Thursday, October 30, 2008

Another institution
‘modernised’ by Labour :

Another institution in crisis.

The BBC has found itself in deep trouble this month following a storm of protest about the style, content and extent of coverage of the Osbourne/Mandelson/Rothschild affair and then a hurricane of protest over the Russell Brand show and the comments made by him and Jonathan Ross to Andrew Sachs’ answerphone.

Irrespective of ones views about either story (and both are entirely subjective issues) there is widespread agreement that the rows themselves have been badly handled by the BBC. Initially they failed to react at all and looked high-handed and arrogant as a result; and then faced with the furore have over-reacted to the long-term detriment of the Corporation. This echoes the fuss over the queens ‘tantrum’ that never was and the now infamous phone poll fixes.

Controversy is nothing new to the BBC; for as long as I can remember there have been fairly regular outcries about what is broadcast or complaints of bias and in the past there was a quick response from the Chairman of the Governors or the ‘DG’ or both.

For a long time past the BBC has been a problem, it has grown from a national broadcaster of two radio stations and the sole TV channel to being Britain’s biggest media empire with extensive interests in publishing, film-making, the internet and literally hundreds of channels on air on TV and radio around the world. It badly needed a root-and-branch review – what is the BBC for in the digital age? Why should 100% of viewers pay for a free service that only about 35% of people watch? Why have a licence fee for watching TV when increasingly we will get our entertainment ‘on demand’ over the web or via satellite?

New Labour failed to address the big challenges and instead agreed to renew the charter with some tiny (and utterly futile) changes to the management. Out went the Board of Governors and its hands-on chairman and in came the BBC Trustees; a toothless quango whose ill-defined responsibilities appear to clash with the existing regulator OFCOM.

And the result? Another new Labour fiasco. The BBC is now not sure who it reports to (we tax payers are not represented either directly or via our elected Government) and the whole edifice seems incapable of deciding day-to-day why it exists or what it should be trying to do other than get as much money out of the treasury as possible and spend it as fast as it can.

This is a repeating characteristic of nearly everything New labour have restructured, from the regional Development Agencies, health trusts, the banking regulators and the broadcasters the story is the same, lack of focus, lack of accountability and self-serving management.

Monday, October 27, 2008

Will the New Labour spending splurge include the Kingskerswell bypass?

The Labour Government have decided that the best answer to the deep hole the country is in is to keep digging. The idea that the way out of an economic crisis brought on by too much debt is to borrow more money is utterly bizarre.

The Government argue that a sudden increase in State spending can alleviate the worst effects of a recession, an argument that sounds sensible enough on paper but falls at the first hurdle on closer examination.

The main reason that there is a crisis in the first place is that the other side of the borrowing/lending deal – the lenders, have got cold feet. It’s not banks that have the money to lend; it is the people that deposit with them. These people have become rightly concerned about the ability of many bank customers to repay their debts.

So everyone still wants to borrow (in fact in a downturn borrowing requirement goes up) but the banks stuck in between have to persuade their creditors that they are lending responsibly to attract their funds in the first place. As a consequence there is a lot less money around; and because there is less of it the price (real interest rates) have shot up.

If you are sitting on a pile of money you need to lend it but you only want to lend it to the safest borrower imaginable; and easily the safest borrower is anyone who can’t go bust – a big Government like HMG is perfect. So as soon as the Government starts serious borrowing they start competing (and beating hands down) with the very businesses and firms they say they are so keen to help. This has the effect of driving the interest rates that these ‘less safe’ people have to pay even higher and means that fewer firms will be able to borrow at all.

What a blatant ‘tax and spend’ policy like this undeniably does is to shift even more of the economy out of the hands of individuals and businesses and into the dead grip of Government. When this last happened last time in a big way after second-world war, it brought us 45 years of relative economic decline.

