Shocked by what is happening in London

Back on December 10th, I wrote a post titled Why have the Con-Dems lost control of the street?, where I made this comment:

When the first student protest got violent, the feeling was that the Met had been caught off guard - they simply didn't have enough police on hand to deal with it. But now it's the fourth protest, and they still haven't got a grip. Have they cut their budget so much they can't afford the overtime for extra officers? Are the police deliberately holding back in order to make a protest of their own?

Yes, we have a careless Tory government (what's new?), headed by a prime minister who sends for his personal tennis coach to be flown out to Tuscany while London riots. Yes, there is a lot of tension on the streets as the under-classes feel the pinch of cutbacks in education allowances, high inflation and no prospect of work thanks to Osborne taking an economy growing at a fast 1.1% per quarter at the election and hammering it wilfully into the ground.

It still does not add up to a burning capital city, unless you throw in a third toxic element - and that is the Met. They've handled it astonishingly badly, they failed to call for swift assistance from outside police forces, they've messed up at every turn.

The chattering classes are now nodding and saying "well they won't cut 2000 officers from the Met now, will they?".

Leave aside whether you agree or disagree with the cuts to the police force (I think the cuts are a bad idea).

The serious issue is that the police have won their "protest" with their rather unusual strike, where they've worked to rule and watched from the sidelines rather than taking full control of the situation. And at what a terrible cost. I shudder to think they'll feel emboldened to do it again - holding both communities and governments to hostage, because they've discovered they have the power to let the capital burn by simply doing nothing.

The weak Tory leadership and their clown Clegg deputy haven't helped either.

This would not have happened under either Tone or Gord. Tone's antennae would have been twitching on day 1 and he'd have been putting tremendous pressure on all concerned to get a grip. John Prescott would have done his deputy job and been all over the airwaves telling the rioters off (or as someone on twitter put it "I can't help but wonder that if John Prescott was in charge he would be out on the streets punching the hoodie feckers himself"). And in Gord's era, the chief of the Met would have been woken up at 4 a.m. to ensure he was up in time to do his job properly, and he might have been encouraged with a bit of shouting.

The Met wouldn't have dared to allow things to get this out-of-control under the Labour government.

But no one is in the least bit in awe of Cameron, not the rioters, and not the police. So London burns.

So Honest Ed was Victorious!

Let's recap on the past week and a bit:

* the Tories didn't want a judge-led enquiry - Ed forced them to accede to one
* the Tories didn't want the enquiry to start till after the police investigation was over (a few years down the line) - Ed forced them to agree to one starting now
* the Tories didn't want to refer the BSkyB bid to the Competition Commission - Ed kept up the pressure so that there was no was no option but to get the Competition Commission and Ofcom involved
*Finally, Ed arranged for a Commons vote to call on Murdoch to withdraw his bid altogether, and the Tories reluctantly accepted the Labour Whip, causing Murdoch to withdraw his bid. The demise of NOTW is just a bonus on top.

So now the post-mortem - why was Ed Miliband able to respond so quickly to events, leaving Cameron and Clegg in his dust, and as is clear to all observers, quicker than his brother David would have reacted had he been the leader.

It all goes back to the Labour leadership election. None of the newspapers backed his leadership bid, not even the Mirror. There was shock and fury in the media that the Labour electoral college had defied them and gone with their own instincts.

So Ed was beholden to no-one, apart from the Labour party, and could act freely.

Media endorsement is a double-edged sword - even if you know intellectually they are jumping on your bandwagon, a part of you wonders, did I get here because of their help? And of course the media plays on this feeling. Part of the reason why there have been campaigns in the papers in recent weeks against Ed Miliband's leadership is because they feel bereft as they have no leverage over him.

So that explains his ability to just go for it. The rest was skill.

There's something else: Ed Miliband may be what Napoleon referred to as a Lucky General.

During the Iraq war, he was not only not an MP, he was not a Parliamentary aide either - he was at Harvard teaching economics, and not in the loop at all. So that's the luck bit.

Then came the expenses scandal. He came through as one of the saints, with one of the lowest expenses in Parliament, because he only claimed for rent for a two-up-two-down in his constituency plus a bit of electricity. This at a time when both Cameron and Clegg were claiming three times as much. So that was down to innate honesty plus disinterest in money.

