Scotland, the rematch

30 10 2014

So it turns out the independence referendum was actually a two-legged affair…

The collapse of Scottish Labour has drawn headlines in the last week; their ineffectual leader has resigned, and their Westminster poll ratings are collapsing at the hands of the SNP, following the line set at Holyrood in 2011.

A poll today has the SNP on 52% in Scotland’s Westminster voting intentions, with Labour down to 23% – in 2010 Labour scored 42% with the SNP below 20%. If those results were replicated at next year’s general election on a uniform swing across Scotland, Labour would be left with at best four and at worst just one MP in the country they have dominated politically for decades. The SNP would have between 54 and 57 of the country’s 59 MPs, turning Scotland into virtually a one-party state. There is absolutely no precedent in British political history for such a dramatic collapse.

Any such outcome would make a Tory-led government almost certain after the general election. Which is why it is unlikely to happen.

It is inevitable that Labour’s remaining world-weary troops will trudge around Scotland next year with the simple line “Vote Yellow, Get Blue”. Despite Labour’s despondency, that message will have an effect. Massive SNP (the yellow party) gains would almost certainly take the Tories ahead of Labour at Westminster, regardless of Labour gains south of the border.

Much of the SNP’s rapid growth came towards the end of the independence referendum campaign and in the aftermath, as Labour’s Scottish heartlands deserted the party over its alliance with the hated Tories in the No campaign. Are those same voters going to cast their ballots in a manner that is likely to see a Tory-led government at Westminster? Really? Whatever arguments one could make about a Tory government devolving powers more quickly than a Labour one, if hatred of the Tories is as visceral in Scotland as we are led to believe, that sort of detail is unlikely to count.

The SNP’s problem here is that, beyond the (powerful) symbolism of a vote against Westminster, there isn’t actually a lot that a vote for the SNP would achieve. SNP MPs don’t vote in Westminster on matters decided for Scotland at Holyrood – Westminster’s place in Scottish politics is a denuded one. Their role would be in agreeing a coalition (or a “confidence and supply” deal) in exchange for more powers for Scotland.

But during the election campaign, Labour is bound to demand of the SNP – “Will you rule out propping up a Tory government?” If the SNP says no or ducks the question, Labour can cry “Vote Yellow, Get Blue”. But if the SNP says yes – if they rule out a deal with the Conservatives – that would massively reduce their bargaining power in any post-election coalition talks with Labour, as the SNP would have put their credibility on the line by ruling out talks with the Tories.

It’s basically the same sort of bind the Lib Dems found themselves in after Cleggmania – both main parties claimed a vote for the Lib Dems would lead to a coalition with the other.

Labour could, of course, still royally screw everything up, as is their habit. Electing Jim Murphy as their Scottish leader – the demand from the Westminster elite – would be to entrust in an out-and-out Blairite the job of winning back Labour’s core vote from an SNP that is seen as standing on the left. It would be like standing Margaret Thatcher in a mining constituency.

But Labour is insulated by enormous majorities in its Scottish Westminster seats – 30%, 40%, even 50% majorities, the kind of majorities that have never been overturned in general elections, and barely ever in by-elections. The seats where the SNP is closest to Labour are more middle class seats, seats that voted No, with voters Labour might hope to hold on to. Chuck in the “incumbency bonus” of left-wing Labour MPs such as Katy Clark and Mark Lazarowicz, and the picture becomes even more muddled.

And whilst tactical voting for Labour by Conservatives to keep the SNP out is unlikely – tactical voting being very much a thing of habit – should the returning Alex Salmond start dropping hints about a second independence referendum as part of a coalition deal, don’t rule it out.

More likely than the SNP winning 90% of Scottish seats next year, is the SNP coming within three or four percent of winning 90% of Scottish seats next year. It is easy to see the SNP repeating the legacy of the SDP in 1983 – getting close far more often than close enough.

Which would help Ed Miliband stagger the last few steps to Downing Street, but is of absolutely no use to Labour long-term.

2015 is set to be the last hurrah of the two-party binary, and the last toot on Labour’s rusting trumpet. Even if the SNP surge blows itself out over fears of a second Cameron administration, Labour’s austerity government, with its unpopular leader, mutinous front bench, and dwindling union funds, would find themselves with the SNP, Ukip, Greens and the Tories all perfectly poised to pounce in 2020 – the SNP sweeping through Scotland, Ukip driving its tanks through northern towns, the Tories carving up Middle England and the Greens nabbing the youth vote. If Labour is even able to hang on to power until 2020, that is.

