with 53% of Labour MPs having been to comprehensives), while 59% of Tory MPs are public school educated. So a potential poster to publicise this could say something like

93% of Britain is state educated.
82% of Labour MPs are state educated.
7% of Britain went to public school
59% of Tory MPs are public school educated.
Labour reflects Britain. The Tories do not.

Another poster could say "This is the first government in history to be dominated by state-educated people. This is the first government for x hundred years to deliver 11 years of continuous growth. This is not a coincidence". Hopefully by the next election, this will be 13 years of growth.

Cabinet ministers such as David Miliband, Ed Miliband, Jacqui Smith, Yvette Cooper, Hazel Blears, Alan Johnson, John Denham, Hillary Benn and others should be telling people how proud they are to have been educated under the state system. Alan Johnson is the only one who has successfully got his background across. The rest need to raise their profiles.

Finally, people were prepared to give Timpson a pass because his family are manufacturers (there is an understanding that you don't succeed in business without effort no matter how exalted your background is). People were prepared to give Boris Johnson a pass because he is descended from a Turkish refugee (and claimed that his great-grandmother was a slave) - the conclusion of the public was he was a pretendy toff not the real thing. But they are less willing to give a pass to those who are of real inherited priviledge (hence the constant irritation with the antics of the House of Windsor, excepting the Queen). Therefore we should be very selective where we use the toff label.

The main person in the conservative party who is vulnerable is David Cameron himself. He is descended from James I, via Margaret Tudor, Henry VIII's sister, and got his first job because someone from the palace put in a word for him. And then he married the daughter of a baron. He messed up at On Digital (it went bust because of lack of subscribers, despite Cameron being hired as PR person to get punters to sign up). But never mind, that old boys network the Conservative party found him a safe seat with attendant income. And then he pretends to be an ordinary bloke.

Incidently, the link between Cameron and the mad bad Henry VIII is especially interesting as there is a family/genetic resemblance. Take a look at these picture - the eyes and the shape of the face are the same. I wonder what else he has inherited.

LibDems will definitely ally with Conservatives in a Hung Parliament

The Telegraph has a piece about the LibDems deciding to ally with the Conservatives, which confirms an earlier piece in the FT in February that they were considering doing this. According to the Telegraph:

Nick Clegg, the Liberal Democrat leader, will support David Cameron if the Conservatives are the largest party in a hung Parliament.
In consultations with senior members of the party, he said he was prepared to take the necessary steps that would enable the Tories to form a minority administration.

..........Before now, it had been thought likely that Mr Clegg would wait until after an election to embark on negotiations with both of the main parties in the event of a hung Parliament.

But The Daily Telegraph understands that he has decided that the public would not forgive him if he propped up a Labour administration that they had voted to throw out.


Of course Clegg leaves out of his calculation that many of the seats the LibDems hold are by virtue of Labour voters voting tactically to keep the Tories out. He seems to think that people vote LibDem because they are LibDem fans.

There are 63 Liberal Democrat MPs in parliament, and they won their seats in 2005, under Charlie Kennedy, who was palpably left-of-centre and indeed promised such things as a 50% top rate of tax (attracting many old labour voters in the process) and an anti-Iraq stance. If these Labour voters vote LibDem in the next election simply to deny the Tories a majority,and then find that their LibDem MP has crawled into bed with those same Conservatives, they would be horrified especially as Cameron and co were more gung-ho about Iraq than most Labour MPs and he is certainly not interested in progressive taxation as his recent comments attest.

So what should Labour do about this? The current position is a legacy of the 1980's, when the Labour party destructively split into Labour and the SDP. Many voters opted for the SDP/Alliance because they didn't like the Tories but were afraid of the way the hard-left seemed to be taking over the Labour party in the absence of the moderates, who had gone SDP. By 1997 however, Millitant and Michael Foot were decisively vanquished. There was no reason for Labour voters to have to continue voting LibDem in certain parts of the country - except expedience. In the run-up to 1997, New Labour didn't want to spend time re-claiming these areas when they needed to concentrate their fire-power on Labour-Tory marginals. So Blair famously wooed Ashdown, so that Labour voters felt comfortable voting LibDem in places like the south-west "to keep the Tories out".

But what on earth is the point of Labour voters going LibDem if it results a conservative government? No point at all.

The first thing Labour should do is publicise this new alliance between the Tories and LibDems. Many people are unaware of it, and still assume that the LibDems are to the left of Labour. The next thing we need to do is start re-claiming our lost territory. The next election is a straight up fight between Labour and the Conservatives. The LibDem vote is the softest of the three parties and should be squeezed. The only question is who gets those votes. We must make it clear that a vote for the LibDems is a vote for the Conservatives, who are Thatcherites maskerading as "compassionate conservatives" in the manner pioneered by George Dubya Bush.

