Sunday, July 30, 2006

Britain can't solve the world's problems

In Prime Minister's Questions on the 19th July, in a response to Ming Campbell, Blair noted that Britain's influence over Hezbollah was "somewhat limited".

He never spoke a truer word. In fact Britain has zero influence over any of the players in the Middle East: Hezbollah, Lebanon, Israel, Syria, Hammas, Egypt, Iran, the USA.

Yet Blair has faced a storm of criticism over Lebanon, all of which assume that he has enormous influence over all the parties and is deliberately choosing not to exercise it.

Yet if you examine what Blair has actually said, he's been very reasonable. He's called the situation in Lebanon "a catastrophe", and called for everyone to "calm down" and that "It's got to stop on both sides". There's nothing exceptional in that. But the press is up in arms about it for two reasons - he's talked about both sides being at fault instead of just condemning Israel, and he's been photographed with Bush (cardinal sin). And underlying it all is the assumption that if only he tried, he could make Bush make it stop.

This is nonsense: he has no more influence over Bush than France or Germany, or indeed me. Even Thatcher wouldn't have been able to move Bush (she was lucky in that Reagan was an affable man, amenable to suggestion), indeed there is no reason to suppose that she would have even tried.

This notion that Britain can solve all the world's ills is dangerous. It feeds into the belief in the muslim community that we are a world power, still an Empire, and that we could solve the problems in the middle east, but are choosing not to and some take it further and conclude that therefore we deserve to be bombed. They are encouraged in this belief by the press, and by parties like Respect and even the Lib Dems, addicted as they are to noble posturing with an eye to getting a "Lebanon bounce" in the polls.

The truth is that we are merely a medium European power, we haven't controlled the world since Empire collapsed some forty years ago. We cannot "make" the rest of the world do anything. British muslims, British jews, indeed Brits in general should come to terms with this and concentrate on things we can do, such as improving the lot of Brits at home, whether they are muslims, jews, christians or atheists. By all means hold the government to account for education and housing in Tower Hamlets, but excoriating the government because they haven't made the guns fall silent in Israel-Lebanon? Get real, our government hasn't got the power to do it. All responsible people should be working to ensure that people see things as they really are. Because if people persist in delusions about Britain's alleged influence over the world, the more likely it becomes that we'll see another event like 7/7.

Wednesday, July 26, 2006

Was housing responsible for the 1997 general election result?

Tories like to claim that they lost the election in 1997 due to sleaze. According to them, everything in government was going swimmingly and if only the likes of Neil Hamilton and Jonathan Aitken had behaved themselves, they would have won.

This is delusion. They lost the 1997 election because they lost a lot of people a lot of money.

The slowdown that took place in the period 1990 - 1993 resulted in the third worst recession of the 20th century, and left deep scars. In particular, there was a vicious property crash. During the initial stages of the crash people believed that the drop in prices was temporary and would soon be reversed, so they put up with the 15% interest rates that applied in 1990 and voted the Tories back in, in 1992. In any case, some felt they had no choice as they didn't trust Kinnock to sort things out.

But time went on and nearly a decade after the peak in the market, house prices were still falling. According to the Nationwide the average house price reached it's lowest level in 1995 (it had previously troughed at the start of 1993, recovered a little and then plunged again in 1994 and 1995). A year and a bit later, the Tories were kicked out.

I thought I'd illustrate by showing the change in house prices in London from 1988 to 1995.

Price changes in London, from 1988 to 1995.

