Government is no longer New Labour of the 1997 Manifesto

The Government is now further from the “New” Labour in the 1997 Manifesto, than “New” Labour was from the traditional Labour party.

These extracts from that 1997 Manifesto demonstrate the point.

Spending and tax: new Labour’s approach

 

“The myth that the solution to every problem is increased spending has been comprehensively dispelled under the Conservatives.”

That is as true for investment as for current spending. It is certainly true for increased current spending, even if you attempt to re-define as investment. It is also true for spending your way out of recession, or a fiscal stimulus during a boom. As the manifesto goes on to state:-

“The level of public spending is no longer the best measure of the effectiveness of government action in the public interest. It is what money is actually spent on that counts more than how much money is spent.”

“The national debt has doubled under John Major. The public finances remain weak. A new Labour government will give immediate high priority to seeing how public money can be better used.

The national debt had indeed risen, and was coming down during a boom. It came down even further during Labour’s first term, due to their adhering to the Conservative’s policy. This high priority has been dusted off again, as a way to reduce spending, having failed for over twelve years to implement it.

New Labour will be wise spenders, not big spenders.”

Not for the last nine years they have not. By any measure, they have been big spenders, not wise spenders. Increased expenditure on the NHS has mostly been wasted on exhorbitant pay rises, and much expenditure of very expensive hospitals. However, the sharp end of survival rates from strokes to cancers is still amoungst the lowest of the OECD countries. That is lower productivity, or less value for money.That is less value for money. In Education, there has been a lot of new schools built, lower staff to pupil ratios, but little evidence of improving standards. That is lower productivity, or less value for money.

To be wise spenders you must first acknowledge your limits and seek counsel from those who have a track record in these matters. The Taxpayer’s Alliance has some good ideas, supported by Wat Tyler at Burning Our Money. John Redwood draws on his experience in government, along with his time in business. The Adam Smith Institute also provides some thoughtful pieces at times. Further, you should ignore the master’s of spin. That is the Mandelson’s, or the Campbell’s of this world. And treat as lepers the Mcbrides and the Drapers, who will only serve to destroy good government.

 

“No risks with inflation

We will match the current target for low and stable inflation of 2.5 per cent or less. We will reform the Bank of England to ensure that decision-making on monetary policy is more effective, open, accountable and free from short-term political manipulation.”

In the last year the Bank of England has pumped £200bn of money into the economy. They have reduced interest rates to 0.5%, a record low in over three centuries. Although nominally independent, are very much in line with Government policy, and would have been leaned on heavily if they had disagreed. Sound money has gone. In so far as it existed since 2001, it was despite of deficit-funded spending boom. The risks taken with future inflation are huge, and prices are already rising.

“Strict rules for government borrowing

We will enforce the ‘golden rule’ of public spending – over the economic cycle, we will only borrow to invest and not to fund current expenditure.

We will ensure that – over the economic cycle – public debt as a proportion of national income is at a stable and prudent level.”

Another policy that was shelved in the second term by pretending current expenditure is investment. Also by believing that the government had “ended boom and bust”. At the peak of the cycle in 2007, the deficit was about 4% of GDP, despite a long period of historically-low interest rates. At such a long-term peak, there should have been a surplus of around 2% of GDP. The differential – the structural deficit is around £80bn. With the collapse in the financial sector, that structural deficit now exceeds £100bn.

“We will clean up politics”

 After twelve years of government, the expenses scandal erupted. The headlines were grabbed by rich Tories (for cleaning the moat, a duck house, and manure), but the biggest monetary claims were mostly Labour MPs, including government ministers. It was kicked off by Home Secretary, Jacqui Smith claiming her main home as her sister’s house in London, not her family home in her constituency. The Labour party have not just failed on this policy. Many members of that party have helped bring it lower than at any time since the 1832 Great Reform Act abolished pocket boroughs.