In fact, as the Labour Party enters its final death throes – sacrificed at the altar of its own austerity amidst economic meltdown as Britain’s personal debt drags it beneath the waves – it is easy to see both the prime minister and chancellor of the exchequer losing their seats at the election after next; Ed Miliband to Ukip, Ed Balls to the Conservatives.

Fear and loathing of the Tories should get Labour over the line next year. But a party that loses its principles becomes nothing more than a hollow shell of powerlust. Labour now exists for nothing more than its own existence. And a party that exists for the sake of its existence does not exist for long.

Ian Paisley is dead in the water

12 09 2014

Ian Paisley is dead. That much you’ll probably already know. And we can now expect a stampede of commentators hailing his remarkable transition from appalling bigot who stood in the way of peace to appalling bigot who enabled it.

And this will be a lie.

Ian Paisley did not “enable” peace. He stood in its way at every turn as leader of the Democratic Unionist Party. His demand was “peace on our terms”, and peace on our terms is a declaration of war.

I remember shortly after Tony Blair became prime minister in 1997, he held a meeting at Downing Street for Northern Ireland’s political leaders. A peace process had taken root under Blair’s predecessor John Major, but it had fallen apart amid rows over IRA weapons decommissioning and the fraught issue of Orange Order marches. An IRA ceasefire had been called but collapsed. Northern Ireland was once more at war.

Those Orange Order marches in the mid-90s were symbolic, especially the march at Drumcree. Drumcree was the annual flashpoint back then. In 1995 Paisley and his arch rival, Ulster Unionist Party leader David Trimble, marched shoulder to shoulder in defence of the loyalist hardliners of the Orange brigade.

That unionist unity didn’t last. The Downing Street meeting in 1997 opened a schism between Trimble and Paisley. Paisley emerged onto the steps of 10 Downing Street and bellowed that the peace process was “dead in the water”.  Trimble, by contrast, tentatively entered multi-party talks later that year.

For almost the next decade Paisley tried to block any progress in Northern Ireland. He opposed the Good Friday Agreement. He opposed power sharing. He opposed police reform. He opposed compromises on marches. He refused to accept that the IRA was decommissioning weapons. After Dr No and Senator No, Paisley became The Reverend No.

Meanwhile David Trimble signed up to the Good Friday Agreement, became Northern Ireland’s First Minister, and despite huge political pressure from both Paisley and his own UUP, he backed away from pulling the plug on the peace process in the face of ongoing low-level IRA violence.

Unionists came to despise him. He survived two UUP leadership challenges and had three MPs resign the party whip. Power-sharing broke down and the Stormont parliament did not sit for five years.

Whilst Trimble was in the wars in search of peace, Paisley was gathering his troops. UUP support collapsed amidst unionist discontent with the stalling peace process. In 2005, with Stormont still suspended, Paisley’s DUP trounced Trimble’s UUP at the general election – Trimble even lost his seat in parliament. Flattened by this earthquake and hated by his own side, Trimble quit as party leader and stepped down from frontline politics.

And so with Trimble and the UUP out of the way and the DUP well head in Northern Irish polls, Paisley started his remarkable and not-at-all cynical “transformation”. In 2006, with the First Minister’s chair there for the taking, he changed his mind – on everything. Power-sharing was not the death of unionism after all; Sinn Fein were not terrorists in suits.  It’s remarkable how things look different when you need them to.

Paisley signed up to the 2006 St Andrew’s Agreement that paved the way for fresh elections and the resumption of the Stormont parliament. Predictably, the DUP – having built its political strength from opposing power-sharing and the peace process – came out well in front, and Paisley hardly batted an eyelid as he took power alongside Sinn Fein. He and Sinn Fein’s Martin McGuinness got on so well they became known as the ‘Chuckle Brothers’. At least someone found it funny.

And so the man who had risked everything for the peace process, lost everything – and the man who had risked nothing by opposing it, reaped its rewards. Don’t tell that story to your children.

There are very few politicians I have any time for. But if there’s one thing I do respect, it’s taking personal risks to do the right thing – particularly in facing down one’s own side.

There are any number of bones you can pick throughout David Trimble’s career – as a conservative-minded politician from the oppressing side in a long-term conflict, it’s inevitable.