Average Price

          1988            1995                     
E1 £111,855 £ 72,010 -36% Steepney
E2 £ 80,658 £ 70,133 -13% Bethnal green
E3 £ 88,481 £ 86,269 -2% Bow
E4 £ 89,347 £ 77,110 -14% Chingford
E5 £ 79,244 £ 67,454 -15% Clapton
E6 £ 71,728 £ 51,666 -28% East Ham
E7 £ 69,497 £ 51,441 -26% Forest gate
E8 £ 96,424 £ 65,137 -32% Hackney
E9 £ 79,834 £ 65,071 -18% Homerton
E10 £ 64,831 £ 51,960 -20% Leyton
E11 £ 74,805 £ 66,005 -12% Leystone
E12 £ 72,743 £ 60,835 -16% Manor Park
E13 £ 63,935 £ 45,875 -28% Plalstow
E14 £121,729 £ 76,965 -37% Poplar
E15 £ 66,949 £ 47,655 -29% Stratford
E16 £ 71,207 £ 44,701 -37% North Woolich
E17 £ 66,885 £ 56,229 -16% Walthmanstow
E18 £ 89,053 £ 74,760 -16% Woodforrd
SE1 £ 84,712 £ 86,777 2% Southwark
SE2 £ 60,705 £ 51,552 -15% Abbey wook
SE3 £110,009 £ 91,978 -16% Blackheath
SE4 £ 71,175 £ 58,508 -18% Brockerly
SE5 £ 91,696 £ 95,027 4% Camberwell
SE6 £ 73,931 £ 63,182 -15% Catfrod
SE7 £ 72,669 £ 69,859 -4% Charlton
SE8 £ 70,171 £ 56,656 -19% Depford
SE9 £ 88,586 £ 72,842 -18% Eltham
SE10 £109,023 £ 90,617 -17% Greenwich
SE11 £107,695 £ 89,279 -17% Kenington
SE12 £ 78,779 £ 70,014 -11% Lee
SE13 £ 71,095 £ 61,565 -13% Lewisham
SE14 £ 75,195 £ 56,585 -25% New Cross
SE15 £ 74,480 £ 57,896 -22% Peckham
SE16 £ 90,481 £ 77,725 -14% Rotherhyde
SE17 £ 81,681 £ 66,449 -19% Walworth
SE18 £ 64,781 £ 53,108 -18% Woolwich
SE19 £ 71,505 £ 59,180 -17% Norwood
SE20 £ 65,283 £ 57,741 -12% Anerly
SE21 £ 88,365 £113,095 28% Dulwich
SE22 £ 74,459 £ 72,835 -2% East Dulwich
SE23 £ 74,539 £ 65,878 -12% Forest Hill
SE24 £ 91,261 £107,809 18% Herne Hill
SE25 £ 66,173 £ 52,403 -21% South Norwood
SE26 £ 72,065 £ 59,202 -18% Sydenham
SE27 £ 74,806 £ 64,903 -13% West Norwood
SE28 £ 59,946 £ 41,740 -30% Thamesmead
SW1 £155,444 £143,949 -7% Pimlico
SW2 £ 73,355 £ 75,317 3% Brixton
SW3 £179,108 £286,283 60% Chelsea
SW4 £104,969 £101,298 -3% Clapham
SW5 £123,264 £150,934 22% Earls Court
SW6 £125,794 £154,992 23% Fulham
SW7 £202,467 £309,205 53% South Kensington
SW8 £ 79,711 £ 75,780 -5% South Lambeth
SW9 £ 79,461 £ 78,125 -2% Stockwell
SW10 £138,141 £149,483 8% West Brompton
SW11 £112,650 £122,419 9% Battersea
SW12 £ 94,880 £101,541 7% Balhan
SW13 £151,440 £213,998 41% Barns
SW14 £145,167 £160,891 11% Mortlake
SW15 £116,233 £133,784 15% Putney
SW16 £ 78,829 £ 71,502 -9% Streatham
SW17 £ 78,376 £ 81,292 4% Tooting
SW18 £ 99,452 £ 93,966 -6% Wandwoth
SW19 £ 94,504 £104,880 11% Wimbledon
SW20 £119,287 £123,355 3% West Wimbledon
W1 £186,261 £160,324 -14% West End
W2 £141,258 £137,045 -3% Bayswater
W3 £ 99,658 £ 92,276 -7% Acton
W4 £112,954 £141,164 25% Chiswick
W5 £119,393 £104,85 -12% Ealing
W6 £113,409 £106,397 -6% Hammersmith
W7 £ 86,619 £ 82,690 -5% Hanwell
W8 £178,362 £252,656 42% Kensington
W9 £113,235 £129,276 14% Maida Hill
W10 £ 99,949 £102,227 2% North Kensington
W11 £147,168 £202,748 38% Notting Hill
W12 £ 96,080 £107,936 12% Shepards Bush
W13 £104,843 £108,235 3% West Ealing
W14 £103,523 £115,983 12% West Kensington
NW1 £128,027 £118,038 -8% Camden
NW2 £ 94,768 £ 82,839 -13% Criklewood
NW3 £136,916 £162,687 19% Hampstead
NW4 £112,462 £ 97,307 -13% Hendon
NW5 £111,719 £137,997 24% Kenish Town
NW6 £103,487 £100,780 -3% Kilbourn
NW7 £114,286 £ 91,416 -20% Mill Hill
NW8 £130,556 £164,265 26% St Johns Wood
NW9 £ 90,753 £ 73,471 -19% The Hyde
NW10 £ 81,750 £ 69,790 -15% Willesdon
NW11 £152,377 £144,263 -5% Golders Green
N1 £126,169 £118,018 -6% Islington
N2 £115,475 £130,491 13% East Finchley
N3 £113,428 £109,560 -3% Finchley
N4 £ 83,772 £ 86,198 3% Finsbury Park
N5 £116,772 £109,871 -6% Highbury
N6 £128,605 £169,553 32% Highgate
N7 £ 97,678 £ 86,880 -11% Holloway
N8 £ 92,203 £101,196 10% Hornsey
N9 £ 75,355 £ 58,552 -22% Edmonton
N10 £108,290 £106,685 -1% Muswell Hill
N11 £ 89,087 £ 80,152 -10% New Southgate
N12 £104,052 £ 95,928 -8% North Finchley
N13 £ 92,338 £ 70,766 -23% Palmer green
N14 £131,327 £112,201 -15% Southgate
N15 £ 73,075 £ 55,931 -23% South Tooting
N16 £ 82,812 £ 81,106 -2% Stoke Newington
N17 £ 72,228 £ 54,282 -25% Tottenham
N18 £ 78,221 £ 56,145 -28% Upper Edmonton
N19 £102,708 £ 98,869 -4% Upper Holloway
N20 £130,108 £117,172 -10% Whetstone
N21 £127,239 £114,728 -10% Winchmore Hill
N22 £ 80,880 £ 72,934 -10% Wood Green

Only a few wealthy places escaped the crash - Chelsea, Kensington etc. It's not surprising that Labour won London in 1997 (apart from the few Tory strongholds like Chelsea and Kensington). This was replicated all over the country.

