Worth every care home that was closed to pay for it

It wasn’t exactly a JFK moment, but I still remember where I was when I first heard that the British government had decided to blow tens of billions of pounds bailing out our investment banks.

It was October 2008, and I was in a Scottish hotel room for a conference for the ‘project finance community’. The morning television bulletins were plastered with footage of Gordon Brown looking terribly serious as he took the grave decision to splurge other people’s money to save RBS and HBOS.

Oddly, I was just about to join a horde of bankers to listen to them talk about, well, banking. The attending bankers weren’t of the casino kind – project finance being about as risk-averse as banking gets – so I lacked any great impulse to throttle them.

But I was in a fog of outrage. How could this be right? Why bail out the banks’ investment arms, rather than just their high street operations? And yet a consensus had congealed within hours of the announcement that the bailout was the right thing to do. Practically all the talking heads and newspaper columnists (Simon Jenkins aside), all the ‘serious people’ and ‘experts’, supported the bailout. It is educative to look back at the BBC report from the day of the announcement and find that the only critical voice complained that the bailout was too harsh on the banks – Professor Tim Congdon (a ‘serious person’) whining that the bailout was “stealing from the shareholders”, as opposed to stealing from the rest of us.

What was going on?

I only recall one MP in the entire Commons publicly criticised the bailout at the time – in fact, a few days before it had been confirmed. For this, John McDonnell deserves eternal credit. To read his words now is to read the story of 2011, told in 2008:

“Taxpayers will end up paying doubly, once through loose subsidies to dodgy banks and the second time as the recession bites and they risk losing their jobs, homes and going further into debt … At that point they will rightly be asking the government: ‘Where is the bailout for the British public?’”

I recount this to illustrate a question. The bank bailouts of 2008/9 were illogical on a basic level – throwing good money after bad. So how did the government get away with it?

Thanks to the political ‘mainstream’. Go back to October 2008, and the political, media and economic establishment was broadly united in backing the government response to the crisis. So regularly were we assured that this was the right thing to do that any sceptic could have been forgiven for growing sceptical at their own scepticism.

A present for the bankers. Brownie points docked for tatty gift wrapping.

The problems with the bailouts were obvious at the time. By funnelling public money onto bank balance sheets, they wrecked public finances and took away money that could have been used for a genuine economic stimulus. By not actually taking control of the banks, the government was unable to either rein in bonuses or stimulate lending. And by paying for bank shares that were essentially worthless, the government subjugated itself to the banking sector in order to one day sell its shares at a profit.

This latter point is key. One reason the government has tiptoed around the banking sector since the bailout is that in order to make up the money it spent on the share purchases, it needs to protect the profitability of the banks and their attractiveness to investors. A bank that loses its ‘star’ performers because it cuts bonus payments, a bank that withdraws from the hyper-profits and massive risks of the casino sector, a bank that is forced to lend in the national economic interest rather than driving cash towards speculation, is a bank whose shares will be less attractive to investors down the line.

Look how the modest Vickers proposals to ringfence banks’ high street operations from their riskier activities have been kicked back to 2019 – long after the present government hopes to sell its bank stakes. This September, RBS shares were trading at less than half their bailout value. Without a sharp recovery in share price, the taxpayer will make a hefty loss.

The bailout has tied the nation’s finances to the continued deregulation of investment banking. The government is at the mercy of the City.

October 2011

Three years on, and the bailouts are increasingly seen for the utter shambles they always were. One of the unifying themes of the Occupy movement has been hostility towards the bank bailouts. What was once heralded as a medicine to save the world is now rightly understood as simply more of the poison.

One statistic that was not made up on the spot. (Photo: John Quigley)

Against this backdrop, October 2008 can be seen as the moment the political mainstream finally cut itself loose from the public mainstream. Three years ago, the political mainstream, which had for years encouraged the growth of an enormous debt mountain to hide the public’s stagnating incomes, was given a choice – either govern in the interests of the public, or govern in the interests of the super-rich. By bailing out the investment banking sector, the political mainstream chose the latter.