The Poison Pill Strategy

The opinion polls continue to look dire, with YouGov in the Times showing the Conservatives on 45%, Labour on 25% and the Liberal Democrats on 18%. These may of course just be the mid-term blues. But it is possible that Labour will lose the next general election.

Before people leap out and call for Gordon Brown to step down and make way for someone else, all polls (including the YouGov one) show that changing the leader wouldn't make any difference. The real damage to the Labour party started with the Iraq war, and as soon as people started regarding us sceptically, it was on the cards that the scepticism would snowball and they would start to blame us for everything and anything they didn't like - sub-prime mess in the USA, it's Gordon's fault for not regulating lending in America; oil price hike, it's Gordon Brown's fault for not controlling world oil demand and so on. There is not a lot you can do about this once people get into this negative frame of mind, especially when it is magnified by a hostile press. Any successor to the PM would face the same problems. We also simply don't have the time to change leaders and in any case potential leaders (my preferred successor is Ed Miliband) need time to develop.

However, the next election won't be till 2010, which means we still have two years to go. If we are going down, we might as well go down as Labour, it won't make any difference to the outcome, but will cheer up our supporters and make things a little difficult for the succeeding government.

What do I mean by this? Well I was thinking primarily about tax and the example provided by Germany. The red-green government led by Schroeder followed a New Labour like strategy, cutting the top rate of tax from 51% to 42%. However, the red-blue Grand Coalition led by Angela Merkel has done something quite different and made the tax system more progressive.

First lets look at the German tax system. As of 2008, corporation tax is 15%, and businesses pay a 14%-17% municipality tax in addition. VAT is 19%. Individuals and employers in Germany pay about 20% each in social insurance and West Germans pay a solidarity surcharge of 5.5%. The income tax regime is as follows:

Tax % Tax Base (EUR)
0 Up to 7,664
15% 7,665-52,152
42% 52,153-250,000
45% 250,001 and over

Using an exchange rate of 1 euro = £0.7962, you can see that the 45% rate kicks in at £199,050.

Obviously some of the German taxes are completely unacceptable to a Labour government (particularly the VAT rates). However the shape of the income tax regime is very attractive. I think we could use the next two years to cut the basic rate to 15% and put in a 45% top rate for those earning over say £180,000.

Of course the high earners in the City will scream blue murder about this. But given that we might lose the next election anyway, we should simply shrug and tell them to take it up with the next government. If the next government turns out to be Labour, we can then point to a mandate for the regime.

We can also point out that in the City of London's main rival, New York City, high earning individuals are subject to 35% federal tax, 3.65% New York city income tax and 6.85% New York state income tax, making a grand total of 45.5%. The highest bracket 6.85% New York state tax kicks in at $40k (approx £20k) and the 3.65% New York city tax kicks in at $500,000 (approx £250k) and the 35% federal income tax kicks in at $357,701 (approx £179). Even if you earn less that $500k, you get clobbered because New York state has a highly progressive tax regime with five tax bands starting at 4% for low earners. New York city also has a lot of bands starting at 1.9%. And strangely (or not!) you don't see New York financial people decamping to low-tax Georgia. New Yorkers are now thinking of a millionaire's surcharge, and Americans don't have a non-dom system - if you are a citizen, you pay tax regardless of where on earth you live. Also note that the likely incoming Obama government will raise federal taxes on the highly paid.

How would this affect a possible incoming Tory government? In my opinion they will struggle to reverse the tax regime. If abolishing a 10p rate which applied to £2230 of income caused people to get upset, then raising the basic rate back to 20% from 15% (affecting income on the £34k above the personal allowance) in order to pay for a cut in the top rate will cause riots. They could try to raise VAT, but will find it has a knock-on effect on inflation and interest rates. (Mrs Thatcher managed this in the early 80's, abolishing the 25% initial rate of tax and doubling VAT in order to cut the top rate - but she only got away with it because the Labour party had split into Labour and the SDP. That's not going to happen again.) They could try to cut spending, but oops they have pledged to keep to Labour spending for three years, and in any case David Cameron has made much about how he will spend more than Labour on the NHS, defence, and whatever takes his fancy depending on the day of the week.

This strategy means that even if Labour loses the next election, Labour people can go to their beds happy that they've cut tax for the poor and made the high earners contribute more.

The Confucian State

Many commentators have expressed surprise at how well China has coped with her earthquake, dispatching aid, help and the Prime Minister Wen Jiabao. China, the story went, was a military/communist dictatorship akin to Burma's. It's taken two disasters, in Burma and China, to demonstrate the difference.