According to this BBC graphic, showing an analysis of the 2005 election, Labour still wins amongst home owners with mortgages.

The figures were as follows (1997 result in brackets):

Labour 39%(41%)
Tory 30%(32%)
Lib Dem 23%(19%)
In hindsight it was a stroke of genius on Gordon Brown's part to make the Bank of England independent, as this restored confidence in the houseing market. As long as the economy continues to grow and there is no large spike in inflation and interest rates, house prices should not fall. And as long as house prices do not fall, Labour stands a good chance of being re-elected (on the grounds that people are extremely reluctant to ditch a good manager of the economy for an unknown).

Monday, July 24, 2006

A Politician Got it Right

Concerns had been raised about the safety of the Snatch Land Rover, used in Basra and attacked by road side bombs.

Michael Smith takes up the story in the Times:

The day after the articles appeared, Des Browne, the defence secretary, stood up in parliament and said that while he accepted that Snatch had been the right vehicle for use in Basra’s narrow streets, the advent of the new roadside bombs meant that things had changed. “The weapons that the terrorists are using have changed radically. I have seen that that is a serious issue, and have asked for a review.”

The cynics among us thought that a very good way of silencing the critics. It always works. The review into this that, or virtually anything, goes on and on. Inquiries will be met with the response that officials are still working on it. Eventually everyone will forget about it, until another soldier dies of course, and then it will emerge, among much hand-wringing, that the review found there was simply no alternative but to use Snatch.

........But in the case of the Snatch Land Rover, something astonishing happened. The review not only took place, it took place “urgently”, reporting in near record time. Last week, I was tipped off that the MoD was about to announce a big order for the South African built RG31 armoured patrol vehicle, which was said by campaigners, wrongly as it turned out, to be virtually immune to the new roadside bombs.

Attempting to stand up the story with the MoD, I was surprised to be told by one official that they weren’t going to buy the RG31, “because it isn’t good enough”. They were going to buy the Cougar, which has had impressive results when used by the US Marines in Iraq. But even that wasn’t good enough, they were going to add extra armour.

There had to be a downside to this. There wouldn’t be any more money from the notoriously frugal Treasury, so something else would obviously have to go. Some other vital piece of equipment – the lack of which would cause untold problems for British troops - would be axed. What was it? To my utter astonishment, I was told that no piece of equipment would be lost. Des Browne had gone to his mate the Chancellor and persuaded him to stump up the cash.

It was all far too good to be true. But you can always rely on the British defence procurement system to mess things up. After all, the Cougar is built in the US. The system demands that if we decide something American is the best bit of kit around, the one thing we mustn’t do is buy it straight off the US manufacturer. The politicians need jobs from their constituents. So we have to waste millions of pounds setting up our own production lines, to produce the paltry number of vehicles, or aircraft, or widgets our forces are going to get at four or five time the cost of buying from America, thereby ensuring that, by the time the things are delivered, they are no longer any use.

But no, we are going to buy them direct from the US manufacturer, and as a result they are going to be ready by November. “Browne accepted the arguments in favour of the Snatch Land Rover but ruled that the new range of IEDs meant the situation had changed,” the source said. “He insisted that the new vehicle was bought as fast as possible without the usual procurement crap.”

I’m stumped. I don’t know what to say. Here was a real matter of life and death and a politician got it right, belatedly of course, but Des Browne has only just been appointed defence secretary so he can’t be blamed for the previous failings. Come to think of it, two politicians actually got this one right, because Gordon Brown stumped up the £40m cost of paying for the things.

It's nice to see stories like this in the press. Of course our government tries very hard all the time to get it right - but it's seldom acknowledged in the press.

Saturday, July 22, 2006

History Repeating Itself?

From the Washington Post:

The 1978 Operation Litani provided a clear lesson in the rules of unintended consequences. It was a swift success militarily; Israeli forces pushed across the border and moved about 20 miles north to the Litani River without serious opposition from primarily ragtag Palestinian defenders. They weren't native to the area or fully familiar with it -- they'd moved to it in the early 1970s to escape a crackdown in Jordan.

Under U.S. and other international pressure, the Israeli forces soon withdrew. But the Israeli defense minister at the time, Ezer Weizman, who later became president, ordered relentless bombing of the Lebanese border hills to drive out the civilian population. U.S. officials complained of civilian casualties, but the attacks continued.