This is because Government spending rarely creates economic activity; it more often destroys it. State projects and Government machinery create non-productive activity – and worse they create jobs which suck talent out of the labour pool; meaning business’ cannot always grow even when they want to because they can’t attract staff who are enjoying security; a top salary and an index-linked pension in the public sector.

In any case big infrastructure projects like the Kingskerswell Bypass take years to start, let alone finish, and by the time they are providing work in construction it is highly likely that the building slump will be over. We can live in hope that this is one piece of Labour spin that might help us, but I won’t hold my breath.

Monday, October 20, 2008

Polling latest:

It's good news for him

But bad news for him:

A slew of recent opinion polls have provided some much-needed cheer for the Prime Minister, and some serious pause for thought for Nick Clegg.

ComRes for the Independent on Sunday has :
- CON 40%: LAB 31%: LD16%
Yougov for the Mirror has
- CON 42%: LAB 34%: LD14%
The Mail on Sunday poll, showing
- CON 46% : LAB 30% : LD 13%
turns out to be a bit of an outlier now and therefore is looking less reliable than the others.
Generally therefore I have to admit that Browns handling of the banking crisis added to his well received Conference speech has provided about a 5% lift to Labours poll rating (average during the summer was in the 24-27% range).
Of course you could argue that this is good news for us in the blue team, as this is not enough of a bounce to justify an early election or provide Labour with a win, but it is enough to prevent Gordon from being ousted and thus guarantees a Cameron V Brown playoff in 2010.

On the other hand the Labour supporters reading this (Yes, Kieth, that's you) will probably argue that Gordon is building a base on which to mount a fightback, and that to be 'only' 8 points behind at this stage of a third term Government is very good. Trailing by only 8 points or so into an election would leave them strong enough to bounce back in a single Parliament, even as they lost power.
Of course it's true that Conservatives would feel much happier back in the 20% poll leads we did briefly see during the summer (although there is a danger of complacency, see posts passim) but it's easy to forget that we would have bitten our own arms off for a poll lead of anything like this as recently as summer 2007. Even with these numbers Cameron would be safely installed in 10 Downing Street with a working majority.
The biggest worry in these latest polls must be for the Liberal Democrats, who on the averages have now completely lost touch with the 18/20% that they must be in range of to avoid at least halving their Westminster presence. Lib Dems claim that an election campaign boosts their poll numbers as the broadcasters are forced to give them more airtime under fairness rules; but the last few weeks have boosted their broadcast presence hugely, Vince cable has hardly been off the TV screens, yet they are steadily losing votes (overall the Lib Dems have lost more than one in four of the voters they had in 2005). Worse, the latest Labour surge has come almost exclusively at the Lib Dems expense which blows Nick Cleggs new strategy (making gains from Labour in the North by promising tax cuts) out of the water altogether. Having already had two complete changes of policy (in totally different directions), and three leaders in one Parliament the Lib Dems have no room left to change strategy or leader again before the next election.

I happen to think Labour will not sustain this level of support. Reaction on the doorstep to Gordon Brown hasn't noticeably changed at all, most people really don't like him or want him as their Prime Minister and as soon as this credit crunch does become a crisis in our high street then Labours level of support will sag even further.

Update Wednesday 22nd : A new poll came out today from IPSOS MORI today with another set of figures that supports the others.
Their figures are: CON: 45 LAB : 30 : LD 14.

The average 'poll of polls' considered to be the most accurate predictor of all has CON 43, LAB 31 and LD 16

Wednesday, October 15, 2008


- it's in our genes.

One of the most irritating features of the current banking crisis has been the barely- disguised glee with which journalists and politicians of the left have reported it.

Mainly this has been in the ‘proof at last that market forces cannot be trusted’ type thing, but what has surprised me is the sheer lack of understanding by supposedly intelligent commentators about what ‘economics’ is, and what ‘the market’ is.

To many it seems the free market is some kind of theology, a cast in stone political and economic philosophy that has been followed by right wing politicians with seemingly disastrous results.