And then came the Murdoch hacking scandal - his initial reaction was down to revulsion (minutes after the story broke he summed it up saying "My wife said to me, this is sick, what is going on?", which echoed what everyone else was thinking at that moment. Then the luck bit again - he was not under obligation to anyone in the press, thanks to how things worked out in the Labour leadership election. So he took his opportunity to stand up to Muddoch and take him down, and skilfully played it out to the finish.

If he continues like this, it's a just a series of moves on the chessboard to Downing Street.

Honest Ed v the Dirty Digger

One of the most striking things about News at Ten was the comment from Nick Robinson saying that the Murdoch empire have said that "If Ed Miliband thinks he can win, he's about to be proved very wrong".

Clearly News International do not regard this as a battle between them and the political establishment, or them versus the law of the land, but them versus Ed Miliband.

How sweet of them to personalize this battle. Clearly they are the forces of evil (not to mention the forces of criminality). So if, according to them, Ed is their only opponent, then that means he stands alone on the side of the forces of good and the forces of decency. And I guess they would know who their true opponents are.

This is not the first time that Ed Miliband has been on the right side of a huge scandal. In the expenses debacle, he was one of the "saints", with one of the lowest expenses in parliament. They say that the mark of an honest man is that he does the right thing even when no one is looking.

His core character is decent and his instincts sound. I'm glad he got elected Labour leader.

As for News International - well Labour managed to force the emergency debate in the House of Commons against Tory wishes, and managed to force Cameron into conceding Ed Miliband's request for an enquiry. Now it looks like we might have forced U-turn Dave into delaying the BSkyB takeover. Go Ed!

The Royal Snub to the Labour Party

The huge, and I mean HUGE news is that while William and Kate have invited all the dictators of the world to their wedding (the Crown Prince of Bahrain, King Mswati III of Swaziland, Saudi tyrants and Robert Mugabe's personal ambassador to London), they have deliberately excluded two Labour former PMs (whilst inviting former Tory PMs).

We've had a ton of excuses come out from the palace - that this isn't a state wedding (ah, so the ambassador from Mugabe is William's personal friend, is he? Shades of Edward VIII). And the whole business of "knights of the garter" (how does that apply to Guy Ritchie)?

What is clear is that the Royal Family is breaking with over a century of tradition where the head of state stays neutral, and is deliberately picking a fight with a major political party.

It changes the constitution more than any referendum to change the voting system.

Blair's exclusion is particularly interesting as the only reason we have a monarchy at the moment is because Blair used his political capital to rescue them in 1997. At the time, many of us Labourites shook our heads and wondered at him. Republicanism was riding high, the Labour party was riding high, and Blair was at his zenith. If he'd have withdrawn his support from the House of Windsor, they'd have collapsed.

Looking back, he is probably wondering why he bothered to help them.

One thing is clear - a future Labour PM will view the monarchy as a biased institution that is opposed to our party and our Labour voters i.e. our enemy. When the next royal crisis comes - and it will come - it is unlikely that the next Labour PM will do a Blair. We're more likely to do a Baldwin.

Looks like Osborne is determined to turn the UK into Ireland

In 2006, George Osborne penned a piece for the Times called Look and learn from across the Irish Sea, which he began with the memorable opening phrase,

A GENERATION ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable.

It's still laughable, but he doesn't seem to get it, and today's budget was a continuation of his stated aim to emulate Ireland - he cut corporation tax rates just two months after he hiked VAT on consumers.

He fondly believes that cutting corporation tax stimulates the economy - but as the Irish experience shows, the only thing that stimulates an economy is consumption - preferably by the consumer or but in emergencies, consumption by the state works too. But what has he done? Taken a hammer to the consumer with his threats to people's jobs, VAT rises and petrol rises (albeit backing down by a tremendous penny on petrol), and cut consumption by the state at the same time.

Anyone who runs a business will tell you that in order to survive, you have to sell stuff - which means other people need to buy stuff from you. It's literally that simple and that difficult. If people stop buying, no amount of corporate tax cutting helps - because if you don't make the sales, you don't make the profits, and corporation tax is merely a theoretical notion.

