Thursday, February 18, 2010

Will the growing signs of a 'double dip' bring an early election?

The economic news is deteriorating rapidly. Aside from the short-lived 0.1% 'growth' story earlier in the month the economic news has been relentlessly gloomy so far this year with the outlook for jobs, house prices, inflation, economic growth, the exchange rate, Government borrowing and interests rates all turning sharply negative in recent days.

Especially worrying are the Government borrowing numbers for January which reveal that we needed to borrow £4bn in a month that normally has the Governments coffers overflowing. The BBC reports "January typically brings the government a large income from tax receipts, giving it a budget surplus and allowing it to repay some of its debts. But this year tax receipts were significantly lower than expected, the ONS said, with both income tax and capital gains tax income falling sharply. Tax receipts dropped 11.8% compared with January last year, when the government was able to repay £5.3bn."

This is the equivalent of a seaside holiday hotel finding it is making a loss during August.

For most of 2009 the Government were printing their own money to spend, but that process has ended and from now on the Government has to persuade real investors to lend it the mountain of cash it needs to pay the salaries and benefits on which millions of Britons depend.

Borrowing costs will almost certainly rise, very sharply. Unless the markets are convinced that the Government has a plan to deal with its budget crisis even this might not be enough.

That is why speculation is rising again that the Government may not wait for the news to get worse but instead cut and run for the election in March. An early election means that the Budget could be deferred and the election would happen before the 2010 1st Quarter economic figures are published in April (Many analysts believe that the Q1 figures will be more disappointing than the 0.1% 2009 Q4 figure published last month, suggesting either no growth or a tip back into recession).

We cannot go on like this, playing politics while the real economy teeters is the last straw. It is more important than ever that the Government delivers a credible plan for jobs and growth. Labour should take the advice of leading economists and Sir Richard Branson and adopt our plan to tackle the deficit and ensure stable recovery. Instead, Labour are pursuing a path that will undermine confidence, threaten higher interest rates and mortgage rates and put the recovery at risk.

Wednesday, February 10, 2010

Fair Votes-
Has Nick "Mini Me" Clegg made a big tactical blunder?

After weeks of careful positioning by Nick Clegg that his party were not in Labours pocket, last night the entire Liberal Democrat contingent filed through the voting lobby with Labour in a shabby attempt to alter the voting system.

The Liberal Democrats have sought a change to the voting system ever since they were formed but they want Proportional representation. The system proposed by Labour is in many ways the opposite, alternative vote has a tendency to exaggerate the advantage held by the winner, it would have given Labour even more seats in 1997 and 2001 than they already had, for instance.

As Mike Smithson, the Lib Dem blogger from puts it:

"The general presumption is that Labour hopes that Clegg and his party will now look at Labour more favourably in the unlikely event of a hung parliament. But hasn’t the aim been much more short-term than that?

For the form of what’s described as “electoral reform” that’s represented by AV is an abomination to the Lib Dems. It doesn’t deal with their main concern that the numbers of MPs each party gets should be in line with how the nation voted. In many way AV makes that worse"

Yet Cleggs party went along with the stunt - and apparently this is in the name of trying to repair public trust in politics!

Public anger at the expenses scandal is part of a deeper frustration with our whole political system.

Labour have had 13 years to mend our broken politics. But Gordon Brown is just not capable of doing it.

He has tried to block the publication of MPs’ expenses, he has dithered over reform and it took days of Conservative pressure to force him to take away the whip from three Labour MPs facing prosecution over expenses.

After avoiding a leadership election and bottling a general election, Gordon Brown is trying to fiddle the electoral system to save his own skin, it is as simple as that.

It’s clear he will say anything to cling on to power.

We can’t go on with five more years of Gordon Brown’s old politics. We need change and real reform of the political system.

An incoming Conservative Government will fix our broken politics with a sweeping redistribution of power: from the state to citizens; from the government to Parliament; from Whitehall to communities; from Brussels to Britain; from judges to the people; from bureaucracy to democracy. We will ensure that MPs can never use parliamentary privilege to evade justice, and reform lobbying laws so ex-ministers can’t use public resources for private gain.

To get real political change we need a change of government.