NB – My thoughts were prompted by John Redwood’s short piece today on Labour’s Pledges. He says

“Keep this card and see that we keep our promises” says my copy of Labour’s pledge card from the start of the government. I did:

“Get 250,000 under 25 year olds off benefit and into work

Set tough rules for government spending and borrowing; ensure low inflation; strengthen the economy”

We all look forward to those. Any chance any time soon?

Labour’s aim to save £35bn

According to John Redwood, the Labour Government has plans to save £35bn a year. I posted the following comment.

 

 It is good news that the government is allowing for value for money as a consideration. But after twelve years of government, it is a bit late.

 A bit of quick beancounting might put this into perpective. If these are mostly savings they could have made earlier, and assuming they have always been a constant percentage of government spend, then labour’s delay has cost the  taxpayer around £325bn. If it has only built up since the spending hikes in 2001, the figure reduces to £150bn. However, for the government to admit this lower figure would be to admit that a large part of the spending increase was money down the drain.

 Another way of looking at the £35bn is to divide by the number of Labour MPs. It is nearly £100m per MP. As I have blogged before, this level makes the financial amounts of MPs expenses seem trivial.

 But even this annual £35bn only scratches the surface between the best value that can be theoretically achieved and the situation now. There is a lack of dynamism in government in changing service provision to the changing requirements; a lack of expertise in matching real individual (or local) needs to the money available; and a total lack of thought in relating costs to benefits for new initiatives. Add to the mix the strong interest groups in protecting the status quo, and many statutory encumbrances that add little value but a lot of grief, and you have the opportunity to spend a lot less, whilst improving the welfare of society as a whole.

 

To enlarge on why the scope for savings is much larger

 

1)      Much of the government services provided, whether education, health care or welfare payments are based upon a uniform specification. In education, there might be too much spent on some pupils, so that a very small minority will be missed out. The same goes for disability or housing benefit.

2)      Initiatives that flounder. Whether it is the drug addiction schemes that are less than 5% effective or the computer schemes that deliver many times over budget, years late and without the benefits specified.

3)      Lack of marginal analysis. A new initiative will look at the supposed benefits, but not the costs. For instance raising taxes on alcohol, tobacco and fuel may all have the desired results of reducing consumption, but the biggest impact is the reduction in living standards of those whose spend increases on these items. Last year I wrote extensively on the proposed congestion charge in Manchester. My major objection was the same issue. A low charge will be mostly absorbed by the motorists. Only a high charge will cause the majority to switch to public transport.

4)      Ignoring unintended consequences. The smoking ban in public places has triggered a massive decline in the number of pubs. The raiding of pension funds by Gordon Brown has contributed to the decline in final salary schemes. Avoiding recessions after the dot.com bubble burst in 2000 and after 9/11 mean that the boom was prolonged, causing greater grief when the boom finally ended. Doing “whatever it takes” to save the banking system, meant that the exchequer took on hundreds of billions liabilities that may result in massively increasing the National Debt.

5)      Ideological or political appearances. Whether it is “bobbies on the beat” or investing in renewables to meet climate change targets, costs are incurred for public relations, rather than to have any obvious effect. The excessive increases to doctors and nurses in recent years has added billions to the NHS wage bill.

6)      Lack of Expertise in cost negotiation. The government this month signed a £6.5bn PFI deal to widen 38 miles of the M25. In 2004 it was to be £4.6bn for 63 miles.

 

Another attempt at understanding cost control in government was here, where I applied the principals used in my weekly shopping to the issue.

MPs Expenses – Classic British Fudge follow-up

In an earlier post I wrote about Nadine Dorries alleging that the  “expenses system was designed to give MPs an underhand pay rise, when a real one would have caused public anger.”

John Prescott says that

“I recall Bob Mellish, our Chief Whip in the mid 70s, telling us at the PLP that the Government was not allowing the MPs wage award but the new alllowances would be more generous and they’d allow a ‘liberal interpretation.’