But as fawning eulogies glut their way across the press, it’s worth keeping in mind that Northern Ireland would have been in a far better state without Ian Paisley, but would never have reached peace without the forgotten David Trimble.

Austerity outstays its welcome

9 06 2014

Anyone watching media coverage of the recent spate of elections, or indeed the news more generally, could be forgiven for thinking that austerity never happened. I don’t think the BBC’s coverage of the local elections once mentioned the gutting of local government funding that has taken place since the banking crisis; the results were only to be discussed in terms of national politics – namely, what this means for the general election.

But austerity is a thing. It has been a thing for many years now. And all main political parties are committed to keeping it a thing for many years to come.

The Conservatives have made their position clearest so far. George Osborne has pledged to engineer a budget surplus by 2020 – which hardly anyone believes is possible – and so the welfare system will be dismantled further, local councils will be bled dry, and the NHS will wither on the vine. None of this is news, in any sense of the word.

What did catch my eye was part of the undercard of Lord Ashcroft’s opinion poll a fortnight ago. The headline act in Ashcroft’s weekly polls is always the voting scorecard – Labour v Tories – but this particular edition also featured a question on attitudes to austerity. The response was completely ignored by the media – but not by Lord Ashcroft himself, who understood its significance:

‘… 41% agreed with the statement “the national economy is not yet fully fixed, so we will need to continue with austerity and cuts in government spending over the next five years.” Nearly seven in ten Tories and a majority of Lib Dems thought so, as did one fifth of Labour supporters.

But a quarter of voters overall, including a quarter of those who said they would vote Conservative in an election tomorrow, felt that the medicine – though necessary – has already worked and the treatment can stop. They agreed that “while a period of austerity was needed to fix the national economy, we don’t need another five years of cuts of government spending”.

Meanwhile a further one third of the electorate, including nearly half of Labour voters, believed instead that “austerity and cuts in government spending were never really needed to fix the national economy, it was just used as an excuse to cut public services.” UKIP voters were among the most sceptical or cynical about the government’s deficit reduction policy, with 41% believing austerity was a cover for cuts in public services. Swing voters, too, will need convincing.

More than six in ten thought austerity could end; these were divided evenly between those who thought the policy had served its purpose and those who did not believe it was needed in the first place.’

What does this mean?

The Tories have long feared that economic recovery would undermine the case for further cuts – if headline growth figures are returning to health, why administer more of the “medicine”? Add that to the third of the electorate who always regarded austerity as a scam, and you have a majority against wielding the axe for another five years. Those supporting more cuts make up the biggest single bloc of opinion – but they are ultimately in a minority.

Note also that UKIP supporters are among the most sceptical of all about the need for more austerity. In one sense that’s not surprising – UKIP have the most working class voter base of any party. And let’s not kid ourselves – just because UKIP supporters don’t want more austerity doesn’t mean they don’t back welfare cuts, as these are seen as much in terms of “morality” as fiscal necessity.

But it is striking that at a time when leading politicians are falling over themselves to beat up on immigrants and benefit claimants out of a supposed need to court the UKIP vote, all three main parties will not so much as hint at deviating from the austerity line.

Why is this? Well, for many frontbench politicians, it is simply what they entered politics to do – the Tories to destroy the social state, the Lib Dem “orange bookers” to marketise it, and Labourites to replace it with unregulated charities.

In addition, nobody near the Labour leadership is willing to risk the ire of the markets, the financial sector or the right wing press by facing down the austerity agenda.

On top of that, you have the 41 percent who backed further austerity in Lord Ashcroft’s poll – many of them Tories, likely to be middle class, and likely to be located at least in part in the southern battleground seats that, whilst now largely irrelevant, remain firmly at the root of political calculations. Labour daren’t ditch austerity and sacrifice some quixotic stab at winning Surrey votes. Immigration and welfare, by contrast, are seens as easy targets that unite haters everywhere.

Put all that together and you get the status quo – three parties committed to delivering what most people don’t want.

MPs’ pay – stating the bleeding obvious

9 12 2013

A few quick words on MPs’ pay.

First, the body that recommended the pay rise may be politically neutral, but it is not ‘independent’ in its views on what we might call ‘public sector executive pay’. Why not? Because the Independent Parliamentary Standards Authority (IPSA) is made up of public sector executives.

Have a look at the board members – here they are. We have an ex-MP, a judge, two former NHS executives and two former quango bigwigs. Those latter four share the career paths of those who spent the best part of the 2000s trousering huge salaries, usually on the basis that they were running large organisations, had considerable responsibilities, and could earn so much more in the private sector.