In fact the term free market is nothing more than a euphemism for civil freedom. People free to behave as they wish will buy, sell and trade their legally held assets as the mood takes them; and because humans do periodically act as a herd, occasionally they all choose to sell, or buy, at the same moment in time, and when that happens there will be a very temporary spike or dip in the prices. This process (‘boom’ or ‘bust’) can be very messy but is as inevitable as leaves falling off trees in the Autumn.

Human nature also inevitably provides the solution – it never takes too long before the bold in society turn these situations to their advantage and act differently, becoming very successful in the process, encouraging imitators and reversing the spike/crash in the process.

Stupid politicians and their left of centre supporters imagine that this apparently random process needs to be somehow ‘controlled’ by a higher authority, namely those same politicians. There is no example in history of any authority managing the process of trade with anything other than disastrous results.

The most that a Government needs to do is to protect citizens from the temporary fal-out if there is one. A good example of this is George Osbournes ideas on fuel duty that would rise as prices fall (and vice-versa) thereby ironing out the worst effects of oil price fluctuations.

Yes, there is a massive correction going on in the financial services world, banks have become over-borrowed and the fall out will be destructive and cause short term problems for economies around the world, but this crash is the aftermath of 20 years of an unprecedented increase in living standards world-wide, from Manchester to Mumbai citizens are richer, happier and healther than at any time in history thanks in large part to those same bankers and speculators.

Human progress is messy. Some of the biggest and most successful business ventures ever have been the result of, or have caused, the destruction or breaking up of venerable institutions in the process. Some of our best inventions, greatest sociological steps forward and greatest freedoms have been the result of wars.

The lefts desire to regiment and organise all aspects of our lives is a failed philosophy and it will be a huge step backwards if the temporary breakdown of the loan market were to be an excuse for a widespread abandoning the freedom to speculate that is at the root of all of our wealth.

Thursday, October 02, 2008

Just the ticket.
Camerons Conference speech did the trick – he perfectly straddled the conflicting challenges facing any opposition leader in such difficult international times.

On the one hand he had to rally the troops and bolster party supporters (to whom the Conference is supposed to be focussed) to do the extra legwork and hard fundraising necessary to put us in a winning position in 2010 and on the other hand he has to persuade the public at large (for whom the conference is actually focussed) that we are a Government and he is a Prime Minister in waiting.

The carefully choreographed seating arrangement (Candidates were all seated behind David Cameron in a strict plan that was supposed to reflect the diversity and inclusiveness of the new party offering) took nearly an hour and a half to organise (and came to nothing because the point was completely missed by the media) but at least gave me a good seat from which to hear the whole speech.

Our inconvenience was nothing compared to delegates, though, who as the photograph shows started queuing for seats a full four hours before the hall opened (surely even Barry Manilow would have been humbled by such dedication) to ensure a seat in the main hall rather than the ‘overflow’ one. I said to a colleague that the only thing that would get people would queue up for 4 hours to hear a speech from Gordon Brown was if they knew he was going say 'I resign' at the end of it.

As the picture I took from behind the stage shows the size of the audience facing him would reduce most people to a quivering jelly; but Mr C remained as cool as I have ever seen him; which given that he had been up nearly all night re-writing the speech to keep up with world events was remarkable testament to his abilities and stamina.
Personally the bit about dealing with the 'all must have prizes' mentality in our schools had me cheering and the shocking story of Mr Woods wife and the heartless nature of NHS bureaucracy had me weeping. Any bit of oratory that can take a cynical forty-something like me to both emotional extremes in a few minutes must be noteworthy indeed.

Anyway we have had a reasonable press and some positive response from commentators, the general view is that he pulled off a very difficult task. There will be a few days of turbulence and it won't be until the weekend that we get to see the first post-conference polls; and mid October before they have settled down fully but I expect there will be a lot less talk of a 'Brown Bounce', for sure.