It's easy to see why the misunderstanding arose: under Mao and his extremist wife, and the Cultural Revolution, China was a brutal communist dictatorship. But starting in 1979 with Deng Xiaoping, China abandoned economic communism and seems to have abandoned social communism too. But they are clearly not a democracy, so how to define the Chinese state?

It's becoming increasingly clear that after flirting with western ideas in the 20th century (a corrupt version of democracy before WW2 and communism after), the Chinese have reverted back to the system of government that worked best for them for several millenia - the Confucian state.

Confucianism, which first developed in around 400 BC, is a system of government based on technocrats. Confucius was distrustful of aristocracy and inherited power, and instead was the first to come up with the idea of government by a permanent civil service, which was entered into by examination, and which wielded power while the Emperor remained a figurehead (hence our term "mandarin" for civil servants). You could be the son of a nobody and yet wield huge power if you were clever enough to pass the examinations to get into government. Confucian government was also deeply conservative, keeping detailed historic records so the government could search for precedents before enacting any law. "Documents, conduct, loyalty and faithfullness" were his four key rules of government. In addition he believed in the traditional Chinese reliance on clans and family ties.

And despite his conservatism, Confucius believed that although rebellion was wrong if a true king reigned, a government that provoked it and could not control it ought to be replaced, as it had proved itself illegitimate. Hence confucian governments paid great attention to the prospect of trouble brewing, as they did not want to make themselves illegitimate by messing up. (You could also say that the rebellion that led to Mao's government after WW2 was justified by ordinary non-ideological Chinese people at the time as being in accordance with their traditional Confucian values, as the previous government had failed to defend them from the Japanese and had hence made itself illegitimate).

And so we come to modern China. They have reverted to a Confucian system par excellence - a government of technocrats, very conservative, always worrying about potential uprisings (hence the move by the government in recent years to rapidly increase rural incomes to forestall unrest, and the related moves in Tibet to quell demonstrators) and very much concerned with "face" or conduct. And anyone who has done business in China can attest to the power of the clan system in controlling commerce. Some modern Chinese scholars have even gone so far as to propose the government introduces an upper chamber of deputies, Xianshiyuan, that is entered into by examination rather than election, which would complete their reversion to Confucianism. It's a complete contrast to the values of the Cultural Revolution, which imprisoned intellectuals, rather than revered them as in the Confucian system.

In this context, the speedy response of the Chinese government to the earthquake, including the presence in the area of the Prime Minister, is easily explained. According to Confucian thought, the government would become illegitimate if it failed to do it's duty and respond properly to the disaster, and would open itself to replacement. So of course they are doing everything they possibly can to demonstrate good government to the people in the affected regions.

Alistair Darling's statement

Never let it be said that Labour does not cut taxes. Not only has the basic rate of tax been cut from 22% to 20%, effective this April, but in a statement in the commons this afternoon, Alistair Darling announced that he was raising the personal tax-free allowance as well. This means that the allowance will have increased from the £5225 in the 2007/8 tax year to £6035 in the 2008/9 tax year, an effective increase in the allowance of 15%. Some 22 million taxpayers will benefit (far out-weighing those who were disadvantaged by the abolition of the 10p rate). Plus the increase in tax credits for people with families, announced previously, will continue to go ahead.

Some commentators have likened this to the tax rebates the US government is giving to their citizens, but the US tax rebate is a one-off, they won't get it next year. Whereas Darling's increase of the personal allowance will not only be permanent (the personal allowance will not be reduced next year - not going into a general election!), but it will continue to increase in succeeding years in line with inflation to comply with the Rooker-Wise parliamentary amendment, passed in the 1970's, which requires governments to increase the personal allowance in line with inflation unless they have a good reason not to. The only budget since the 70's that froze the personal allowance was the vicious Thatcher/Howe budget of 1981, during which he also abolished the 25p lower rate of tax that Labour had introduced in 1978, so that these low tax-payers suffered an increase to the then 30% basic rate of tax. And it all happened when the inflation rate was over 10%. The other Thatcher/Howe masterpiece was the 1979 budget when they raised VAT from 8.5% to 15%. (Tories who dare to criticize Labour on tax have very short memories indeed).

Perhaps Labour should develop this theme, and continue to increase the personal allowance/decrease the basic rate of tax and increase the higher rate to compensate. I can't see our opponents trying to reverse this in order to pay for inheritance tax cuts.

Is Cherie inadvertently helping Gordon by attacking him in her book?

Cherie Blair's book is being serialised in the Times and all the papers are full of details about it, including the Daily Mail which dwells on it at some length. In particular the Mail gives prominence to a passage about Cherie's attitude to money and MP's salaries, with quotes from the book:

"When the move to Number 10 became a probability the accountant looked at our income and expenditure exercise. The results weren't encouraging. It showed that while Tony's income would go up, mine would go down.

