Archive for January, 2012

The intriguing Holliband possibility created by Cameron’s EU stupidity

January 29, 2012 1 comment

When Cameron vetoed the ‘Merkozy treaty’ in early December, it meant that the deal could not be signed off as a variation to the Lisbon Treaty, and that any deal would need to be an intergovernmental treaty of the 26 participating countries.  As such, any deal is separate from the workings of the European Union.

This threw into doubt whether the 26 countries signing up to the Merkozy “non-EU” treaty could legitimately use the Court of Justice of the European Union (ECJ) to police the deal and punish states which failed to abide by the proposed fiscal rules.  At the time, Cameron threatened legal action to stop the other 26 governments trying to use the ECJ in this way.

Unsurprisingly, now that he’s gained cheap political brownie points from using the veto, Cameron’s not bothered about pursuing this threat.  Diplomats are calling it a “heat of the moment” thing, and it’s being dropped as quietly as possible. 

This does, however, raise an intriguing possibility.

If the 26 member states now do go ahead uninterrupted and sign offtheir economically absurd pact, and include within it provision for ECJ ruling authority, it sets an important precedent for any set of European countries to come together, bash out a deal, and then call on the ECJ to do its thing.

Logically and legally, what could stop Francois Hollande, coming together with other like-minded European countries to sign a pact running entirely counter to the Merkozy pact, and asking the ECJ to be the binding arbiter on that too? 

After all, Hollande has already set out a clear manifesto promise around the need for a new ‘pact’.

Je proposerai à nos partenaires un pacte de responsabilité,de gouvernance et de croissance [growth] pour sortir de la crise et de la spirale d’austérité qui l’aggrave. Je renégocierai le traité européen issu de l’accord du 9 décembre 2011 en privilégiant la croissance et l’emploi, et en réorientant le rôle de la Banque centrale européenne dans cette direction. Je proposerai de créer des euro-obligations [Euro-bonds]. Je défendrai une association pleine et entière des parlements nationaux et européen à ces décisions. Cinquante ans après le traité de l’Élysée, je proposerai à notre partenaire l’élaboration d’ un nouveau traité franco-allemand.

Why would this new pact have any less legal weight than the one now being rushed through before Sarkozy is sent packing?

The  like-minded countries Hollande needs for such a scheme might include Spain, whose (rightwing) government is now calling for a ‘new realism’ about how to manage the economic crisis in light of its descent into economic chaos, and Greece,  fuming at Germany’s proposal to make its government subservient to an EU budget commissioner. 

It might, in 2015, also include Britain (or England/Wales/NI & Scotland) if Labour were minded to push for an entirely new approach to the European economy, something Ed Miliband at least hinted at in Davos this week (though clearly ideas on what to do are not yet formed).  If Labour has its wits about it, it should see jumping on the Hollande bandwagon, in a common drive to reorientate the EU towards the welfare of its people, as a very attractive proposition.

The alternative ‘Holliband’ pact might include shared commitments to investment in jobs, with targets for the reduction in unemployment levels, as a mirror to the stupid fiscal targets advocated by Merkozy, and call on the sanction of the ECJ for countries that failed to meet the employment and other needs of its citizens.

Clearly, two diametrically opposed  intergovernmental pacts, formed outside the EU but calling on the same EU institution for their operative legitimacy, would create a legal and institutional crisis at the heart of the EU that Cameron could never possibly have dreamed of when he stook his foot in his mouth in December, but that might well be better than simply allowing the current rightwingers in France and Germany to carry through their plans for the outlawing of  socialist econmics in Europe.

And what better payback for Cameron’s arrogant but wholly ignorant politicking with the EU than for him, in time, to see it used as the opening for a few Left front for a new Left ascent in Europe.


Osborne’s lie hits small businesses for thousands

January 27, 2012 Leave a comment

I’ve been following the National Loan Guarantee Scheme.  Well, someone has to.