The idea, Israeli officials explained, was to create a free-fire zone where it could be assumed that anybody moving around was a Palestinian guerrilla and a fair target for Israeli warplanes or artillery fire. The result over the next year, however, was a long list of civilian deaths -- farmers carrying tobacco crops to market, families picnicking on jagged hillsides and villagers caught in their homes when stray bombs landed.

Eventually, increasing numbers gave up and fled to Beirut. These families, most of them Shiite Muslims, took up residence in what was then undeveloped land between southern Beirut and the international airport -- and now is the teeming Shiite suburb known as the Dahiya.

Its exploding young population, sons of those chased from southern homes, became the base of a new radical organization born several years later. Inspired by the 1979 Iranian revolution, it eventually took the name Hezbollah, or Party of God.

..............More than two decades later, Hezbollah has grown into an extensive political force in Lebanon, backed by Shiite Muslims who have become the largest religious community in the country. Hezbollah candidates run for elections. Hezbollah social service agencies provide health care and schooling for poor farmers. Hezbollah television, al-Manar, broadcasts technically slick and virulently anti-Israeli programs into Lebanese homes.

Not least, a Hezbollah military wing, not the national army, fought year after year against Israeli troops who remained after 1982 to occupy a border enclave. Politically worn out, the Israeli occupation forces finally pulled out of Lebanon in 2000, a departure that has gone down in local historical narrative as a Hezbollah victory.

...............Driving Hezbollah out of southern Lebanon, Israel's declared goal in its current campaign, may prove more difficult than the Israelis expect. Hezbollah is at home in the rough-hewn hills that overlook Israel's Galilee region. "When I hear the Israelis talk about getting Hezbollah out of southern Lebanon, I have to laugh," said a veteran Middle East official and analyst who requested anonymity because of his sensitive position. "They live there."

In addition, he pointed out, clearing the border would not remove the danger of attacks on northern Israel. During Operation Litani and the 1982 invasion, he said, a secure border zone was enough to prevent attacks by the short-range rockets of the time. But today that kind of safety is no longer guaranteed. "There are missiles now with a range of 20, 30, 40 kilometers," he added.

....................Suggestions that the Lebanese army take command of anti-Hezbollah operations in the border hills seem unrealistic, they said. At best, the Lebanese army could take to the field once a settlement was reached, so as to symbolize national authority and to police arrangements agreed to by Hezbollah and other Lebanese political forces, they explained.

But the largest obstacle to removing Hezbollah may be its place in Lebanese society. As a political force, it represents the country's largest religious community. As a military force, it has stood up for Lebanese under attack while the army stood aside.

Friday, July 21, 2006

UK growth accelerates in the second quarter

From the FT:

The UK economy grew at its fastest pace in two years in the second quarter, driven by robust service sector growth, according to official data released on Friday.

In its preliminary calculation of gross domestic product, the Office for National Statistics said output expanded by 0.8 per cent between the beginning of April and the end of June, compared with the previous quarter. Against the same period a year ago output grew by 2.6 per cent.

The numbers suggest the UK economy is growing above its long-term trend rate.

..............The main driver of growth was the service sector, which grew by 1 per cent in the second quarter and which accounts for about 74 per cent of the nation’s economy. Within services the distribution, hotels and restaurants sector was particularly strong, growing by 1.2 per cent, a surge the ONS said was caused by accelerating activity among retailers. The contribution of the High Street to growth reflects the World Cup related shopping boom and a further football effect could be seen in sturdy growth in public houses and bars as fans fuelled their support then drowned their sorrows.

...............“Above-trend growth in the second quarter will boost expectations that the Bank of England could raise interest rates as early as August,” said Mr Archer [of Global Insight]. ”However, given the significant uncertainties about the longer-term growth outlook and the current continuing lack of evidence that high energy prices are having marked second-round inflationary effects, we suspect that the Bank of England will continue to hold fire on interest rates in the near term at least.

Wednesday, July 19, 2006

England v Scotland: Legacy of ancient apartheid?

Interesting article from Bloomberg:

The modern-day English gene pool contains 50 to 100 percent Germanic Y-chromosomes, says Mark Thomas, a geneticist at University College London. The reason can be traced back to a medieval segregation system, set up some 1,600 years ago to keep Anglo-Saxon overlords separate from the native Celts, Thomas says in a new study, co-authored with German academics.

The apartheid theory explains why the English don't share more genes with their Scottish and Welsh compatriots, even though Anglo Saxons came to Britain in fairly small numbers, Thomas said in a telephone interview.

``We wrote a computer simulation to see if it could actually explain the discrepancy,'' he said. ``We found that apartheid is just the perfect explanation.''

The 10,000 to 200,000 Anglo Saxons who began coming to Britain in the fifth century used their military and economic might to force the majority Celts into a system of servitude, similar to the one that recently ended in South Africa, Thomas said.