Having made that choice, the subsequent cuts and austerity and inequality were written in stone – they were the inevitable next steps under the shock doctrine to make the public pay the price for the bankers’ crisis. Cue mass disillusionment and disenfranchisement. Cue protests.

But most remarkably of all, three years later, we are being lined up for more of the same. The global financial aristocracy has spent months banging the drum for a Eurozone mega-bailout, combined with eye-watering public spending cuts. US Treasury Secretary Tim Geithner has been desperately urging European finance chiefs to expand its bailout and bond-buying fund from its current €440 billion – that’s around £385 billion.

So, that’s £385 billion to be spent on bailing out banks and buying up sovereign debt. No-one seems to think it’ll be enough to rescue the Eurozone, Britain’s major trading partners.

Perhaps the most damning indictment of the political mainstream is how they keep attacking the political ‘stalemate’ and ‘stand-off’ in Europe. ‘Why don’t they stop twiddling their thumbs and do something?’ they wail.

The reason Europe’s leaders won’t just ‘do something’ – to be precise, massively expand the bailout package and implement even more severe public funding cuts – is not because they will not, but because they cannot. The political mainstream, hidebound as it is to financial elites, regard an expanded bailout as a no-brainer. But there is something in the way, and that something is democracy.

The people of Europe have had enough. The first round of bailouts and austerity solved nothing – rather, they made things worse. The people of Europe will not tolerate their democratically elected governments trying to force any more of this down their throats, and nor should they.

Europe’s financial elite are ready to tear up democratic mandates in order to get their bailout. This is a coup d’état without guns.

Or as bankers know it - 'Recycling'.

The radical Left and Euro-sceptic Right have both nailed this for what it is – a crisis of democracy, where governments are frozen with fear. The markets want one thing, the voters another. They can side with the voters, and the investment banks might collapse. Or they can bail out the banks, and crush the will of their own voters. The German government only won parliamentary approval for the most recent rescue package after promising it wouldn’t grow any larger than advertised; but their government is under huge pressure from banks and institutions to do just that, lest stricken Eurozone governments default, plunging lenders into crisis.

Gallons of ink have been spilt explaining the minutiae of what has caused the latest crisis, but it’s really quite simple – though utterly absurd…

1. Banks got themselves into huge debt
2. Governments bailed them out – and thus put themselves heavily into debt (although Greece’s woes are more deeply rooted than the bailouts)
3. Austerity economics made these debts worse
4. As the governments had guaranteed repayment of the banks’ debts, this added to the governments’ debts
5. Because government debt is held by many of the same banks those governments had bailed out, richer economies like Germany are being told to bail out poorer Eurozone economies to ensure that as far as possible, no matter what happens and who suffers, the banks don’t lose the money the governments owe them
6. Because if that happens, those banks might need yet another bailout themselves – and some of them already need one now

Ok, so it’s not exactly simple, and the picture can vary slightly between countries. But it’s clearly absurd; Joseph Heller couldn’t have made up this level of lunacy. The banks that needed a bailout the first time are now demanding bailouts for governments purely so those governments can pay back those banks the debts that were partly racked up in the first bank bailout. And the austerity economics demanded by the financial elites have made the situation worse. Well done everybody.

What’s worse, with European governments hastily buying up stricken governments’ debt, those governments themselves will take a hit in the case of a national default. The labyrinth of guarantees agreed from 2008 that sees governments guaranteeing banking sector debt, leaving governments on the hook for banking losses, has become ever more enmeshed.

The calamitous results of the bank bailout strategy make no sense if you view them as an economic policy, because they never had much to do with the economy. Bailing out the banks was not an economic policy, but an ideological policy. The intention was never to rescue the economy, but to rescue an ideology (two ideologies, if you include the Brussels ideology of enforced EU integration). The economy didn’t benefit as a result because no-one intended it to.