In his Autumn Statement, announcing the scheme, Osborne was specific about the reduced costs for businesses:

We expect that it will lead to reductions of 1 percentage point in the rate of interest being charged to these companies so a business facing a 7% interest rate to get a £5 million loan could instead see its rate reduced to 6% and its interest costs fall by up to £50,000.

Paul Myners (Lab) has been following it too in the Lords.  Hence his written question:

To ask Her Majesty’s Government whether they expect their proposed programme of credit easing to lead to a reduction of one percentage point in the rate of interest being charged to companies, as forecast in the Autumn Statement on 29 November 2011, or to lead to a small reduction as indicated in HM Treasury’s publication of 6 December 2011 on the national loan guarantee scheme.

 Commercial Secretary to the Treasury (Lord Sassoon) replied:

The national loan guarantee scheme, as announced in the Chancellor’s Autumn Statement, will lead to a reduction of loan interest rates to smaller businesses by up to 1 percentage point.

Lord Sassoon is lying.  Osborne didn’t say “up to 1 percentage point”.  He said “1 percentage point.”  That small difference makes thousands of pounds difference to small companies.*

So did Osborne also make a false statement to the Chamber?  Time will tell, but I think he probably did.**

*A quick calculation on the loss of savings to businesses suggests that if the interest rate cut ends up at, say, 0.5% rather than 1% on the £20bn scheme, this will cost businesses £100m, at presumably crucial times in their survival/growth.

** It will be interesting to see if the 1% rate cut forecast by Osborne is actually accounted for in the guarantee part of the scheme, but lowered en route to businesses up as banks charge administration costs etc..

Why I agree with Peter Mandelson on globalization: the case of the EU-India Free Trade Agreement

January 26, 2012 1 comment

Guest post by John McDonnell MP

Yesterday, in a parliamentary debate on UK-India trade, I found myself in the somewhat unusual position of quoting Peter Mandelson approvingly.  Writing for the FT in advance of the major IPPR report on globalization (published today), Mandelson argues:

[L]iberalisation of trade and financial markets requires a careful parallel process of building domestic institutions and capabilities. It is not the absolute level of openness in the global market that matters for growth so much as the fact that it is governed by shared rules and sustainable practice.

I agree. 

Sadly, when it comes to the EU-India Free Trade Agreement (FTA), negotiations on which began when Mandelson was still EU Trade Commissioner, the reality falls a long way short of his aspiration. 

As a result, many millions of Indians stand to be driven towards poverty and hunger.

The sudden removal of import tariffs, especially on dairy and poultry products, and the consequent flood of imports from the EU, is likely to have a devastating effect on millions of marginal and landless farmers, who will suddenly find their markets swamped by produce – notably skimmed milk and poultry meat deemed unsuitable for the European market – which remains heavily subsidized through the European Common Agricultural Policy. 

The European Commission’s own Sustainability Impact Assessment calculates that the FTA may be of benefit “in the long run to those “who are able to participate in evolving supply chains“, but it acknowledges that  “integrating small farmers and producers into the supply chains is a daunting task which is only possible through domestic policy measures only.”  A subsequent Right-to-Food Impact Assessment, conducted in 2011 by NGOs, came to very worrying conclusions about the impact of the FTA on the Indian poor, some 27% of whom already live with chronic hunger.  

Similarly, if multi-brand retailing is suddenly and without safeguard opened up to EU retailers such as Carrefour, Metro and Tesco, 1.8 million jobs may be created, but at the cost of up to 5.7 million people working as street vendors.

In other words, Peter Mandelson’s condition for good globalisation – well-developed  “domestic institutions and capabilities” which allow the poor to engage on something like equal terms – has clearly not yet been met in the case of this EU-India FTA.

This is precisely why the European Parliament resolved, in December 2010, that the European Commission should carry out impact studies on human rights in addition to those on sustainable development.  To date, the Commission has completely failed to act on this resolution, even though the FTA is due to be agreed and ratified by member states during 2012.

The European Commission currently appears unwilling to listen to the views of its own Parliament, so it is up to the UK Parliament to ensure that the human right are not trampled on in the rush towards global trade. 