``We believe that they also prevented the native British genes getting into the Anglo-Saxon population by restricting intermarriage,'' he said. The Anglo Saxons' superior social standing allowed more of their children to survive into adulthood, populating the land with people who speak a primarily Germanic language, he said.

The English have the closest genetic ties with people living in Friesland in the northern Netherlands, Thomas said.

It's possible that the English nationalism we are currently seeing is a remnant of a memory of ancient apartheid - which is why it's even more important not to succumb to it and not to let the UK break up.

Tuesday, July 18, 2006

The Oil Price and Fuel Duty

I love stats, so I'm going to begin with some figures from the AA. Unleaded petrol was introduced in 1988, and here is fuel duty as a % of the pump price for unleaded petrol over the years:

1988 61.10%
1989 59.25%
1990 58.65%
1991 61.55%
1992 65.55%
1993 67.13%
1994 69.64%
1995 73.17%
1996 76.10%
1997 77.14%
1998 81.48%
1999 81.14%
2000 75.00%
2001 75.33%
2002 75.26%
2003 75.26%
2004 73.18%
2005 68.89%

As you can see, the burden on the driver has been dropping under Labour, due to the Chancellor coming off the fuel-price escalator in 2000, and then keeping the duty frozen since 2003. He has clearly concluded that the petrol price is sufficiently high enough already to encourage conservation, and that the burden of fuel tax should fall in real terms as the oil price rises.

In this he has the support of industry (especially distribution) and also the general support of voters. UKPolling made the following comment:

A YouGov poll for the Economist partly reprised questions that were last asked in June 2005. Asked about some suggested policies to reduce the UK’s carbon emmissions, the figures suggested a very slight drop in the already low support for higher taxation of petrol in order to invest more in public transport (only 27% of people supported this, compared to 31% last year). 45% of people supported higher taxation of aviation, almost unchanged since last year. .

The oil price is now circa $76 per barrel, and flirted with $80 per barrel last week. It's possible that it might go to $100 or higher if the madness in the Middle East does not cease.

What should the government do if the price reached $100? I think they should either make an outright cut in fuel-duty, or make fuel-duty a function of the oil price, so that if the price rose above $100, duty would automatically fall, but could rise back to it's original level if the oil price fell, so as to keep the price at the pump stable. This would protect the economy from the ill-effects of the oil price spike and would have broad support from the public. The Lib-Dems and the Green Tories would protest - but let them. The green vote in Britain is a minority, let the two opposition parties squabble over this tiny cohort. In any case, the growth in CO2 emmissions is mainly coming from airline fuel and households, not cars. Varying the fuel-duty on petrol would of course keep our demand stable and put pressure on the Americans to cut theirs in order to affect the oil price - but this is only fair as the Americans have been free-riding on European self-restraint over fuel for decades.

Monday, July 17, 2006

UK Pension Funds moving into the Black Again

Very interesting piece in the Times about pension funds:

WHISPER it quietly, but the pension deficit problem is receding fast. Official figures this week show Britain’s employers are shovelling cash into their defined-benefit schemes in unprecedented dollops.

Partly this is due to regulatory chivvying. Under the new regime, employers normally have to put in place plans to plug their deficits within ten years. Partly, it is due to the lashings of cash thrown off by many blue chips. Without a murmur, HSBC has been able to find £1 billion to boost its pension fund, Royal Bank of Scotland £750 million and Lloyds TSB £200 million.

...........Last year just five of Britain’s 100 biggest listed companies were able to report a pension fund surplus. So long as there are no adverse market movements in the coming months, dozens more will join them. Alliance & Leicester, 3i, Enterprise Inns, British Land, Smiths Group and United Utilities are among those tipped to cross back into the pensions black. Of course, there are still many firms struggling with serious deficits, but on an aggregate level, the problem has eased.

However, the move towards and beyond equilibrium raises the question of whether we may ultimately see the whole ghastly cycle repeat itself. Many factors contributed to the pensions crisis, but the seeds were sown in the 1990s when companies understandably declined to pay into pension funds that were already comfortably in surplus. Taking a “pension fund holiday” seemed only reasonable, especially as contributions into funds heavily in surplus were penalised by the taxman.

Are we going to see a repeat of that problem? Will managements refuse to build up cushions in their schemes? After all, under the new regime it is virtually impossible to claw back contributions, however large a surplus were to become.

The problem may not arise at some employers because of their changing attitude to risk. According to independent pensions consultant John Ralfe, the moment schemes get into surplus in future, their sponsoring employers will want to lock in certainty by pulling out of equities and buying safe bonds. The chances of a surplus disappear, but so do the risks of a deficit. The ageing membership of defined-benefit schemes will also push them deeper into bonds, leading to less volatility.

Let's hope the cycle does not repeat - it would be bad for pensioners and bad for the companies themselves. But it requires everyone to think long-term, rather than short-term.