Arch-ideologue Milton Friedman. Cheers, blud.

It is only when viewed in this light that the bailouts make sense. Because in bailing out an ideology, they have succeeded spectacularly. The investment banks are still ‘investing’. The casino gamblers are still gambling. Commodities traders are still speculating. Bonuses are still astronomical. Boardroom pay still rises exponentially. For the financial elites, the torchbearers of free market fundamentalism, nothing has changed. And they’re still forcing the rest of us to pick up the tab.

In that sense, the bailouts have worked a treat.

Europe now stands at a crossroads. Down one road lies madness, with safety nets ripped open and public services torn apart, unemployment and poverty shooting up, and democratic mandates tossed aside as nations are locked together in loveless debtor-creditor marriages. Down the other road lies a chance of starting over.

The investment banks and financial elites – and their hired guns in the political mainstream – claim that if these bailouts don’t go ahead, the investment banks will collapse.

So be it. Protect retail banking and the real economy, let casino banking collapse. Withdraw the government guarantees if need be to protect public sector balance sheets. It’s what we should have done in 2008; it’s what we must do in 2011. This roulette wheel’s been spinning far too long.

We can’t afford to bail out financial capitalism. If the financial capitalists can’t afford that, then we can’t afford them.

Amount of loose change available to replace government funding may vary.

With the coalition’s cuts set to impact all areas of public spending, many civil society organisations, community groups and charities are growing increasingly concerned about the effect they will have on the people and causes they represent.

For all the rhetoric around the Big Society, the reality so far has proven rather different, with charities losing funding and many of the most vulnerable sections of society bearing the brunt of the cuts agenda.

Some charities have focused solely on defending their own area of funding, while others are looking to build a united front – and representatives of this latter group met in London last week to start initial discussions on how charities, community groups and civil society can build a united resistance to the cuts.

The meeting was off the record, so I’m not going to quote people or give a line by line account – save to say that it was productive and focused on strategy – but here are some of the suggestions and ideas that emerged during the meeting. As will be apparent, it covered a fairly wide range of topics.

Just to note, these aren’t necessarily my suggestions – just some of the points that were raised:

• A key period will be between the finalising of the Labour cabinet on 30^th September and the Spending Review on 20^th October – the Labour leadership will be working out its approach to the cuts agenda during this time, making it the key three-week period when we (or those in Labour, at least) will have to try and exert maximum pressure on the leadership to take a solid anti-cuts line (etc). Labour will be stuck with whatever it says on Oct 20^th until 2015, so it’s a crucial one-off chance to try and influence them as far as possible.
• Tax avoidance was repeatedly raised as a key issue that needs to be highlighted, both on the fairness point and as a means of reducing the deficit without cutting services. Many organisations that have in the past focused on the impact of tax avoidance on poorer countries are acutely aware that it features heavily in the deficit debate here in Britain.
• The C1C2 group of middle income voters is a very powerful block that isn’t being engaged properly – we need to identify set piece government cuts that affect C1C2s and mobilise that group (e.g. bus passes and winter fuel payments).
• We in the anti-cuts movement have to be ready to suffer some defeats over the next year, as the government will be able to drive through much of its agenda through at first – so we will have to be able to maintain people’s confidence during these setbacks in order to win the long game. It’s important to find high-profile set piece ‘wins’ that can be achieved during this first year – specifically chosen fights with the government on big issues that we can win. However, we need to do so without pitting one campaign against another.
• Local government could provide local campaigners with a chance to score early victories, albeit on individual cuts rather than the entire local government cuts programme. Scotland and Wales also provide opportunities for early breakthroughs, together with London in advance of the 2012 mayoral election.
• Different sectors must avoid ‘nimby’ campaigning to protect their ‘bit’ by arguing that the government should cut some other sector instead – a form of cutthroat defence. There was a suggestion that different campaigners should enter into some kind of ‘non-aggression’ pact that would avoid different sectors competing against each other for funding. It might also be a way of working with those many charities and lobby groups that are wary of taking overtly political stances against the entire cuts agenda, but are protecting their own sector.
• Developing that point further, it’s important that we try and spot in advance issues that could divide sections of the anti-cuts movement, and act early to reach some kind of accommodation to defuse any potential trouble. An obvious example would be possible tensions between certain environmental groups and industrial trade unions.
• Since bailiffs coming to evict non-payers were a major focal point of anger at the poll tax, there was a suggestion of holding protests at county courts when there are eviction hearings of people forced out of their homes due to housing benefit cuts.
• Co-operation between campaign groups may work best on the basis of mutual support rather than a formal coalition. Trying to get all the member organisations of a formal coalition to agree to joint statements can prove more hassle than it’s worth.
• Legal challenges to elements of the cuts agenda (judicial reviews etc) could be an important tool. Austerity programmes rely on making a lot of headway in the first year or two – if the austerity programme gets bogged down in the first couple of years, people start losing patience and the programme is in trouble. Judicial reviews and other forms of legal challenges could help put a spanner in the works, and drag things out. Unison have clearly adopted this approach with regards to Andrew Lansley’s NHS White Paper.