I reiterated this call for a full Human Rights Impact Assessment in parliament yesterday, in support of a broad range of EU and Indian civil society organisations (including Traidcraft), who are doing the same.

In his FT piece Peter Mandelson goes on to say:

Globalisation is a means, not an end. This way of seeing things challenges equally the political right and left. The anti-globalisers of the left have always underplayed or ignored what is good about the expanding reach of global markets by focusing on the (legitimate) grievances of the short-term losers. The right has too often shrugged off the negative social effects of global markets as unavoidable or even a price worth paying for the benefits of ‘liquidity’.

Mandelson’s analysis may be astute, but it skirts round the brutal reality – that these “short term losers” are hundreds of millions of men, women and children going hungry for want of a fair free trade policy, and for whom being a “short term loser” can be the difference between life and death.  These people are as much a part of the 99% as those now occupyingSt Paul’s.

Time is short.  I hope we can build a coalition for the defence of the Indian 99%.


John McDonnell is the Member of Parliament for Hayes & Harlington. You can read his full speech in the UK-India Trade debate here.  If you would like to help, please ask your MP to sign John’s Early Day Motion 2645, calling for a Human Rights Impact Assessment on the EU-India Free Trade Agreement.

(This article is cross-posted from Liberal Conspiracy, though we’ve got a slightly fuller version.)



Peter Hain on Ken Livingstone

January 24, 2012 4 comments

I’ve written a review today of Peter Hain’s autobiography Outside In on the Left Foot Forward website (published yesterday), saying what a good read it was, and what an interesting person Hain is. I’ve also said that he is something of a conviction politician, which is good to see, and that clearly he was in it for changing the world, not careerism – which in spite of how you see his politics, or whether you agree with them, is noble at least.

On the 20th of January he was clearly delighted that Ken Livingstone was leading Boris in the opinion polls for the mayoral election. He said on twitter:

Great London/Ken poll wipes smile off smug Tory faces and caps off great week for Labour

In his book he did mention that in not supporting Ken for Mayor, Tony Blair’s New Labour control freakery was one example of the mistakes which led to Labour losing supporters (p.212).

But elsewhere (pp.159-60) he had this to say about Ken, which I love:

…I wanted to be effective, to be able to make a real difference. And that meant learning what not to do from Ken Livingstone … he seemed to go out of his way to make enemies, for instance on one occasion gratuitously insulting Labour MPs from northern England by falsely implying that they spent their evenings either drunk or in brothels.

Further in that chapter (p.185) he told the story of when Tony Blair asked him to be a whip in 1995, despite the fact  there was much “suspicion” about him.

Blair, according to Hain, explained:

how he would have wanted to bring Ken Livingstone in too, but that Ken’s behaviour had never permitted that. ‘I may not have liked everything you have said or written, Peter, but you have never been aggressive or personalised your criticisms like Ken has.’

Ken as a whip – imagine that. Rumour has it that Ken recently grassed on the Labour whip when back in the nineties they were encouraging MPs to claim a second-home allowance as supplementary to their wages.

If Ken’s behaviour had been better, he could have stopped that, theoretically.

Still, great intervention by Hain. It’s a great read.

Why I’m running for Labour’s NPF

January 24, 2012 2 comments

I have decided to stand for a place on 184 member strong Labour’s National Policy Forum (NPF), and if I get the necessary endorsements from my and other Constituency Labour Parties (CLPs), I’ll be asking, nay, begging for your vote in May/June.

My election manifesto is simple enough: I would like to see the NPF abolished.   If elected to the NPF I will campaign for its end within a two year period.   I encourage other candidates to stand on the same manifesto.

I have previously set out my reasoning for the abolition of the NPF, and simply provide a somewhat abridged version here:

1.  Good intentions do not lead to effective policy making, or member involvement in policy making, and the party needs simply to accept that what we have now does not work for the vast majority of members, who feel alienated from the whole policy making process. Relatively few people in the labour movement understand the NPF, and probably even fewer trust it to deliver ‘effective policy’ (even this term is contestable).