 This led to my first row with Bob about this policy, which I told him would end in tears”

MPs Expenses – Classic British Fudge

There is a very valid allegation that Nadine Dorries makes, that will get drowned out in the backlash from her wilder comments. The expenses system was designed to give MPs an underhand pay rise, when a real one would have caused public anger. Nadine Dorries claims that until 2005, MPs were actively encouraged to view expenses as part of their normal salary, and the fees office actively helped. According to Iain Dale, that same fees office have privately apologized to Labour MP Ben Chapman for advice given to him on his mortgage arrangements. Dale also made a post that Ken Livingstone has alleged that the Labour Whips actively encouraged MPs to see second home allowances a supplement to their salary. They therefore encouraged MPs to claim the maximum.

 

If Dorries’s allegation is true. then the current expenses system was put in to deceive the electorate about with the true level of MPs pay. In so doing it encourages a culture of dishonesty and self-serving that should be alien to the political class. It also shows that rather than a few MPs troughing off their own, both the fees office and the political parties actively encouraged their MPs to participate. This could be most damaging for the Labour party who have done least to make a clean break with past practices.

The end of Nadine Dorries’s Career?

 

The Honourable Member for Mid-Beds has had her blog taken due to manic accusations about the Barclay Brothers, owners of the Telegraph. Full story from Dizzy, with additional comments by Iain Dale.

It is a shame that she should end the piece concerned with wild conspiracy theories. They do not stand up to close scrutiny. Nadine is also made wild suggestions on BBC Radio 5 Live that there is the risk of MPs committing suicide.  It looks like these extreme comments will drown out a very valid point – see next posting.

MP’s Expenses – Being Machiavellian to tackle the bigger financial issues

Yesterday I wrote a comment on John Redwood’s blog that

  1. That MPs costs are an insignificant part of public expenditure.
  2. David Cameron should take a decisive (Machiavellian) approach to this, providing a clear precedent for the government to follow.
  3. We should then move on to sorting out the economy.

 

This drew two responses. I repeat them hear, with more fulsome responses than I posted earlier on the blog.

Lynne Gill Reply:
May 12th, 2009 at 6:44 am

If you think the furore over MPs’ expenses is a mere distraction you have no idea of the outrage felt by the rest of the population. Removing the party whip and asking for admissions and apologies from these miscreants is only the beginning of the process.

Their behaviour is morally repellent and conniving, and in many cases criminal – but I guess it’s going to be deemed ‘not in the public interest to prosecute’, eh?

The very least they should be expected to do is pay back what they have stolen from the tax-payers pockets. How about putting their ill-gotten gains into a fund for, oh, lets say refurbishing the almost-slums some of our service personnel are living in, between putting their lives in danger at the behest of these gross pieces of work.

 

 I profoundly disagree with your comment. I believe that in politics, as in other areas, you should give people a chance to make amends and move on. This is what David Cameron has done today, setting a precedent for the government to follow.

If we start an inquisition it will go on for months. At this time when we need better government to sort out the economic mess we are in, not to turn parliament into a Roman Circus to watch good people being thrown to the lions.

Further, most MPs have acted within the existing rules. They have not “stolen” money, but that have acted dishonourably and immorally. For them, the conformance has been to the letter of the detailed rules, rather than to the spirit of why they were laid down.

 

Donna W Reply:
May 12th, 2009 at 8:33 am

Sorry, but it is going to need much more than punishment of the 3 worst offenders.

This is Cameron’s chance to clear the Party of the Old Guard – the Squire-ocracy who have no understanding of ‘normal’ peoples’ lives.

If he let’s them get away with claiming expenses for swimming pools, moats, chandeliers, horse-manure (how apt); domestic servants etc ….. then the Tory Party will sink like a stone.

He should be demanding they all pay back the money they have mis-appropriated, seek resignations – and if they’re not forthcoming, withdraw the Whip.