I’d be interested to hear readers’ thoughts on those points and others. There’ll be more on this civil society initiative as it progresses.

P.S: Apologies for the rather sporadic updates of late – I’ve been very busy compiling some large Freedom of Information requests. More on those when they come through. Updates will continue to be sporadic until early-mid October.

According to a Populus poll for The Times, just 22 percent of people support the speed and depth of the coalition’s planned cuts. 37 percent support Labour’s election pledge to cut the deficit more slowly, while significantly another 37 percent say that protecting the vulnerable and keeping a lid on unemployment should be higher priorities than cutting the deficit – even though this anti-cuts line is barely getting a hearing in the mainstream media.

This latest survey will undoubtedly cause discomfort among Conservatives (though their overall share of the vote is holding up) and outright panic among many Lib Dems. It might also provoke a degree of embarrassment to the pro-cuts Times, whose Murdoch-inspired message is clearly not getting through.

But it should also give the trade unions meeting this week at the TUC Congress in Manchester the confidence to press on with plans for co-ordinated strike action.

There are those in the anti-cuts movement who fear that strikes will turn the public against the unions. Meanwhile over at Liberal Conspiracy, Sunny Hundal warns that the unions need to win the public round to the anti-cuts argument before turning to industrial action. He says that mass demonstrations and ‘other action’ will be more effective that strikes in fighting the cuts.

Both fear a rerun of the 1980s, when extended industrial action ended in defeat for both the miners and the printworkers and reporters of Wapping, and a changed industrial landscape that forced the unions into retreat.

But today’s poll shows why there’s no need to tiptoe around waiting for public opinion to fall in line. It already is.

Despite the lack of any meaningful opposition, and blanket coverage of the pro-cuts argument, the public is instinctively suspicious of the coalition’s cuts agenda, with a sizeable minority seemingly opposed to all cuts outright.

Clearly there is an argument to be had and won in public – the impact the cuts will have on the majority of people, the risks to Britain’s economic recovery, the increase in poverty while those who caused the recession rake in huge bonuses once more.

While the public is well aware of the role of doctors, nurses and teachers, the importance of the more prosaic arms of the public sector – legal aid, benefits office staff, Connexions services, to name but three – needs to be spelt out. The unions will need to make the case against cuts – but this they are doing. We are seeing a bigger public relations push from the union movement than ever before.

But we should not lose sight of the importance of strike action. Yes, it creates disruption. Yes, it is often unpopular. But it hits the employer – in this case, the government – where it hurts. Work doesn’t get done. Public transport stops. Offices are shut. Phone calls go unanswered. Agency staff must be hired and paid for.