"We'd been told that living in Downing Street would be taxed, yet we still had a big mortgage to pay, plus the overdraft I'd taken out. I didn't know how long Tony would be Prime Minister. On the plus side I knew MPs and ministers would be about to get a 26% payrise."

........She said she was furious with Mr Brown after he told Labour's first Cabinet meeting in 1997 not to take a 26 per cent pay rise.

Mrs Blair - who said she had taken a pay cut when her husband became PM - revealed: "Tony told me as soon as he got back to the flat. I couldn't believe it as the Tories were taking it. It meant Tony would be earning less than William Hague.

"I remember sitting at the table at the kitchen at No 10 with my head in my hands and staring at the now completely redundant financial breakdown as Tony tried to calm me down, but I wouldn't be calmed down.

"How dare Gordon do that? What did he know about financial commitments? He was a bachelor living on his own in a flat with a small mortgage."


Cherie also says that Blair is helping Brown with his election strategy.

The comments on the piece (and there are loads of them) indicate that people dislike Cherie more than they dislike Gordon Brown. One person, Terry Stride from Tamworth writes:

Well now we know why Mr Brown is making such a mess of things, he is taking advice from Quisling Blair, you could not make it up if you tried.

There's tons more in that vein. To read the whole thing, click here.

Wendy Alexander on a Scottish referendum - "I don't fear the verdict of the Scottish people - bring it on."

Yay! Go Wendy! I hope Westminster takes notice of what she's saying and gives the referendum the go-ahead.

I don't believe that the Scots want independence from the UK. They are not that stupid, and the ties (including family ties and business ties) with England bind tightly and run far too deep, as people have moved freely back and forth over the centuries, settling all over the place and inter-marrying. Compare the UK to Germany - England has been united with Scotland for 300 years, German unification only happened after Bismark united them in 1871 - and then they split apart again in 1945, coming together again in 1990. The ties between east and west germany are far weaker because they were separate so long (the myth held in the UK that german families were split by the cold war applies only to Berlin where a city was divided). Yet despite their unification being recent, Germany stays together.

The only reason the SNP have gained sway in Scotland is because the Tories and LibDems have failed in their democratic duty to provide opposition to Labour everywhere in the UK. Therefore if Scots want an alternative to Labour they have had no choice but to turn to the SNP. It's no accident that the seats the SNP hold - Angus, Perth, North Perthshire, Moray, Banff, Galloway and Upper Nithsdale - are the wealthy Tory seats of old. SNP success is about Tory failure.

If a referendum defeated the independence drive, the SNP would then have to start to define what they are really for. And if the other unionist parties had any sense, they would seize the chance to regain their foothold in scottish politics.

Another consideration. Many Scots say that if there is a Tory administration at Westminster they will definitely go independent, because this generation of Scots hates the Tories. What a stupid short-term reason to break up a 300-year relationship and what a stupid way to decide the next 300 years. Looking at this from a long-term point of view, the Union will be best served if we have a referendum in Scotland before the next general election and win it convincingly. Then even if Labour loses the next general election (and it's still not clear we will, despite the local election results!), the Union will stay intact as the incoming administration can point to the referendum and say that it was the settled will of the Scottish people.

The Local Elections

Local elections are the great safety valve of British democracy. They offer voters a cost-free way of venting their feelings and sending a message to government without risking anything more important than who does their bin collection (London obviously is the exception).

The last time Labour did this badly was in 2004 when people furious about the Iraq war vented their feelings. I was one of them and it was immensely satisfying watching the seats fall. I felt good for days afterwards and revelled in how anguished the government was about it. I imagine that the people who voted against Labour in the 2008 election are feeling the same. In fact I wouldn't be at all surprised if beer sales shot up this weekend as people celebrate showing the government who is the boss of them.

However Labour won the 2005 election, despite the 2004 local drubbing. How did that happen? Part of it was down to general elections being about long-term decisions about the future, while local elections are usually verdicts on the past year (though there are some truly local local elections). Part of it was that the 2004 vote was carthartic. After metaphorically punching the government on the nose, the anger was mostly spent and it was hard to re-stoke it.

But a big part of it was that Labour addressed the central complaint, which was Blair and Iraq. He announced in late 2004 that he was stepping down, and the polls immediately started to improve. The 2005 election was fought as "Vote Blair, get Brown" with the explicit promise that one man would step down and the other take over. And in 2007 when Blair did finally depart, there was a surge of approval for Labour. Part of that was down to people having been intensely irritated that Blair was swanning around refusing to admit he'd made a mistake, when in real life people lose their jobs for lesser misdemeanours. Natural justice demanded his head. Since Blair has gone, the program of withdrawing troops from Iraq has accelerated and the Brown government has made it clear that it won't go to war again without an iron-clad UN mandate (see Gordon Brown's speech in New York last month).