I've never heard of a business saying they will close down if their corporation tax isn't cut by 5%, but I've heard plenty say they have to close because they can't make sales. Forget all the tortured arguments about encouraging people to start new businesses with the corporation tax cut - success in business is more about how the hell you keep a business going, how you sell stuff. Starting the business is the easy bit.

Osborne's decision to heap taxation on individuals and simultaneously lighten them on businesses, actually hurts the economy because it clobbers those who underpin any economy, anywhere - consumers.

We got a glimpse of what is going on in the latest figures released by Sainsburys. Like for like sales increased by just 1% in the 10 weeks to 19th March, down from 3.6% in the previous three months. It will just take a small further tightening of household budgets to tip them into a fall. Sainsburys (and Tescos) have blamed the VAT rise. Will the cut in corporate tax help them? It depends on whether the impact of VAT, high inflation, high fuel prices and high joblessness reduces sales by more than the 5% corporation tax has been cut by. If it does, profits after tax will be down despite the corp tax cut, and their only option is to cut expenses - jobs - which frightens the consumer even more.

Ireland has proved that if you get the the balance between households and corporations wrong, if you expect households to shoulder all the burden and corporations and shareholders none, you end up in a death spiral. Shareholders don't spend enough to keep an economy going, and that's before you factor in the fact that most shareholders are either off-shore or overseas investors anyway. Trickle down economics doesn't work. But that's what has been served up by the Tories today.

The public sector unions should enact a personal spending strike rather than an actual strike

Trade unions have been meeting to consider striking in response to the public-spending cuts, and the Tories have been rubbing their hands in the hopes of stirring hatred towards the unions and trying to turn public opinion against them.

I've got a better idea - instead of the unions striking, they should ask their members to go on a personal spending strike. They should honour their employment contracts, turn up for work, supply the services they are supposed to, and instead focus their efforts in an area they have absolute discretion - how to spend (or not spend) their after-tax take-home pay.

This is essentially a boycott of the economy at large - Stop eating out, stop buying anything other than essentials, save, save, save, and pay off debts (which is rational as they could lose their jobs, Gideon said so).

After all Osborne thinks spending is bad. So public sector workers should stop spending their after-tax pay. How on earth can he object to that?

A good six months of a co-ordinated boycott by all public sector workers (and anyone else who feels like joining in) should see a contraction of the economy which will precipitate a crisis and a general election by the end of the year.

If we are going to have spending cuts, lets have competitive spending cuts. Lets see who can cut their spending the most, the state or individuals, and which group has the biggest effect on the economy. Why should just one group suffer while others make hay? Things should be spread around, both prosperity and misery.

My message to the unions is to not go on strike - ask your members to be prudent and prepare for the job losses by stopping all their personal spending instead.

Economy contracted in Q4 2010

The only people shocked by today's bad figures are Tories.

I'm sure they will rush out to blame the weather - but even if you strip out cold-weather effects, growth would have been non-existent. This is very serious because the contraction happened in Q4, which is the most important trading period of the year. If we can't grow in Q4, when can we grow?

Ed Balls and others pointed out that if you attack the economy while it is still fragile, you are attacking the private sector, which leads to a drop in growth. Especially as most of the "cuts" the government made so far were cuts to contracts held by the private sector.

It was all compounded by Osborne holding his emergency budget in October, just before the important Christmas trading period, when most businesses make most of their profits. He gleefully frightened voters, telling them that he was going to axe public sector jobs - but didn't say which jobs, so that all 5 million public sector voters shut their wallets tight and stopped spending. Which again impacted the private sector.

Osborne can't seem to grasp that economies run on confidence. People don't spend unless they feel confident about their jobs. It's fear that holds economies back, not fiscal policy. And if you frighten the economy into contracting, you end up with a bigger deficit as tax receipts shrivel - ask Ireland, who were running a budget surplus in 2007 and might have ridden out the financial crisis if they hadn't decided to take an axe to their economy at the same time.

What's just happened is a vote of no confidence in Osborne by consumers.

Oldham East and Saddleworth by-election

So it turned out to be a comfortable victory for Labour, with a majority greater than Phil Woolas got in 1997 at the height of Labour's New Dawn.

The significance of this election was that it was the first since the early 1980's where Labour faced tactical voting against us, and we were nervous, as not only had the LibDems got within 103 votes of us at the 2010 general election but the combined LibDem and Tory vote in that election was enough to overwhelm us.