Only the most obdurate employer, determined to break a trade union, can endure the disruption and expense of a properly planned, well supported strike. Thatcher did, of course, but the coalition does not have her landslide majority, obedient backbenchers and divided opposition to fight a long war of attrition.

And those who worry about the verdict on strikes in the court of public opinion should bear in mind that in the 1980s, trade unions were seen by many as being powerful baronetcies that brought the country to a halt throughout the 70s. Fair or not, the shadow of Red Robbo was a long one.

That is ancient history now. The picture today could not be more different. While the public is not exactly having a love-in with the unions, it is privatisation and financial deregulation – the Next Big Things of the Thatcher years – that are now in the dock.

Privatising public services will not win favour among commuters delayed by franchised trains. Cutting funding to schools and hospitals will bring back memories of the crumbling classrooms and NHS beds crises of the Major years. A recession cooked up in the casinos of the City will not willingly be paid for by the public.

And if economic data continues to get worse, the entire economic basis of the cuts agenda will evaporate.

In that context, while strike action will cause inconvenience and irritation, it is the impact of the government funding cuts that will cause real anger. People frustrated because they can’t access services during a one-day strike will realise that government cuts could deprive them of those services for far longer.

Strike action will have to be planned, organised and co-ordinated for maximum impact. It can only go ahead with members’ support. The unions’ media strategy will have to be carefully worked out to fight the anti-union hysteria that will inevitably fill much of Fleet Street. Strike funds will need to be topped up.

Most importantly of all, the anti-cuts movement will need to set out alternatives to the cuts agenda, both for better public services and for economic growth and prosperity. We are seeing the beginnings of this already.

But strikes – along with demonstrations and other tactics – are very much part of the strategy that will be needed to defeat the cuts. They are not the first and only option, but they are a valid and effective option nonetheless. To simply rule them out is to neuter the bear before it enters the pit.

The public mood is already turning against the cuts and towards the unions’ arguments. Now is not the time to go wobbly.

Almost sixty housing projects incorporating more than 1,500 social or affordable housing units are now under genuine threat of cancellation due to cuts at the Homes and Communities Agency (HCA), which administers a number of commercial and social housing initiatives.

Back in May the coalition withdrew £230m of funding for the HCA, creating a black hole in the HCA’s budget and throwing hundreds of housing schemes into doubt. The government later provided some financial relief to reduce the funding shortfall, allowing many schemes to progress, but around 160 schemes were still left at risk.

The HCA has now announced that 105 of these at-risk schemes have now secured funding under the body’s Kickstart 2 and Local Authority New Build (LANB) programmes, while one or two others should proceed under different funding streams.

But the remaining housing schemes are in limbo, and may now have to be scrapped. The HCA is working with developers to see if they can be funded under other HCA programmes, but the agency’s own budget is limited and money is in short supply.

Below are links to the schemes that have been saved and those that are under threat:

• Kickstart 2 funding secured
• Kickstart 2 at risk
• LANB at risk
• LANB funding secured

In the above tables, HBD refers to Home Buy Direct, LCHO refers to Low Cost Home Ownership, and SR refers to social rent. All are forms of social or affordable housing.

Bristol has fared particularly badly. Of 13 Bristol-based schemes that were under review by the HCA, 10 remain at risk, with funding secured for only three developments.

London schemes have generally been given the green light – although eyebrows might validly be raised at the £22m in Kickstart 2 funding that has been committed to six Berkeley Homes schemes in London that contain not a single social or affordable housing unit between them.

Of course, this merely accounts for cuts to two schemes – Kickstart 2 and LANB. The impact of the government’s decision to abandon housebuilding targets will be far greater as Britain’s long housing crisis deepens.

The Lansley is for turning

The Conservatives appear to have learnt little from Labour on the dangers of making policy on the hoof. For British jobs for British workers, now read scrapping NHS Direct.

Yesterday health secretary Andrew Lansley backtracked on the plans in the face of stiff opposition and a mass petition – perhaps the first major national victory against a proposed service cut. Questions still exist over the future staffing and funding levels for the service, but it at least seems likely to continue in some form.