As a result Iraq wasn't mentioned at all on the doorstep this year - problem solved. Only we seem to have acquired a whole new set of problems. What were people giving us a bloody nose about this time, and what can we do to address their concerns?

In my opinion the public is very nervous about the economy (fed by a hysterical press) and for the first time they are unsure whether the Labour government can protect them from global headwinds. That was what they were protesting about - what they perceive as the government's loss of grip over the economy. Commentators point to the US government sending out tax rebates and claim that by contrast the UK government is ham-strung and is doing nothing. In reality, the basic rate of income tax got cut by 2% this April - and the key beneficiaries, people who earn between 18k and the upper earnings threshold, are the very people who have mortgages, and need the tax cut. But none of this is being communicated. Maybe if we hadn't bothered to cut the base rate and had sent out one-off tax rebates people would have been happier. It's certainly something to think about for the future as it is less expensive in the long run and people seem to notice one-off rebates more than permanent income-tax cuts.

In addition, many people seem to believe we are in recession, when instead we grew at a fair 0.4% in the first quarter, stronger than the growth going into the 2005 election and stronger than growth in the USA (which posted growth of 0.15% in the quarter, the annual equivalent of which is 0.6%). The USA itself seems to be hanging on and not contracting, and that too is a good sign for the world economy. But that is not being communicated either.

Some people are worried about house prices - but again, housing slowed sharply in the run-up to the 2005 election and people didn't really bat an eyelid. But then again the press wasn't as hysterical about it in 2005 either.

I think the main failure of the govt is in reassuing people about the economic side. We are not doing enough to challenge the rubbish written about recession and "meltdown". We should be agressively challenging the misconceptions. We should be saying up-front that we believe that the Tories are wrong about the economy and that events will prove it. And when events do prove it, we should bang on endlessly about how they got it wrong. Alistair Darling is a bit too soothing when he talks on TV and some of the people think the lack of bite means that he doesn't really believe that the economy is holding up. He needs to assert his points with more oomp, or get someone from his department to do it on his behalf.

And then there is Gordon. He's the same man he was in 2005 when people endorsed him on the "vote-Blair-get-Brown" ticket. Everyone knew he was more about substance than style, and that he liked to think about things rather than make off-the cuff decisions like Blair. But Brown is being attacked relentlessly for it and in a very personal way. However the attacks on Brown are no worse than the attacks Hillary Clinton has been taking (and she's been taking them for 16 long years). Her response is to keep smiling and to fight back, as feistily as possible, whereas our Gordon tends to look a little hurt.

Gordon is not the punch-back type (unlike Blair and Prescott), but he should work on not looking upset when someone has a pop at him. I've noticed that he's much more cheerful and relaxed when Sarah Brown is around and that the two of them together project a very good image. My solution - he needs to take Sarah with him everywhere he goes and perhaps Sarah should start raising her profile.

Finally, under Blair, whenever there was trouble, a whole phalanx of ministers was deployed to take to the airwaves - Blair himself only came out on the second wave, mainly at press conferences. Under Brown, Brown seems to be doing most of the lifting (apart from Yvette Cooper who seems to be on TV a lot). The cabinet need to start pulling their weight a bit more and all turning out to defend the govt. Labour stands or falls together.

I must say something about Ken Livingstone - the first and greatest of London mayors. London will regret his departure. It was heartening to see turnout for him in Inner London - it bodes well for the seats Labour holds there. When there is something real at stake the Labour vote does respond - and that's the silver lining.

The Virtues of being a Fighter not a Quitter

Barack Obama's campaign is in grave danger thanks to his pastor the Reverend Wright. Just as the whole pastorgate thing looked like it was dying, up pops Wright on national TV and according to the Washionton Post

Wright praised Louis Farrakhan, defended the view that Zionism is racism, accused the United States of terrorism, repeated his view that the government created the AIDS virus to cause the genocide of racial minorities, stood by other past remarks ("God damn America") and held himself out as a spokesman for the black church in America.

It wouldn't have been so bad if Obama had denounced Wright in no un-certain terms when the pastor problem first arose. Instead, Obama tried to explain the pastor and said he could no more denounce him than his own grandmother (who is white). The speech was very elegant and won many plaudits for it's prose, but from a political point of view many wondered why Obama didn't simply dump the pastor (who is clearly bonkers). He might as well have, as Pastor Wright seems to be speaking out now in revenge because he's ticked off that Obama didn't praise him to the skies in the speech. His behaviour would have been the same if Obama had denounced him, but at least moderates would still be onside. As things stand Obama, by hedging, has upset everyone.