2.  The party needs to accept that there are limits to the effectiveness of the kind of deliberative/semi-democratic NPF structure now in place, and Labour – if it really is to engage more members and non-members – needs to embrace the messy, but creative dynamics of contested power, scrutiny of and challenge to authority.

3.  First of all, the often lengthy NPF process is simply unsuited to the demands of modern government and opposition.  The public, through the media, demands on-the-spot policy responses from those at the top of  the national party hierarchy, and media statements about policy inevitably become that policy.  It is pointless to pretend that it can be otherwise.

4.   More fundamentally, the current NPF process lacks accountability. There is no-one within the process to whom ordinary members can go and ask about what happened to their or their branch’s policy submission, whether it was accepted, why it was rejected, and what’s going to happen now.

5.  Ultimately, the problem is that structure has been developed as a way of disguising power asymmetry in the party. To tackle this, we need the complete abolition of current process in favour of one which acknowledges that power is (and should) always contested and contestable, and which puts accountability of senior party people at the heart of the process, rather than allowing them to use a complex ‘deliberative’ NPF structure as shield.

6. We need to build accountability back into the process . The best way to do this, having abolished the NPF, is to invest both authority and accountability in the place where most members of the party see it invested anyway, and where they have a real and meaningful point of contact.

7.  This is the local MP (and MEPs), or the local PPC in places where there is no Labour MP.

8.  To replace the failed NPF we need to establish a process – indeed culture – whereby branches/CLPs/affiliate groups, and perhaps also individual members, can make legitimate policy demands of their MP/PPC, asking them to promote their policy proposals and ideas.

9.  The parameters for this process should not be set out from ‘on high’ as they are at the moment (with pre-defined policy areas), and the power to raise policy ideas/concerns should fit squarely with local parties. It should then be the job of the MP/PPC to feed these policy ideas directly towards the Parliamentary Party hierarchy (and European Labour Party) and to report back directly to local parties on what steps, with what level of success, they have taken.

10.   This whole process should be part of a wider configuration of the MP/prospective MP role, whereby s/he should become answerable to the local party.  Local MPs should start to see themselves as akin to the CEO of a charity, in which the members elect Trustees (in the form of CLP officers) to oversee theMP/CEO, and the MP/CEO presents, say, an annual business plan to the ‘trustees’ for approval of business expenditure) and regular monitoring. 

11.  Where policy matters are expressed in local terms by local parties, it should be up to the MP to extrapolate as need be to develop wider policy recommendations for submission to the Cabinet/NEC, in conjunction with other MPs as s/he feels necessary/useful.

12.   This will create a much more dynamic structure for the policy making process, with accountability back to members built in as part of an MP’s performance by which s/he is judged when it comes around to selection trigger points etc..



The postmodern payday lender

January 22, 2012 3 comments

Recently it was revealed by McKinsey, the consultancy, that the UK debt to GDP ratio stood at 507% in the middle of 2011. Robert Peston reminds us that this is up from 487% of GDP in the second quarter of 2008, and, incredibly, from around 300% in 2003 – before the credit boom.

Only Japan is more indebted with its debt to GDP ratio at 512%.

Further still, it is the financial sector, mostly in the city, which accounts for 219% of the debt. Household debt experienced a modest decrease, though is still very high.

To rub our noses in it, the Royal Bank of Scotland – undeterred by the reputation left by Fred “the shred” Goodwin – has a pot of £500m to spread liberally around its investment bankers in bonus pay.

This gave grounds for the Wongaforum – a forum, as you might guess, that talks about all subjects wonga, and beyond – to post on how terrible it is that RBS bankers are set to receive such fortunes, while banks themselves receive a downgrade from Moody’s and the rest of us suffer.