 

Your comment about Cameron demanding that money should be paid back is valid, and is exactly what Cameron has done today. However, Cameron has broadly followed my line. Draw a line in the sand to those who recognise their error and apologise, then move on. Indeed he has improved on my suggestion, as he has set a clear set of rules for those wishing to retain the Conservative Whip. To do as you suggest – essentially sack those the toffs, or those you disagree with – is poor leadership.

Political parties are essentially coalitions, and the leaders need to keep a large range of people on board, who are loyal to that leadership. Machiavelli wrote in 16th century Italy that when a Prince takes over a city he should kill a few and then clearly state that peace should ensue. This way, the new subjects have a clear decision – die or become loyal. For Machiavelli, going after all the vanquished enemies would be counter-productive. It is better to transform the majority and make them loyal subjects, for given that chance most will become loyal subjects. If you are continuously crushing the vanquished, then they will have reason to rise up against the Prince.

 Being “Machiavellian” in the modern political context, is about delivering a clear message in times of crisis, sacking those who do not conform, but then offering a clear way forward to those who wish to mend there ways.  

          As John Redwood has stated, the Conservatives in power will have much bigger battles to wage. Today Cameron has shown he can fight those battles more effectively than the current Prime Minister.

Dave Cameron is decisive on MPs expenses

Yesterday I wrote

 

 David Cameron should remove the party Whip from the 3 worst offenders (according defined criteria, including failure to recognize their waywardness), forgive the rest (after appropriate admissions and apologies) and move on. That would set a clear precedent for the Prime Minister to follow.  

Further, it would also show David Cameron to be able to make decisive and bold moves for the sake of the country, even if it means losing some friends on the way. With unprecedented cuts to be required in public expenditure when he enters office, this would increase his stature for much bigger battles ahead.

 Today, David Cameron has made the decisive and bold move, in a way that improves upon my suggestion of yesterday, first in John Redwood’s blog, then enlarged upon on this blog. Iain Dale has a fulsome account of the speech here. What was missing from by post was that MPs should pay back expenses they claimed immorally (but not outside the rules). Also Cameron is more benevolent (he will only sack those who do not conform, not sack 3 as a warning to others). In addition Cameron lays down that principles are more important than rules, with a filtering of expenses before they are submitted. In all 3 areas Cameron has improved on my suggestions.

 The result is that the general principles will become more important than the individual rules. This is manic beancounting at its best!

 Furthermore, the way is clear to move on forward onto the wider issues, building on the experience to move forward. To quote David Cameron

” But when it comes down to it I think all of us want the same thing – we want to be proud of our Parliament and the people in it. We’ve got big, big problems in this country. We need big change.

If we win the next election, we’ll be asking the whole country to come together to show social responsibility, personal responsibility and thrift. So the least we can do is to ask Parliament to live by those values as well.”

MPs Expenses – Cameron should be Machiavellian

Just posted the following comment to John Redwood’s Blog

MPs Expenses are (highly symbolic) distraction. If each MP’s cost us £300k each, 650 MPs cost £195m, or 0.03% of total government expenditure. A 50% saving on MP’s costs will be less than 0.1% of the total we need to save. Conservatives should be Machiavellian on this. David Cameron should remove the party Whip from the 3 worst offenders (according defined criteria, including failure to recognize their waywardness), forgive the rest (after appropriate admissions and apologies) and move on. That would set a clear precedent for the Prime Minister to follow.  

Further, it would also show David Cameron to be able to make decisive and bold moves for the sake of the country, even if it means losing some friends on the way. With unprecedented cuts to be required in public expenditure when he enters office, this would increase his stature for much bigger battles ahead.

Kelvin Hopkins – The Honourable Member for Luton North

As a break from all the revelations of MPs playing the system, please read this in today’s Telegraph.

 

A loose regime can only work for people with integrity. But a complex system will not only penalize the honest, but distract MPs from their proper role.

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