But no sooner was Lansley rolling back from his on-the-hoof policymaking than George Osborne was riding in to fill the breach, suddenly announcing an extra £4bn of benefits cuts for the unemployed, taking everyone surprise, and thoroughly annoying the Liberal Democrats.

The reasons why this makes no sense are sufficiently obvious and oft-repeated that I’ll just list them:

• there are precious few jobs for the jobless to go to
• Jobseekers Allowance is already pretty stingy
• the government seems rather less concerned by the vast sums lost to tax avoidance

But what makes this latest episode so extraordinary is how flimsy it is. It was announced with apparently minimal consultation with the Department for Work and Pensions or the Lib Dems.

The £4bn figure frankly seems to have been plucked out of the air. Can it survive as far as the October 20^th spending review? Won’t it get torn apart and shot at by Osborne’s cabinet rivals behind the scenes? The likes of Iain Duncan Smith and possibly Vince Cable must be turning red with rage.

So should we get angry at the latest announcement? Count the days before the government performs another u-turn?

Or just sigh at the incompetence and illogicality of it all?

At the end of July, a council vote forced Conservative council leader Harvey Jennings to write to communities secretary Eric Pickles in protest at the impact of government funding cuts on Derby.

And then last night, the Conservatives, Labour and the Lib Dems all voted to lobby education secretary Michael Gove over his decision to axe most of the city’s schoolbuilding programme, which was weeks away from signing contracts when he pulled the plug.

So is this a Tory council in revolt? Well, not quite.

This May’s local elections left the council with a three-way split between Labour, the Tories and the Lib Dems. Negotiations saw the Conservatives form a minority administration, with the Lib Dems not part of a coalition but allowing them to govern.

This left the Conservatives vulnerable to defeat on individual votes – as happened in late July, when the council was debating the government’s in-year cuts, and the council’s budget strategy.

The Labour group moved an amendment to approve the council’s budget strategy ‘but to actively lobby against the Government’s proposed 25-30% cuts in grant’ – see page 14 here.

The Conservatives voted against it, but with a few Tory councillors absent and the Lib Dems abstaining – for reasons that aren’t clear, even having spoken to two of their councillors – the amendment was carried.

As a result, Cllr Jennings had to write to Pickles in his capacity as council leader, warning about the impact the cuts would have on Derby. The full letter is here (apologies for the imperfect formatting) – one highlight is where he confirms that imminent funding cuts to local councils are likely to hit poorer areas hardest:

‘A key message I would like to get across is how the funding cuts will not affect all authorities to the same extent. Highly geared, deprived authorities such as Derby are particularly vulnerable to both Specific and Formula Grant cuts and I would urge you to give this serious consideration before any decisions are made on funding share in the comprehensive spending announcement.’

Cllr Jennings takes fire at how the current grant system and three-year settlement – both legacies of the Labour government – favour London boroughs over councils like Derby, and urges Pickles to reform the system before October’s spending review.

And then:

‘…it would be deeply regrettable if we had to cut our capital programme at a time in which we have a strong desire to create jobs for local people.’

What’s this? A Conservative council leader backing public spending as a means of creating jobs for local people? Why yes, yes it is!

In conclusion:

‘To keep the impact on service provision to a minimum we urge that any further cuts announced during the Comprehensive Spending review in October are kept to a minimum.’

No word yet on whether Pickles has replied.

As for the Building Schools for the Future programme, the scrapping of which has provoked concern among many Conservatives, Derby has seen 11 local school redevelopment projects scrapped, and just three ‘sample schools’ saved.

At last night’s council meeting, all three parties backed a proposal to write to Gove opposing the decision to scrap the local BSF programme, and to invite him to Derby to discuss the situation. No doubt a letter will follow shortly.