This is because with the banks not doing their jobs properly, not heeding to calls to further roll out basic bank accounts and overdrafts (an intervention which didn’t cause the banking crisis, nor would hurt the banks one iota), forcing people into the hands of pawnbrokers and high street shops who promise to cash cheques for high fees, places like wonga are able to pretend to have the moral high ground.

As Stella Creasy recently put it, “Payday loan companies are trying to promote a veneer of respectability”.

Better still, payday loan companies – which Wonga are despite their own denial – are so acutely aware of how horrid an image loan sharks have, that they will do anything to deflect the notion that they are similar.

And to a large extent this is true, though Wonga are also trying to deflect the notion that they are anything like other payday lenders on the high street.

This is because what this trade boils down to is one where sub-prime consumers are given money at high interest to pay for things we in the west would consider basic necessities. Regardless of whether Wonga are providing a service nobody else delivers (banks especially), profiting from the poor looks bad – and for good reason.

They’ll say they stop people from calling on real loan sharks who charge interest rates of percentages in the tens of thousands, though profit from poverty is still frowned upon.

Wonga will even say they don’t target the sub-prime consumers, but there is not enough money to be made in appealing to the Middle classes who have a distrust of banks, and students alone. Though of course any such proof that Wonga have no desire to target this market is hidden behind what they call commercially sensitive data.

In arguing their case, Wonga end up sounding just like the labour union workers in 1930s America did when arguing that low income earners should not be excluded from the credit market. Why, if everyone else could buy on the promise that money will be paid later on, could they not join in? Why were the banks excluding them?

Effectively, Wonga are trying to make a progressive case for their cause – and this is born out of a realisation that they must shift the image both of the loan shark and the payday lender today.

Let’s not forget, though, that banks are allowing Wonga to have this moral high ground, which means that any campaign effort against the profiteering of the payday loan industry, should target banks too, and call for the retail arm of banks to do its job properly.

A full apology from the BBC, but questions remain

January 21, 2012 3 comments

In November 2011, a BBC Radio 5 Live newsreader stated:

Employers are to be offered subsidies worth a billion pounds over three years to take on more 18 to 24 year olds. Companies will be paid more than 2,000 pounds every time they take on someone new.

This was an entirely false statement, and I lodged a formal complaint with the BBC.  The complaint is here.

I have now received an apology from the BBC. The whole letter is scanned in below (with a courtesy name redaction) but the main part of the apology is:

Please accept our department’s sincere apologies for the long delay in replying, this is most unfortunate and regrettable as we understand correspondents appreciate a quick response.

We discussed your points personally with the senior editorial team responsible in Radio 5 Live, who have listened back to the headline sequences in question after reading your complaint. Having done so, we would like to offer an apology for the incorrect information contained therein.

We suggested the billion pounds was all for the employer subsidy programme, but this is clearly not the case.

The Press Release [from the Department for Work and Pensions] does outline a package of measures which add up to £1bn, but we did not give that impression – we should have made clear there are different elements dealing with different groups of people over a period.

We apologise for getting this wrong.

This is fine as far as it goes, and the BBC is to be commended for offering an unreserved apology after a thorough investigation, even if it did take longer than it might have done. 

Nevertheless, it does leave a couple of questions hanging.

First, my complaint did specifically ask:

that the BBC now publicly retract the statement it put out in the 11.30pm bulletin, and any other bulletin in which it was broadcast, and make a public apology for misleading the public. 

The response makes no mention of a public retraction, so I must assume none is planned.  This means that a significant number of listeners may still be left with the impression that the government is planning to spend £1bn on employer subsidies, when in fact only 39.4% of that is planned.   The fact that the BBC apparently has no duty to correct falsehoods, while the press does (to an extent) seems a strange anomaly.

Second, and perhaps more seriously, no-one at the BBC appears willing or able to challenge the Department for Work and Pensions over why it issued such an unclear, and arguably deliberately misleading, press release, in which a central item (the work experience programme) appears both uncosted and, by deduction, bizarrely expensive (at £1, 624 per 6 week work placement comparied with £2,275 per 6 month employment subsidy).


Categories: General Politics

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