Friday, July 14, 2006

How the Americans covered the saga of the Nat West/Enron three

So how did the Americans cover the story of the Nat West Three that has been engulfing everything here? Here's the revealing thing: it seems to have by-passed them. The New York Times ignored it entirely. The Washington Post carried a piece from Reuters, which reported it in neutral terms. The opposition to the extradition was described as follows:

British Prime Minister Tony Blair has defended the extradition treaty and sought to calm angry members of parliament by telling them U.S. prosecutors would not oppose bail for the three.

Critics of the treaty have say it is unfair because the United States does not have to provide evidence to support extradition requests from Britain, but Britain must face a more stringent standard to seek extraditions from the United States.

BusinessWeek was equally bland:

The case has caused outrage in some quarters

BusinessWeek at least mentioned that the treaty had not been ratified in the US senate - but revealingly did not mention why.

So are the Americans indifferent to anti-Americanism in Europe? Not quite. Newsweek devoted a major article entitled Will Gitmo Reversal Help Bush in Europe? where they point out that:

What’s interesting about Tuesday’s announcement [that the Geneva Conventions now apply to Guantanamo] was the timing. It wasn’t just the Supreme Court decision or pending hearings in Congress on the issue of military detainees. On Wednesday morning, Bush left the White House for a five-day visit to Germany and Russia, where he will attend the G8 summit. The trip is partly aimed at shoring up the United States’ relationship with its international allies, many of whom have expressed reservations about America’s treatment of terror suspects.

One of the president’s newest allies is German Chancellor Angela Merkel, who is scheduled to meet with Bush in Germany on Thursday. Narrowly elected last fall, Merkel has visited the White House twice this year, in part because she and the president “really hit it off” in the words of one Bush adviser. While Merkel has worked to strengthen what has been a strained relationship between Germany and the United States in the wake of the Iraq war, she has also made no secret of her desire to see Guantánamo Bay closed and has pressed Bush repeatedly on the issue.

Clearly getting on-side the Conservative leader of Germany is important to them and occupying all their thoughts. And they are anxious about Germany, because they know that anti-Americanism there comes from both the right as well as the left, leaving the Chancellor contrained and having to tread very carefully indeed, despite her personal views.

But they are taking Britain for granted rather. The saga of the Nat-West three has caused a surge of anti-Americanism in the traditionally right-wing City and amongst the middle-class Telegraph/Mail reading Tory public. Add that to the existing anti-Americanism from the left over Iraq (Labour abstainers and Lib-Dem supporters), and you have a dangerous convergence of opinion.

Perhaps the Americans think that it's unlikely that the Tories will come to power so their opinion doesn't count - but the neutral centre represented by Labour isn't large enough to counter the mass of anti-Americanism from the right as well as the left. The Americans need to pay attention and ratify the treaty or even a friendly Labour PM won't risk going anywhere near them in future - in other words we will become the new Germany.

Wednesday, July 12, 2006

Small Businesses fail to take advantage of R&D Tax Credits

According to this article in Business Week, small businesses in the UK are failing to take advantage of R&D tax credits.

Small businesses are missing out on millions of pounds of tax relief designed to encourage research and development in the UK, a report suggests.

Less than half (45 per cent) of eligible small and medium-sized enterprises (SMEs) are taking advantage of the tax breaks, and almost a quarter (24 per cent) of respondents said they are unaware the incentives exist, according to research by Deloitte.

David Cobb, head of R&D tax services at Deloitte, said in a statement it's ironic that businesses with the most to gain are missing out.

Any company developing new products, materials, processes or services could be eligible for the tax relief, Cobb added.

R&D tax incentives work by reducing corporation tax payable for tax paying companies.
The majority (80 per cent) of companies that have claimed no tax breaks employ fewer than 50 technical staff, which suggests the scheme is failing to reach SMEs.

The research, which questioned 563 companies, found regional differences in the number of SMEs making claims. Less than 10 per cent of the businesses questioned in the Midlands are applying for tax relief, with only one-third of those in the North East and South West doing so. Companies in London, Northern Ireland and Scotland appear to be the most switched on, with 55 per cent of eligible companies making a claim.

Cobb said the process of applying for relief is fairly straightforward.

Perhaps the Treasury could do more to publicise the R&D credits, and perhaps councils in the regions with poor take up could also promote this.

Monday, July 10, 2006

The Pound passes the Yen as a Reserve Currency, showing International Endorsement of the British Economy and the Labour Government

This is an excerpt from an article in Bloomberg:

July 10 (Bloomberg) -- Central banks from Oman to the Ukraine are increasing their holdings of British pounds, contributing to the currency's biggest first-half gain against the dollar in 16 years.

National banks boosted holdings of pounds to $115 billion, or 4 percent of total reserves at the end of March, the most since the International Monetary Fund began publishing data in 1999. The increase is helping Britain's economy by holding down government bond yields.