Why did Obama not grasp the nettle earlier? Did he believe that denouncing the pastor would hurt him with the African-American community? He's surely wrong - African-Americans must be horrified that the pastor is stereotyping them so negatively on national TV just at the point they had thought they'd beaten back this sort of profiling.

Thank goodness Hillary is still in the race! If this gets worse, the superdelegates have the option of choosing Hillary as the least damaged candidate, whereas if it had been all over in February, they would have had the horrible prospect of watching a trainwreck, powerless to do anything about it. She's in the race simply because the people of New Hampshire, California, Ohio, Pennsylvania and other places were determined not to make the mistake they had made in 2004, when they chose too early before the candidates had been properly vetted (the 2004 race was practically over after New Hampshire). This time they've gone for a proper trial by ordeal to see what skeletons will surface (as they always do).

It's also a credit to Mrs Clinton herself that she's still there. She started off the campaign with the reputation of an ice-queen, distrustfully masking her thoughts. She got attacked relentlessly and viciously by everyone, being called a witch, a b*tch, the terminator, and worse and was repeatedly told to give up and step down. But she decided to fight and as she did so, the real Hillary broke through the mask, and she's proved herself feisty, full of nerve, un-expectedly warm and completely shameless in her determination to win - not only throwing the kitchen sink but boldly announcing in advance she'd do so. The only thing she didn't throw at Obama was Pastor Wright - he did that to himself.

It's hard not to smile and be charmed by this shameless, bravura and up-front display of guts. You know exactly where you stand with the Clintons. In a fight you'd want them on your side. People have criticised her chaotic campaign, forgetting that Bill Clinton's campaign (and indeed his entire white house administration) was equally chaotic. It's not always the case that disciplined campaigns such as that of Obama (and George W Bush before him) produce the best presidents. On the contrary, an atmosphere where people feel free to argue the toss prevents group-think, shows up flaws in arguments and in the end makes for better decision-making.

By holding firm, she's put herself into a position where she can now profit from Obama's mistakes. All eyes will now be on North Carolina and Indiana. The Wright thing can only hurt. They say you should never write off the Clintons. The last time they lost an election was in 1981. Since then they've been winning everything they contested, governorships, the presidency, the senatorship, now possibly the nomination to be the Democratic candidate for president again.

Even if she doesn't pull it off, the Labour party should take notice of how she's handled herself, because she's far more popular now than she was at the start of the contest. No-one likes people who pathetically give up and "resign themselves to losing". Everyone likes people with the gumption to fight because it implies you believe you have something worth fighting for.

GDP grew by 0.4% in first quarter

According to the ONS, GDP grew by 0.4% in the first quarter, which is a slowdown from the previous quarter, but still higher than the growth we had going into the 2005 general election. It came as a disappointment to those who were claiming that we were "in recession", but still some papers tried gamely to spin this as "Economic Growth lowest in three years".

Looking at the figures, as expected, business and finance had lower growth than in the previous quarter (0.4% compared to 0.6%) and contruction also grew more slowly (0.5% compared to 1.1% in the previous quarter).

Retail held up nicely - but there is evidence that customers are deliberately shifting to the low-priced end of the market - Primark is doing a roaring business for instance. Online sales are also doing better than high street sales and supermarkets like Sainsburys have launched a 25% off sales push to try to wrest customers from their rivals. All of this is a normal response given the way consumers have reacted to the headlines in the press. Retailers will have to cut prices if they want people to buy - not so good for margins but good the customer.

The Awful YouGov Poll

YouGov have produced a poll which puts the Conservatives on 44%, Labour on 26%, LibDems on 17% and others on 13% (others broke down as follows: SNP/PC 4%, Green 3%, BNP 3%, Respect 0, other 1%).

This gives the Conservatives a huge 18% lead, which comes as a surprise as the ICM poll just three days earlier put the Conservatives on 39%, Labour on 34%, Lib Dems on 19% and others on 9%, giving the Conservatives a 5% lead.

One or both of these poll is a rogue, (there is a huge difference in the reported Labour party figures).

The divergence is interesting because both YouGov and ICM weren't too far off about the 2005 election:

General Election result: Con 33.2%, Lab 36.2%, LibDems 22.6%, others 8%
YouGov May 3-4 2005: Con 32%, Lab 37%, LibDem 24%, others 7%
ICM May 1-3 2005: Con 32%, Lab 38%, LibDems 22%, others 8%

So both pollsters were pretty close to each other and to the final result. So why the current sharp divergence? The two pollsters use different methodology, ICM telephones people randomly and weights by certainty to vote, YouGov relies on a panel of voters on their database and doesn't weight by certainty. It's possible that as politics has moved out of the holding pattern of the last ten years, one of the methodologies has an underlying problem that is giving a skewed answer.