As it happened, enough LibDem and Tory voters switched to us, and enough Tories stayed Tory, to prevent tactical voting for the LibDems from delivering a win. The Tory candidate looked sad standing on the podium, he had been sacrificed at the Coalition altar, and I felt a bit sorry for him.

If Tories and LibDems are asking "why wasn't tactical voting enough to win this seat", the answer is "because you fielded two candidates", which enabled those genuinely Tory to vote Tory. If they want to crush that kind of thing out they need a a proper "coupon" election of the sort they had in 1918, where no Liberal stood against a Tory and no Tory stood against a Liberal. That requires both parties to merge, which might be too much for Tories to stomach, while at the same time being the end of the LibDems.

As long as the Tories and LibDems field two candidates, the vote should split between them allowing Labour to win, especially if some of their voters switch directly to us because of dissatisfaction with the government.

Tory Vat Bombshell gets dropped on Jan 4th

It's hard to avoid news of the Tory Vat Bombshell getting dropped on January 4th. Everytime you turn on the TV, there is a retailer spending hard cash on prime time television adverts warning the public that the Conservatives are going to hammer them with a VAT rise even though the economy is still in a fragile state.

We should also note that during the election campaign, George Osborne specifically promised he wouldn't raise VAT.

Here's what he said

The plans we set out involved around 80 per cent of the work coming from spending restraint and about 20 per cent from tax increases . . . The tax increases are already in place; the plans do not include an increase in VAT.

And here's what Cameron told Jeremy Paxman in an interview on April 23rd:

We have absolutely no plans to raise VAT. Our first budget is all about recognising we need to get spending under control rather than putting up tax.

This is clearly a Government Of All The Liars.

Why have the Con-Dems lost control of the street?

The 13 Labour years look remarkably peaceful as well as prosperous now, don't they? How have the Tories lost control so quickly?

Some part of the responsibility must be down to Boris Johnson, who seems to spend more time guzzling and having affairs, than running the capital. It's a massive contrast to the way Ken Livingstone ran things. Trafalgar Square was a mess in 1999, but he cleaned it up and reclaimed it for ordinary Londoners pretty quickly. The Met was given more funds and hired more police, and managed to handle really large demonstrations like the one million Iraq war marchers and the Countryside marchers, without problem. Nobody dared to go awol under Ken's watch, because he had a grip on what was going on at the Met and in his capital.

So what has changed?

When the first student protest got violent, the feeling was that the Met had been caught off guard - they simply didn't have enough police on hand to deal with it. But now it's the fourth protest, and they still haven't got a grip. Have they cut their budget so much they can't afford the overtime for extra officers? Are the police deliberately holding back in order to make a protest of their own? Who thought it was a great idea to drive Charles and Camilla through the middle of the riot? And with the light on in the car, so the students protesting about unaffordable fees could get a really good look at all the diamonds and emeralds Camilla was wearing, Marie-Antoinette style. Given that the instinct of the ordinary Brit is to steer out of troubled areas, only someone in the police feeling malicious would have decided to drive the royals right into the riot.

And what about this juxtaposition: on the 7th December, Ken Clarke announces that short-term prison doesn't work, but three days later Cameron declares that the "full force of the law" is to be applied to the rioters! Is this another U-turn for him on his law and order policy, or is he just venting for the cameras? And there's also the juxtaposition of Cameron being a violent member of the Bullingdon club in his student days, criticising other violent students. You really couldn't make this up.

P.S. For those interested in the protests against Topshop and others for tax avoidance, please visit the following blog by someone called George, called Boycott Big Business, which gives a detailed look at why these companies are being targetted.

I'd like to point out that the Inland revenue benefits from these protests. It works like this: Say you have £20 to spend on a top, and decide to boycott TopShop and spend your money at John Lewis instead. Because the £20 gets spent regardless, the effect on the economy is neutral. However, because John lewis pays all it's taxes, the Treasury experiences an increase in tax revenue. Employment at TopShop may go down, but employment at john lewis should go up, so the effect on employment is neutral too. And best of all, other retailers may hastily decide to get their affairs in order so that they are not targeted, which also leads to an increase in tax revenue. It's win-win-win, as we then don't haemorrhage tax money to the less scupulous parasite states.