None of this will realistically alter anything by itself. But it is possible to believe that letters of protest from a series of Conservative and Lib Dem minority-run councils may discomfort the Conservative leadership, and cause the Lib Dem leadership plenty of concern, ahead of next year’s local elections.

Derby City Council hasn’t yet decided what specific cuts it will make, but it expects to reduce spending by £30m over the next five years – on top of £32m it was already planning to cut over three years. This from a total annual budget of £200m. 750 posts will go.

There has been controversy locally over a planned £34m refurbishment of Derby’s council headquarters – Labour says the money could be better spent on schools and services. The council insists the refurbishment will recoup money over time, described in detail by the council here.

Meanwhile, Derbyshire County Council was the target of a 150-strong protest yesterday over plans to increase adult care charges, led by Unison and service users who forced the issue into the council chamber.

While the Conservatives’ poll ratings have generally held up since the election, the Lib Dems have fallen back sharply*. While the figures published this week by The Independent showed their poll ratings stabilise, they are still well down on their election result, and light years from their Clegg surge ratings.

Lib Dem leader Nick Clegg. Photo not dated 2011.

Most worryingly for the party, the Independent’s poll suggested that only 62 per cent of Lib Dem voters at the general election would vote for the party again if an election was held today – with 22 percent defecting to Labour.

Many in the anti-cuts movement see the Lib Dems as the weak links in the government, and hope that major losses in the local elections next year could unnerve Liberal Democrat MPs. The thinking is that Lib Dem backbenchers – especially left-wingers and those in Lib-Lab marginals – will fear for their seats if they remain in the coalition, and rebel against the government. Enough rebels means the coalition will collapse.

But while it makes sense to target any parties and councillors who support the cuts, and support those willing to fight against them**, we should be aware that a bad night at the polls next year might actually strengthen the coalition.

Consider this – Lib Dem MPs in Lib-Lab marginals see the party trounced at the polls next year. Maybe they will think that if they stay in the coalition they will lose their seat at the general election – the conclusion being that it’s time to get out.

But it’s equally possible that these MPs might think that collapsing the coalition prematurely would force an early general election in which they would almost certainly lose their seats. They could decide that with the polls looking so bad in 2011, it would be best to tough it out and pray that the economy recovers strongly enough by 2015 that the party’s poll ratings recover and they hold onto their seats.

They may see the choice as between certain disaster in 2011 and probable disaster in 2015. If that’s the choice, many will sit tight and avoid upsetting the applecart.

There is a precedent here – as Labour tanked in the polls during 2008 and 2009, one of the arguments successfully deployed by Gordon Brown’s camp against possible leadership rivals was that any new party leader would have to call a general election to have any kind of legitimacy – and that based on the polls in 2008-9, such an election would lead to absolute disaster.

Labour MPs bought it, and stuck it out to 2010. It’s perfectly possible that a local election disaster next year may lead many Lib Dems to the same conclusion.

That doesn’t mean anti-cuts activists should not target Lib Dem councils next year – it’s just something for the strategists to bear in mind. Forewarned is forearmed.

*Of course, the Lib Dems’ poll ratings also fell back after previous elections – in the past, their support has always dipped between elections, before rising during election campaigns. But this was because they only got publicity at election time; now, their leaders get constant publicity as cabinet ministers – and yet still their ratings fall.

**Whether ‘those willing to fight’ the cuts includes Labour remains to be seen

The Guardian reports that many of the think tanks and lobby groups that have backed the US Tea Party will be attending a conference promoting the small government agenda in alliance with Britain’s ever-reliable Tax avoiders payers Alliance (ok, enough with the strikethrough).

According to the newspaper: ‘Today’s conference will be attended by Americans who have lobbied in the US to overturn Barack Obama’s healthcare plan and maintain tax breaks for the rich. Several of the groups have close links to the billionaire brothers David and Charles Koch, prominent tormentors of the Obama administration.’

Big Oil is prominent among the backers of the conference – the Cato Institute, which is sponsoring the event, is bankrolled by oil companies, while Americans for Prosperity was founded by oil billionaire David Koch.