Pretty much the same arguments regularly wheeled out in favour of MPs earning treble the average wage, then. The pay at IPSA’s not too shabby either.

There’s a line going around that ‘people’ wanted an independent body to determine MPs’ pay, rather than have MPs vote for their own pay rises. This is not strictly true. What most people wanted, as I recall, was an end to MPs getting inflation-busting pay rises well above those of the population at large, as well as their infamously lax expenses regime. MPs had in the past voted themselves a hefty raise – so an independent body was the response. But it’s been stuffed full of suits who are naturally sympathetic to inflation-busting pay rises – and so, once again, we have MPs getting inflation-busting pay rises. There is no public inconsistency here – people, generally, are opposed to this sort of thing no matter what manoeuvring is used to bring it about.

Whilst I accept some of the rationale for ‘competitive’ public sector executive pay (within reason), I think MPs should be paid the average wage of their constituents – same goes for elected trade union officials. I think that MPs should know how their constituents live – how else can they reasonably advocate and legislate on their behalf? If that provides them with an inadequate standard of living – well, that’s telling them something quite pertinent, isn’t it…

I do accept that there are counter-arguments to that. It would favour MPs who had considerable assets, savings, inherited wealth, for whom the low MP’s salary would simply mean dipping into their personal reserves. Meanwhile, those MPs without such financial backing would be signing up for a certain level of hardship; many would therefore be deterred.

But that doesn’t mean salaries have to be three times the average. I’ve seen a few arguments being trotted out in favour of the pay rise, usually enunciated by the kind of people who make great play of being ‘reasonable’ and ‘moderate’ – and to use the technical term, they’re bollocks.

First, high MPs’ pay does not ‘attract the best people’. We do not have anything like the best people – for the most part, we have a pretty low standard of MP. Anyone claiming that we are attracting the best people needs to find a pretty good explanation for the state of parliament in recent years.

Second, and related – the reason we are not getting the right calibre of MP is not because pay is too low. This is tied in to the idea that MPs’ salaries need to be competitive with those of top headteachers, police chiefs, hospital consultants, public sector executives and corporate leaders – otherwise, we’ll fail to attract people with ‘real life’ experience and will be limited to our current crop of universally derided professional politicians.

Which is odd – because professional politicians are a relatively new phenomenon. Go back sixty or seventy years, and MPs’ pay was much lower – in real terms – than it is today or will be from 2015. In 1946 MPs were paid a basic salary of £1,000, which is roughly £35,500 in today’s prices. And yet the House of Commons was replete with former soldiers (distinguished ones, not Iain Duncan Smith), corporate leaders, ex-miners and blue collar workers – people from a wide variety of backgrounds and experiences, not fast-tracked advisers and apparatchiks.

The reason we have a professional political class, and the reason we don’t attract candidates from a wide background of experiences, is nothing to do with supposedly low pay and everything to do with party machines. The ever-growing centralism of the Conservative and Labour parties, combined with freakish party discipline, has meant that only obsessives who have spent years plotting their political careers have had a realistic chance of being selected to stand for parliament. Open primaries have nudged the door ajar, but the tolerance of constituency party autonomy and backbench dissent that once marked British democracy is now long forgotten – parties want the type of people who will toe the party line, and select candidates via processes that favour those who’ve been positioning themselves for years.

This blocks out the 99% of the population with better things to do than spend ten years plotting a route to Westminster far more effectively than a salary miles above the national average but still, supposedly, too low.

The final argument that needs addressing is that of the hard-working MP. They work so hard that they deserve to be paid more – so the line goes. I don’t doubt that MPs work hard – they do. Hours are long, constituents’ needs are never-ending, and no doubt there’s always a ribbon that needs cutting on a Saturday afternoon. It is a hard job, a tiring job, and a thankless job to boot.

It is also one of the most privileged jobs in the country.

Perhaps MPs forget, as they troop off to the lobbies at the sound of a late night division bell, that the job they are doing is one that millions of people around the country would give their right arms to do if they had the chance – if they could do so without having to run the reflexive gauntlet of party machines and grease their way up political ladders.

Instead they – we – are reduced to ranting in the pub or on social media, waving our arms at the TV news or just rolling our eyes and muttering, ‘they’re all useless’.