Both methods have vulnerabilities. ICM is vulnerable to the spiral of silence where people are embarassed to admit their affiliations because of the human desire not to be judged, even by a stranger on the phone - this could take the form of people who remember John Major's govt being shy to admit they are Tories, people who are shy to admit they like Gordon in the face of the bashing he's receiving and people who are shy to admit they are BNP.

Because YouGov's polls are on the internet, the spiral of silence problem is eliminated (as data is sent back anonymously). However they are vulnerable to people setting up multiple accounts (as they pay per poll done) and being swamped by activists joining en masse to try to move the polls.

Both pollsters are vulnerable to people mis-remembering who they voted for in the last election (eg people who voted LibDem and let in a Tory might want to conveniently "forget" this and people who are Labour to the core but voted LibDem to "keep the Tories out" might simply answer "I'm Labour" to the question). YouGov tried to get round this by polling their entire database on election day in 2005 to get a record of how they voted (and given how close their pre-election polls were, it's fair to say that most of their database would have answered truthfully). However, they are vulnerable to new panellists joining since 2005 giving the wrong information about how they voted in the last election.

Looking at the data for the recent YouGov poll, I'm struck by the BNP figures - can they really be polling roughly the same as the SNP and PC combined? Given how popular the SNP is? Or have a whole bunch of BNP supporters joined the YouGov panel to bump up their count (the BNP phenomenon is largely a post 2005 one)?

There is an easy way for YouGov to resolve this. They know that the panellists on their books at the 2005 election were sound and they also have the exact details on how they voted in that election. This group can therefore be used as a control. All they need to do is run three opinion polls, one sampling the pre-May2005 database, one sampling the post-May2005 database, and a third poll run based on the whole database. If there are sharp differences in the results, they can conclude that the post-May2005 panel has been corrupted and take action to sort this out. If there are no differences, they should conclude that their methodology and panel are sound, publicise the findings and stand by their polls.

Consequences of the whole Olympic Torch Business

Gordon Brown got severely criticised by all the talking heads plus the Conservatives and the Liberal Democrats for allowing the Olympic torch to enter Downing Street in his presence, and agreeing to go to the closing ceremony, especially as the French announced they would stay away from Beijing unless "certain conditions were met". The Lib Dems indulged in grandstanding to the extent of writing to the PM to advise him to stay away.

Luckily Gordon didn't listen to them and luckily he didn't follow the French line either.

There has been widespread coverage of the protests in the Chinese media (particularly of the way a disabled female Chinese athlete was attacked by a pro-Tibet protester in Paris, which was wrong no matter how you look at it). China had been furious with France for taking such a high-profile attitude over the Olympics anyway, and the incident with the disabled athlete gave them the chance to scapegoat France for all the protests in Europe. There have been demonstrations and protests outside French businesses like Carrefour in China, and boycotts have been organised.

The business implications are so big that President Sarkozy has had to do a public U-turn from castigating China to appeasing them. He has written personally to the disabled Chinese athlete apologising to her, and has dispatched three high profile envoys to China to patch things up. Meanwhile the CEO of Carrefour has publicly distanced himself from the protests in France.

Given the way the Chinese have made the French bend the knee to them, does anyone believe that the French have the authority to make any further protests to them about human-rights?

It makes our Gordon look like a diplomatic genius, because compared to Sarkozy all he had to endure were a few uncomfortable minutes watching the torch in Downing Street. And businesses like Tesco, competing in China against Carrefour and Wall-Mart, are serenely unaffected. And we still retain the authority to express concerns in private and have them taken seriously because the Chinese know we won't play grandstanding games with them.

Of course human rights in Tibet matters, but concerns need to be voiced in private behind closed doors, especially as the Chinese put great store on not losing face. The Chinese have a long history of reacting positively to approaches made in private but very badly to approaches made in public. In the run-up to the expiry of Britain's lease for Hong-Kong, the private negotiations were going well, the Chinese were all set to extend the lease for another century - till Mrs Thatcher couldn't resist opening her mouth and demanding in public that they renew the lease. Then it became a matter of patriotism to get Hong-Kong back - which they did. Britain had been moving towards full democracy in Hong Kong, and had Mrs T kept her gob shut and let the negotiators get on with it in private, the 7 million Hong-Kong citizens would have been enjoying full democracy by now under a renewed British lease. As it is, the shouting delivered them into the hands of the Chinese Communist party. Chris Patten too found when he was governor of Hong-Kong that publicly criticising China did him no favours (to the extent that Sir William Purves, chairman of HSBC at the time, got visibly irritated with the way he was damaging British business).

It's also not clear whether sports is the correct forum to express concerns on human rights as it hurts innocent athletes and make the target of the protests even more stubborn. And while the Chinese were heavyhanded and over-the-top in putting down the Tibetan demonstrators, the demonstrators were disturbingly xenophobic towards the Chinese (imagine if the Spanish rioted because the English have moved there in numbers, or if the English rioted because Scots live in England in numbers).