In truth, this is the smart end of the Tea Party movement – I doubt the Kochs are dumb enough to question President Obama’s birth certificate; they’re just happy for their movement to use the issue to tangentially undermine his healthcare plans and economic stimulus package. The think tanks have left their loony bin outside the proposed ‘Ground Zero mosque’.

But the Tea Party and their fellow travellers on the loony wing of the Republican Right have a bad reputation in Britain and the rest of Europe. If they’re teaming up with the Taxpayers Alliance, hopefully it will show more people what the TPA’s ideological agenda is – helping the rich get richer at the expense of everyone else. And that can only be a good thing.

So a warm welcome to the Tea Party. Bring it on.

The latest Construction Products Association (CPA) industry forecast predicts that construction will be the first major industry sector to fall back into recession following a brief recovery in the first half of this year.

As The Construction Index reports, output will fall during the remainder of 2010, and the decline will continue into the first part of 2011.

According to the Index, the CPA forecast also predicts:

• Construction output will only return to the 2007 pre-recession level in 2019;
• Public sector including PFI output is expected to fall 26% over the next four years;
• Private housing starts in 2014 will be 18% lower than in 2006;
• Total housing starts will still be 41% lower than the figure required to meet anticipated annual population growth.

More positively, the CPA says that:

• Infractructure output will grow by almost 50% between 2009 and 2014, driven by investment in rail infrastructure and energy provision;
• Commercial output will rise for four years, between 2011 and 2014, yet it will remain 15% below levels seen in 2008.

The CPA represents Britain’s manufacturers and suppliers of construction products, components and fittings. Its chief executive Michael Ankers told the Index: “Whilst there was a bounce back in the first six months of this year, the figures are deceptive.

“The factors that drove this growth – the short term impact of the last government’s fiscal stimulus, a tentative recovery in the housing market, and the start of a number of major projects in the run up to the election – are not the basis for a long-term recovery.

“The industry needs to see strong private sector growth … but as the latest information on new orders for construction work published on Friday shows, recovery in orders for private sector work go nowhere near what is needed to offset the anticipated 18% fall in public sector construction work over the next two years.”

Many sectors of the economy are giving mixed signals at the moment, but the prospects for construction are decidedly gloomy. This latest forecast suggests that the magical private sector growth the government believes will compensate for the impact of public funding cuts simply is not happening.

The council has spent nearly £670k on redundancy pay-offs to three assistant chief executives, just as compulsory redundancy notices go out to 50 Connexions staff, all of whom will receive the statutory minimum – capped at £11,400.

The three senior executives who received bumper payouts are:

• Liz Bashforth – assistant chief executive for legal and governance – £331,867
• Ken Green – assistant chief executive for organisational development and communications – £200k
• Ron Barraclough – assistant chief executive for policy and performance – £125k

Unison regional officer Kevin Osborne told CYPN: “There is clearly a policy of ‘us and them’ at the city council. At a time when public sector workers are having their wages frozen and facing redundancies, these payments are unacceptable.”

Unison is currently balloting its members for industrial action over the job cuts at the Liberal Democrat-controlled council.

As commentary, I don’t think anyone’s arguing that if there are to be cutbacks, highly paid senior managers should be well ahead of frontline staff in the firing line for redundancy.

What I don’t know is whether the terms of the three executives’ contracts meant that the council was legally obliged to pay them £670k.

If the council was obliged to make these payments under the contracts, then they clearly agreed to some pretty daft contracts for senior management. If the council wasn’t obliged, then it is showering these executives with extraordinary largesse, regardless of how competent they were in their roles.

Either way, it’s a mess.

UPDATE: bgb in the comments has informed me that the council was Labour-run at the time these executives’ contracts were agreed, and that the payouts were contractual obligations. Therefore it would appear that the previous Labour council leadership should shoulder most of the blame over the size of the payouts.