MPs are paid a healthy salary, but the real remuneration is in power. There are 650 MPs who get to decide on legislation – a vote denied to every single other person in this country. Sure, the corruption of our political system has invited hordes of lobbyists, financiers, FTSE directors and think tank wonks to formulate policy and law in advance – but the vote is in the Commons, and the voters are MPs. Individually they may not have the power to swing a vote, but collectively they do, and they could do so whenever they wished were they not so wilfully bound to party loyalty and personal ambitions.

The hard-working constituency MP is often virtue hiding vice. A hard-working MP is often busy helping constituents who have fallen foul of benefit cuts or the withdrawal of local services that are the direct result of the very policies that the very same MP voted for. Traipsing around the constituency fixing roofs and mending fences is a salve to the conscience of MPs who know they have sold out their constituents in Westminster, but still want to convince themselves they are ‘doing good’.

For example, I’m told that Francis Maude, one of the fiercest Tory frontbenchers, has been relentless in helping his Sussex constituents who are having their adult care funding withdrawn by the local council. Very good of him – but of course, if it wasn’t for the savage local government funding cuts he helped formulate and drive through, the situation wouldn’t arise in the first place.

MPs who spend hours, days, weeks, months sifting through constituency casework around rejected benefits claims and withdrawn social care funding should not bleat about deserving higher pay. They should first examine their own voting records and see whether they have been the ones who have increased their own workload. Did they vote for benefits cuts or conditionality? Then that’ll be why their constituents have lost their benefits. Did they vote through local government funding cuts? Well, that’ll be why adult care funding is being withdrawn. And opposition MPs don’t get off the hook – what manifesto did they stand on? Would that manifesto have had the same results?

There is a horrible culture of entitlement among the wealthy and the rich. In the private sector this usually equates to the notion that they are ‘wealth creators’; in the public sector it is usually based on the conviction that they could earn far more in the private sector; but when you reach the charitable sector and MPs, it is based on the idea that they are ‘doing good’ and should not be financially disadvantaged for it.

But most MPs are not doing good. They have collectively created the most discredited and despised parliament in memory. They vote in ways that worsen the lives of millions of people, and then claim that the time they spend helping those people manage the consequences justifies a pay rise – a claim that is downright offensive.

I said at the start this would be a few quick words. Now at the end, it clearly is not. But the hardworking MP deserving an inflation-busting pay rise is a myth that needs taking down properly.

And if any current MP doesn’t want to do it for their current salary – let me know, because I will.

Ticked boxes and triangulation that will take Ed to Number 10

29 09 2013

Party membership these days is a judgement by the heart, not the head. Like an unrequited love, the belief is a drug on which the believer becomes hooked.

We saw this again during the Labour conference last week. Ed Miliband’s list of policy announcements have been hailed as everything from a return to social democracy, to a return to socialism. And whilst there is more substance to chew on than his One Nation guff a year ago, the substance merely confirms that what he is offering will not solve the myriad problems Britain faces.

Labour Party members have this desperate desire to believe. But what Miliband really gave us was the product of advisers and pollsters suggesting which boxes to tick as a means of hiding the triangulation that Labour is engaged in on austerity and welfare. It’s the oldest trick in the Labour book and the suckers are sucking it up.

But whilst it won’t cure Britain’s economic ills, it did just seal a Labour victory in 2015.

How to put lipstick on a pig

Energy price freeze

The big one, not because of its actual ambition or impact – both of which are extremely limited – but simply because it was unexpected. Fleet Street was caught on the hop, the Tories overreacted, and that’s about all you need for a five-day media frenzy.

Labour's policy review (credit - Mick Coulas)

Labour’s policy review (credit – Mick Coulas)

Labour has correctly identified energy prices as a major political issue, and the energy firms as an easy (and deserving) target. Expect the Tories to find a way to keep prices down pre-election, or even cut them – it is, after all, in both the Conservatives’ and the energy firms’ interest to avoid energy bills becoming an election issue that hands victory to Labour. The Tories may ditch their carbon commitments to promise cheaper energy in 2015.

But away from the hyperbole, energy prices are already too high – a freeze self-evidently does not lower them. That such a limited policy can set off pandemonium at Westminster merely reflects the introspection of the political class. That such a policy will likely discourage investment in Britain’s creaking electricity generation, at a time when it is desperately needed, will eventually raise questions about ownership that no party wants to go near.