..........The pound's share of reserves has risen from 3.7 percent at the start of last year and 2.7 percent in March 2004. Britain's currency surpassed the yen in December as the third-most popular after the dollar, which makes up 66.3 percent and the euro, at 24.8 percent. The IMF includes data from 114 countries that hold $4.4 trillion worth of foreign currencies.

........Demand for pounds is being propelled from central banks, mainly in developing countries.

The pound is attractive in part because of Prime Minister Tony Blair's success in slowing inflation and spurring growth. Consumer price gains have averaged 1.4 percent since May 1997, when Blair took office. The inflation rate averaged 4 percent in the five previous years. Economic growth of 2.3 percent in the first quarter was faster than the average for the 12 nations sharing the euro.

Central-bank purchases of the pound reduced 10-year U.K. bond yields by as much as 150 basis points from June 2004 through the end of last year, said Gertjan Vlieghe, an economist at Deutsche Bank who worked at the Bank of England for seven years. ``We have seen a big increase in central bank buying of sterling, and those purchases have helped keep yields low.''
U.K. 10-year bond yields fell to 4.64 percent last week from 4.70 percent the week before. In the U.S., 10-year Treasury notes yield 5.13 percent

This is good news - a strong pound keeps the cost of imports low, and hence supresses inflation, and therefore interest rates. It's also a sign of international recognition of how well Britain has done since Labour came to power.

Sunday, July 09, 2006

Total Taxes as a % of GDP

In one of my previous posts. I alluded to the fact that while Labour had changed the mix of taxes, the total tax take as a % of GDP had remained broadly stable, give or take a % point.

FinFacts had an interesting article showing the total tax take as a % of GDP for EU member states over the last decade.

I thought people might be interested in the UK figures:

Total taxes as a % of GDP

1995 36.7%
1996 36.3%
1997 36.8%
1998 37.8%
1999 38.1%
2000 38.7%
2001 38.5%
2002 37.0%
2003 37.0%
2004 37.7%

This belies the Tory tabloid rant about overall taxes rising. Some taxes have risen, but others have been cut. Generally when Labour cuts taxes, it's for the poor. And total tax as a % of GDP has actually been falling since 2001. I expect this will continue to be the pattern while Labour is in power, it will fluctuate a bit with the business cycle, but will remain broadly stable.

Saturday, July 08, 2006

The Times Reviews "tacky", "offensive" Tory Summer Party

Alice Miles in The Times reviews the Tory Summer Party. Here's what she thought:

I HAVE been trying to decide whether the Conservative Party’s summer ball on Monday night was merely tacky or actually offensive. Young waitresses in hotpants and bikini tops handed out champagne; Eastern European models paraded during dinner in skimpy swimming costumes under the pretence of performing a fashion show, to the delight of ageing Tory luminaries.

But as the marketing manager of Veuve Clicquot, who sponsored the party, confirmed to a reporter: “Let’s face it – fashion isn’t the main reason. How many swimming costumes will they sell? It’s a cheap way to get pretty women to look at, isn’t it?” The presence of two young men in swimming trucks didn’t even come close to covering up the fact that this was an evening for wealthy Conservative supporters who had paid £400 a ticket to leer at pretty young girls wearing barely any clothes. And not only at the models, apparently: the after-dinner auctioneer hailed one bidder as “the woman with an almost perfect bosom”.

Somebody pinch me. Which generation, which world, is this new Conservative Party from? And what was David Cameron, the guest of honour, thinking of to allow the event in his name? If Tony Blair hosted a bash like that, or Gordon Brown (the thought of it!) they would be flayed alive by female backbenchers and Labour Party activists, and rightly so.

...............true, the evening may have helped to shed the reputation of the Tory party (and its parties) as stuffy, bouffanted and ballgowned. But to replace it with the Tamaras (Beckwith and Mellon), guests in skimpy designer gear and a DJ flown in from a club in St Tropez that caters to the international jet set; and then to go on to dance at the private nightclub Boujis, the Sloaney haunt of Princes William and Harry? Is this the new inclusive Conservative Party, reaching out? And this in the week that Mr Cameron was placed at the top of Tatler magazine’s annual list of top party guests.

................Even some guests at the party were made to feel uneasy. One, a fully signed-up Cameroon, told me the evening had made him uncomfortable because he was neither rich nor beautiful enough. So much for inclusivity.


Friday, July 07, 2006

Tories wish to leave the EU

Don't flame me from quoting the Sun, but they have a story today from a Tory MP, Graham Brady:

A SENIOR Tory yesterday raised the prospect of Britain quitting the EU under a future Conservative government.

Shadow Europe minister Graham Brady said we could not remain a member if the EU continued to block free trade with other countries.

He told a Westminster seminar: “Can Britain afford to remain in an EU that is pulling up the drawbridge? No we can’t.”

Of course this is baseless nonsense - the EU is of course a free trade zone of 450 million people, and has a large number of no-tariff and free-trade agreements with countries as far away as South Africa and Brazil, through the Preferred Partnership program and the Most Favoured Nation Program. This is in contrast to the USA, which still applies tariffs to NAFTA countries Canada and Mexico, (having made no progress eliminating them since Clinton left office). The EU's external tariffs for non MFN or PP countries, are also the lowest in the world.