China is now a de facto superpower, just like the United States, and just as we express criticism to the Americans in private, we need to express criticism to the Chinese in private too. However much our press and opposition parties may like to pretend that we live in a Love Actually world, we don't.

Much better to have a cautious and discreet Prime Minister like Gordon than a "shoot your mouth off one minute, publicly abase yourself the next minute" leader like Sarkozy. And it's lucky we have a Labour govt in power - because according to the Conservatives and the Liberal Democrats, they would have gone the Sarkozy route.

Unemployment Falls Again

Unemployment fell again according to figures out from the Office of National Statistics, and inactivity rates are also falling. The net result is that 74.9% of people of working age are now in work, a total of 29.51 million people, up 152,000 over the quarter and up 456,000 over the year.

The number of outstanding vacancies is now 687,600 which is the highest since 2001. This accords with anecdotal evidence - I know several people desperately trying to recruit IT staff and struggling to find people who will respond to adverts let alone turn up to interviews. It explains why the BoE has been cautious and has only cut interest rates by a total of 0.75% from the peak of 5.75%, unlike the US Fed which has cut by 3% to take interest rates from 5.25% to 2.25%.

But you wouldn't have known unemployment had fallen if you had logged onto the Times website this morning. Their main headline screamed Unemployment looms large as crunch bites deep - anyone glancing at it would have shivered and assumed that unemployment had just risen. But their whole article was instead based on an predictive "estimate" put out by JP Morgan - you know those people whose predictive abilities are so notable that they loaded up with sub-prime which resulted in them announcing a 34% writedown in Q4/07 income, followed by an announcement today that their 2008 first quarter profits had dropped by 50%. When the ONS released their figures, the Times removed the article from the front page and published the correct employment figures on the business pages - but couldn't resist spinning with the headline that the rise in employment was "masking" the "crunch".

It's hard not to conclude that the Times is doing it's darndest to frighten the public into staying away from the shops, hiding under the bed and stuffing their money under the mattress - all the better to make people doubt the Labour government and vote Tory. It will be interesting to see how far they take this. You can scare-monger to a certain extent, but when you start to do it persistently and in direct contradiction to the facts you get a reputation rather like the Daily Express when they run one of their interminable "Diana was killed by Prince Phillip" stories.

The French State Visit

The Sarkozys are in town lavishing extravagant praise on the British. Most Brits will smile but not take it too seriously. But should they? The most interesting comment about the visit comes from Germany's Deutche Welle, which observed that:

Some political analysts have said the French president is reaching out to Brown because he does not get on well with German Chancellor Angela Merkel. Berlin and Paris traditionally dominate the European Union.

In an interview with the BBC before the trip, Sarkozy, who is scheduled to take over the European Council presidency in three months, said France's European policies would no longer be "reduced to friendship with Germany." He added that "the Paris-Berlin axis is fundamental but not sufficient."

Sarkozy and Merkel have quarrelling almost every month since Sarkozy took over the French Presidency. He's been irritating her on a personal level (eg his tendency to grab her in public, something the reserved Chancellor disapproves of), his tendency to take credit for things Germany has done the work on, and on issues such as EU competition policy and the independence of the ECB (Germany backs the ECB's stern focus on inflation).

This is a massive opportunity for the UK. Sarkozy is looking for another powerful friend and feels that Gordon Brown is the perfect foil (i.e. he won't compete on flamboyance the way say, Blair would have). Plus the UK now has the glamour of a successful economy and any European leader wanting to signal that he is reforming his country's economy does so by claiming alliance to and emulation of the UK. Mrs Merkel is looking for a sober partner who will treat her with respect - and again Gordon Brown fits the bill, given his similar upbringing to hers and similar intellectual bent.

The test of this new alignment might come in the second half of 2008, when France holds the EU rotating presidency, because budget reform will inevitably get discussed. Sarkozy has hinted at CAP reform. The question is whether he can be persuaded to deliver or whether this is merely grand talk in the Sarkozy style. Sarkozy isn't as close to the French agricultural sector as Chirac was, and his personality lends itself to making startling decisions (and for the French CAP reform would be startling), plus he wants to buddy up with the UK. Germany, the long-suffering paymaster of the EU, is likely to be quietly pleased with reform.

Of course we have been here before - Schroeder and Chirac hated each other at first, and both looked to forge a new alliance with the UK, and there were high hopes that the UK could use this position to force through some changes. Unfortunately Mr Blair shortsightedly threw away all chances of realignment by cheerleading for the Iraq War, pushing the French and Germans back into each others arms again. Lets hope Gordon Brown handles things with a little more finesse.