There’s plenty of speculation over whether a Labour government could actually deliver 200,000 new homes a year, but the bigger question is how many of these would be low-cost social housing, where the need is most acute. On that, there has been little detail. ‘Affordable’ housing priced at near-market rates won’t cut it. If Labour has reversed 20 years of antipathy towards council housing, you’d have thought they’d have said so by now.

But even a million market-priced homes would raise some interesting questions. Will Labour keep the government’s Help-to-Buy scheme, which might keep house prices up while leaving the Treasury on the hook? And if the increased supply of homes does lead to a fall in house prices, where would this leave bank solvency, which is dependent on maintaining inflated house prices? Where would it leave the Treasury’s exposure on existing Help-to-Buy purchases?

It’s possible that Labour hasn’t thought this one through to its logical conclusions.

Bedroom tax

Labour was always going to commit at some point to scrapping the bedroom tax – it’s the highest profile and least popular of the government’s various benefit cuts. With any luck, Miliband’s pledge will encourage social housing landlords to pass no-eviction policies, reassured that arrears might stop accumulating in 2015.

But from Labour’s perspective, the bedroom tax pledge is pure triangulation. It allows Labour to keep all the other government cuts to the welfare system as part of its commitment to austerity, while the party’s left wing begs us to look the other way. The bedroom tax pledge is the golden chalice that lets Labour serve its poison.


Sack Atos but don’t scrap the disability benefits assessment system – it’s like changing the driver of a train that’s off the rails. This classic bit of spin was probably designed to keep Liam Byrne in a job – Labour supporters rather conveniently turned him into a bogeyman for all the party’s woes, but this one insubstantial announcement was enough to win them over.

Health and social care

Andy Burnham’s oft-repeated pledge to repeal the sections of the Health and Social Care Act that enforce NHS privatisation was, until last week, about the only thing Labour had given its supporters to cling to. In reality it’s just one element of some off-the-scale triangulation – but Labour’s health and care policies need, and will get, a post all of their own.

Zero hours

Labour’s friendship bracelet for the trade unions to salve the Falkirk splits. Legislating on zero hours contracts will do precious little to rebalance the worker-management relationship that enables such exploitation – and that’s before you even broach the crisis of work. Zero hours contracts could easily be transformed into ‘casual’ contracts that allow workers to opt out, but carry the implied threat that if they do so, they will not be offered work again.

No doubt this one Warwick-lite bone tossed from the table will sate Labour’s union lapdogs – allowing them to collectively ignore the public sector pay freeze, insecure working arrangements, continued local government austerity, the anti-union laws…

Business rates

Labour’s pledge to forego a proposed increase in business rates due in April 2015 and freeze them the following year will have minimal real impact – an average £450 saving for small businesses over the course of two years. These businesses are already being badly squeezed by rising rates, and £225 a year is unlikely to make the difference between… well, anything.

But again, this is about minimising action and maximising message. Even assuming the Tories don’t delay the rates rise themselves, most small business owners will do the maths and draw their own underwhelmed conclusions. But Labour isn’t trying to help small businesses here – it’s looking to tell the public at large that it is interested in small businesses, understands their needs, and will put them at the heart of economic growth. Like the Tories’ ‘jobs tax’ twaddle in 2010, Labour is trying to build a mountain out of a molehill.

What to expect when you’re electing

We have already seen what we will see right through to the election. The same Labourites who cheered Ed Miliband’s ‘One Nation’ speech a year ago, just hours after Liam Byrne had promised more welfare cuts, are now hailing the arrival of the New Jerusalem.

“The gap between the parties is far too narrow – but a lot of people live in that gap. It’s the people I grew up with who will pay the price if you pretend there is no difference at all.”

That John Lennon quote will be the gaslight anthem for Labour tribalists in 2015. That Labour’s promises will be delivered is to be accepted without question. To demand, expect or require more, is to indulge in a Commie wonderland that will Let The Tories In.

Labour's chief spin doctor for 2015

Labour’s chief spin doctor for 2015

If you let slip that a loved one relies on care services that will be hit by continued austerity, you will be sidelined. If you explain that welfare cuts have hit you even though you aren’t under-occupying your house, you will be silenced. If you point out that you can’t cope with energy bills as it is, you will be savaged for being unrealistic, inflexible, and everything up to Helping the Hun.

The party that still claims to represent the working classes will have a message for those working classes – eat what you’re given and get the fuck in line.

Swings and roundabouts

All of this will work, of course. When it comes to British politics, the binary rules all, the binary is king. The 2015 election will once again present voters with a choice between a Tory government and a Labour one, with the Lib Dems reduced to the role of mercenaries to get either party over the line. And it will not be pretty.