Of course Mr Brady may not know this (Tories being notoriously bad at doing their homework - look how Alan Duncan was unaware of how many seats they had in Parliament). It's also likely that he is just casting round for an excuse to get Britain out of the EU.

It gives a clear picture of the bunker mentality of the Tory party. They wish to withdraw from the EU, they look to be abandoning Unionism and dealings with Scots and Welsh (whom they regard as second-class citizens) and moving towards the break-up of the UK. What's next, withdrawal from the north of England?

Thursday, July 06, 2006

Wednesday, July 05, 2006

Are the Tories the SNP of England?

The little England tendency in the Tory party originally appeared with the advent of Margaret Thatcher, and it's got more and more pronounced with time. Note how Tory supporters caricature the Scots (they are all on benefits, they are subsidised by the English) as part of affirming their English identity, in a similar way that the SNP caricatures the English (oppressors of the Scots, thieves who've stolen Scottish oil) to affirm Scottish identity - i.e. both define themselves against their ancient opponents.

Then add to it that the seats the SNP hold in Scotland are former Tory seats of old ; Angus, Perth, North Perthshire, Moray, Banff, Galloway and Upper Nithsdale - wealthy, centre-right places. Both the SNP and the Tories appeal to the nationalists in their respective communities in Scotland and England.

The add to it Alan Duncan's chauvinistic comments saying "I'm beginning to think it is almost impossible now to have a Scottish prime minister" - i.e. Scots are second-class citizens of the UK, who should be barred from the top job - confirming the prejudices of the SNP have about the English - and you have two perfect mirror-images.

The question is, now that the Tories have conceded that they can never win in Scotland and Wales (and perhaps subconciously do not want to win there because they despise these people), are they going to continue to bother to field candidates for the Scottish and Welsh assemblies, and for Scottish and Welsh MP's to Westminster?

Tuesday, July 04, 2006

Monday, July 03, 2006

Why Labour should embrace the idea of an English Parliament

First, some statistics. Here's the results of the last general election (2005), broken down by region:


Labour 286 seats
Tory 194 seats
Lib Dem 47 seats
Respect 1 seat
Ind 1 seat


Labour 41 seats
Lib Dem 11 seats
SNP 6 seats
Tory 1 seat


Labour 29 seats
Tory 4 seats
Lib Dem 3 seats
Plaid C 3 seats

Labour gained a clear overall majority in every single region. Therefore every single region is governed by the party they elected.

In terms of popular vote, Labour got 58,000 less votes in England than the Tories, due to turnout being low in safe Labour seats and high in Tory safe seats. But if Bromley and Chislehurst is any guide, this is about to change. It takes just a handful of Bromleys to cancel the small Tory lead in the popular vote. Remember too that in 1997 and 2001, Labour got 2.6 million and 1.35 million more votes in England than the Tories.

The myth that the Tories "have a majority" in England came about because some in the Tory party seized on the tiny popular lead over Labour in England (out of some 20million votes) to salve their egos after they got thrashed for the third time. This myth has grown and grown amongst people who haven't looked at the figures and think the Tories "won England" and that this is an easy way to steal power even though they lost the general election.

If you had an English parliament on a proportional representation basis, as you do on Scotland and Wales, the system of tactical voting would unravel. No longer would Lib Dems be able to claim "only we can win here". The Lib Dem vote would collapse, and the Labour vote would rise. More importantly the Tories would never get an overall majority - they'd be forced into coalition mode and to do that, they'd have to move to the centre and abandon their tax policies and some of their other daft stuff.

The Prime Minister, being responsible for the whole of the country and for foreign policy could still come from any region, as would the Chancellor, being responsible for the whole economy.

The Tories are far too focused on the short-term issue of Gordon Brown's leadership. In truth, the top of Labour is dominated by Scots because of the legacy of the 1980's when most Labour MP's entered parliament as representatives of Scottish constituencies. English Labour MP's surged into the house in 1997, and they are 1-2 generations younger than the leadership. The next generation of Labour leaders will come from this group - David Milliband, Ed Balls, John Denham, Hilary Benn, Englishmen all.

A Gordon Brown government could legislate for an English Parliament during his premiership, at the end of which the English Labour successors to Brown would be ready to take over.

The Tories are so distracted by Gordon Brown becoming leader (a short-term issue), that they don't realise they are making a long-term strategic mistake. They are in effect conceding that they will never gain an overall majority in Britain and by bringing up the English issue, they are conceding defeat to us for all time. There is a natural centre-left majority in England, and Labour are already winners in England. Labour has nothing to lose and everything to gain - the Tories could be forced into opposition, with no prospect of a coalition, for most of this century in an English parliament, especially if they persist in continuing with mad ideas such as anti-europeanism and other nasty party stuff.

Saturday, July 01, 2006