Voters are not idiots, but Britain’s political system (and I don’t just mean the voting system) forces voters to act idiotically, knowingly voting against their interests because there is no other offer on the table. Nobody votes with hope or enthusiasm, fewer still with trust.

Labour’s message will be simple – and it will not be the branded ‘socialism’ used to whip up their activists last week. Instead it will be to go through a list of issues – energy, housing, welfare, pay, growth – and tell voters that they’ll be better off with Labour on each one.

Which they might be. Marginally. If that.

But that’s all it takes. The binary rules all, the binary is king. Faced with a choice between a Conservative government and a Labour one, Labour’s natural supporters in the swing seats across the Midlands and the North will put a cross by the red rosette, without hope, enthusiasm or trust. At an election where the Tories will struggle to get their vote out, Ed Miliband’s ticked boxes and triangulations – together with stagnating incomes – will be enough to secure him a small overall majority.

Of course, that’s where the trouble begins. An unstable Labour government – with suspicious voters, party members duping themselves into thinking socialism is nigh, and trade union members opting out of funding the party – trying to deliver continued austerity and public service fragmentation against the expectations of their support base is doomed to fracture and fail and split apart right down the middle.

The binary will lose the left half of its kingdom.

Vote Pandora

But that’s just party politics. The failure of Labour’s programme to solve the problems it targets will raise far bigger questions that Westminster would like to avoid. How can we build £100bn worth of new power stations whilst relying on private firms to deliver them? How can we make housing affordable if doing so wipes out our banks?

And which way will we jump when we can no longer put off answering them?

Labour to win the 2015 general election with an overall majority of between 4 and 20 seats.

Squeezing the zombies until the pips squeak?

7 09 2013

Amid all the hype over our new housing bubble, this report in the Telegraph is very interesting:

Banks squeeze interest-only mortgage borrowers

A few choice excerpts:

“Millions of borrowers are being forced to pay more or sell their home by banks’ hardline attitude to interest-only mortgages.

“Half of the property market is buzzing, with cut-price mortgage rates and huge amounts of debt handed to first-time buyers. But the boom has not filtered through to the four million customers with interest-only mortgages, many of whom are over the age of 50.

“Instead, lenders are pushing these borrowers on to higher rates when fixed deals end. For example, one lender charges interest-only customers nearly 5pc, while offering nearer 2pc to others. Many are forced to accept these expensive rates because other banks refuse to take on the loan.

“If interest rates rise, thousands may be forced to sell their home to cover the debt. In other cases, interest-only customers are forced to start repaying the debt immediately – if they move house, for example.”

Interest-only mortgages were a big part of the pre-2008 housing bubble. Borrowers only had to pay interest for many years, with no repayments of the main chunk of the loan – the ‘principal’ – until a big repayment at the end of the term, perhaps after 25 years. What could possibly go wrong?

“In the pre-crash boom, customers were able to borrow on an interest-only basis without showing how the debt would be repaid. Then the credit crunch struck. It quickly emerged that hundreds of thousands of interest-only customers would struggle to service their debts.

“Estimates suggest there are between 2.5 million and four million interest-only mortgages, with around 150,000 maturing annually. Half of these face a shortfall of about £71,000, while one in 10 of all interest-only borrowers had no repayment plan in place.”

Well colour me shocked. So now lenders are jacking up interest rates on existing interest-only mortgages as fast as they can.

“The clampdown has proved disastrous for interest-only customers who reach the end of a fixed-rate period, move home or come to the end of their mortgage term.

“Millions are trapped with their existing lender – and if interest-only is no longer offered, customers must move to a repayment basis. Because those over the age of 60 are unable to extend the term, repayments can increase 10 times over.”

I’m not a banker, but my guess (and it’s only a guess) is that there’s two things going on here.

First, jacking up rates on interest-only mortgages that have long been signed enables banks to replenish a bit of their capital whilst they lend into the mortgage boom at the other end. In other words, they’re squeezing those who can’t get out so they can suck in those who still could.

Second, there’s the small matter of ‘zombie’ loans. These are loans – both to homeowners and businesses – that were unlikely to ever be repaid because of the borrowers’ parlous finances. Whilst zombie borrowers are able to pay the interest on these loans (as long as interest rates stay low), they have little chance of actually repaying the principal. They’re neither alive nor dead, but ‘undead’ – like zombies.

Now, there have been suggestions that banks should cut these zombie loans loose – essentially forcing these borrowers into default so that some of the capital can be recouped and used to underpin fresh loans to supposedly ‘productive’ new sectors of the economy.

The trouble is, banks driving homeowners and small businesses into default en masse does not look good politically.

But if the banks can drive interest-only mortgage holders to sell their homes, they can get these riskier loans – many of which will be in ‘zombie’ territory – off their books on the quiet, drowning it out beneath the noise of the new Help to Buy property bubble (which is apparently what passes for a ‘productive new sector of the economy’ these days), thus minimising the political blowback (NB – see Update below). And because house prices are rising, they can get back all the money they lent under the mortgages before negative equity hits.

As I say, I’m not a banking expert, so if any of the above is wrong I will stand corrected. But I’m on more solid ground with politics, and politically this is not good news for the government. If a few million interest-only mortgage holders – most of them members of the homeowning middle classes – find themselves hit by rising interest rates, that will ensure their finances remain squeezed until the election. And given that the Tories’ electoral fortunes depend not merely on headline GDP growth but rising real incomes – especially middle incomes – then this is a big problem for them.

Of course, this kind of personal finance story only reaches the Westminster bubble several months (if not years) down the line, so don’t expect them to realise until it’s too late.

Update: Frances Coppola, who knows this stuff better than most, tells me on Twitter that it’s “not on the sly. They are under regulatory pressure to reduce or end interest only mortgages because of their riskiness”. So the bankers aren’t pulling a fast one as I implied, but the effect is still the same – cut loose the zombies, don’t make too much noise. It’s just the regulators calling the shots rather than the lenders.

Special Relationship reported missing, presumed dead

29 08 2013

[London] – The long heralded ‘Special Relationship’ between the United States and Britain was reported missing and presumed dead last night at the age of 67.

Reports indicated that the relationship had disappeared somewhere in Westminster, and was believed to have fallen through deep fissures within the Conservative and Labour parties, with little chance of survival.

The alliance, fathered by Sir Winston Churchill in 1946, had seen the two nations maintain global peace by launching a succession of wars over many decades.

But after an expensive petroleum business venture in Iraq failed spectacularly in 2003, support for the relationship fell among the British public, while the global financial crisis has meant that neither country can any longer afford to act as a global policeman.

The final straw came on Wednesday night, as British Prime Minister David Cameron was forced to delay plans to win parliamentary backing for an attack on Syria.

Just 24 hours earlier it had seemed that the governing Conservatives and Labour opposition would all back plans for a new war, on the basis that this is what they always do.

However, an opinion poll published by The Sun newspaper on Wednesday as an alternative to MPs speaking to actual people found that only 25 percent of the public supported the planned attack, with 50 percent opposed.

Labour and Conservative MPs soon expressed public concerns over the rush to war, and with the Liberal Democrats having famously opposed the Iraq venture, Cameron delayed a vote on military action to give himself time to find a better excuse for a stupid idea that won’t work.

United Nations Secretary-General Ban Ki-moon is leading a search and rescue team to try and retrieve the relationship, and a team of national newspaper proprietors is on hand to perform emergency life-saving surgery in a Wapping clinic should the alliance be found.

But experts believe the chances of survival are slim. Even if Mr Cameron’s delaying tactic works and parliament does vote to support an attack, last night’s events remain a landmark as the first time an agreed strategy by the two governments has been derailed in so public a manner.

Left-wingers have long sniped at the relationship, but with even right-wing Conservatives joining the critics, sources believe the relationship may have died of loneliness. Another possibility is death by democratic causes, with the British government no longer able to spin doing whatever the Americans want as maintaining Britain’s role as a major power.

Either way, any surviving relationship will no longer be ‘special’, and will instead come under intense public scrutiny; paparazzi photographers have already been seen at Chequers, a favourite romantic retreat for the relationship.

The Reverend Tony Blair, vicar of Basra, ambassador for Kazakhstan and the former British Prime Minister, led tributes to the relationship last night. “I am deeply saddened by reports of the passing of the Special Relationship. Without it, I might have lasted long enough as Prime Minister to have got the blame for the debt-fuelled recession I helped create, and would never have had the opportunity to trouser a fortune flogging my Middle East contacts to corporate interests, and for that we should all be forever grateful.”

Sources suggested last night that a golden shower may be erected as a permanent memorial.


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