Tag Archives: revise

Labour has a new Brexit policy – but will it survive media misrepresentation?

Labour has revised its policy on Brexit and – true to form – the UK’s right-wing media have got it wrong.

They’re saying Jeremy Corbyn’s party now supports remaining in the EU, and that isn’t right at all.

Labour will only support Brexit if it protects the economy, jobs, and UK citizens’ living standards – and will only campaign to remain in the EU if the Conservatives try to leave the bloc without those protections.

This is clearly the most sensible response to the 2016 referendum by any UK political party.

The Conservatives want Brexit on their terms – terms which would harm citizens’ human rights, working rights, environmental protections and more. If they don’t get their own way, they want to throw all their toys out of the pram and have a “no deal” Brexit.

The Brexit Party want a “no deal” Brexit under any circumstances – that would run down industry, open up the NHS and other public services to yet more privatisation, and shred environmental protections, rights at work and consumer standards.

The Liberal Democrats want to ignore the result of the referendum and force remaining in the EU on the UK’s population without giving anybody a say.

Labour wants a people’s vote (referendum) on whatever is proposed: A Tory deal, no deal or remaining. If the deal does not protect UK citizens and the economy, Labour will campaign for people to support remaining.

So Labour supports the best result for the people of the UK. No other party can say that.

Now: There is a by-election in Brecon and Radnorshire, where Brexit is certain to be one of the main issues.

Wouldn’t it be great if the people here were allowed to make up their own minds on the different parties’ policies, without the media trying to influence them?

The BBC was trying to do it on Politics Live today (June 9). I was tweeting in response to the nonsense, as you can see:

They didn’t get it right.

Well? How about it?

Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.

https://www.crowdjustice.com/case/mike-sivier-libel-fight/


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No, Robert Peston, Osborne was WRONG to impose austerity. Stop distorting the facts!

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The BBC’s Tory economics editor Robert Peston is clutching at straws again.

He’s trying to persuade us all that everything we thought we knew about the UK’s economy during the Coalition Parliament was wrong, and that growth was much stronger than we thought. He is being economical with the truth, it seems.

He writes: “The ONS … says that the economy grew 1.5% in the general election year of 2010, then 2% after austerity bit in 2011 – revised up by the ONS from 1.6% – and then 1.2% in 2012, when the eurozone’s economic crisis imposed maximum pain on us.

“The previous picture, of austerity reducing growth from 1.9% in 2010, to 1.6% in 2011, to 0.7% in 2012, has been magicked away by the official statisticians.

“And they have also revised up their estimate of growth for 2013 from 1.7% to 2.2%.

“If these statistics are more reliable than the last lot, a particular school of Keynesian economists may choose to re-examine their contention that only a fool or a liar would say there is a legitimate debate about whether George Osborne’s policies were good or bad for the recovery.”

One of that school of Keynesian economists has hit back – hard. According to Professor Simon Wren-Lewis, Mr Peston’s argument is “just nonsense: complete and utter nonsense.”

He responds: “This ‘particular school’ has never based their assessment on observing what is still the weakest UK recovery since anyone can remember and looking for something to blame. They based it on what macro theory and the great majority of empirical studies tell us would be the impact of the fiscal austerity that happened. At the conservative end of such assessments is the OBR, who calculate austerity reduced GDP growth by 1% in each of the financial years 2011 and 2012. Estimates of this kind are completely independent of data revisions for one period in one country. We might doubt such estimates if they implied that without austerity we would have had implausibly rapid growth, but for this recovery they do not.”

This means that it doesn’t matter how well the ONS or Mr Peston says the economy performed – the simple fact that George Osborne had imposed austerity on the UK (unnecessarily) means growth was restricted by at least one per cent in the years he mentions.

Prof Wren-Lewis goes on to point out that the UK’s growth performance – even with these revisions – is still terrible because Peston has not taken population growth due to inward migration into account: “You really have to look at GDP per head to make comparative statements about this recovery.

As the ONS point out, this new data still shows that only in this year has GDP per head exceeded its pre-recession peak. Assuming recent data revisions have not changed this, average growth in GDP per head between 1955 and 2008 was about 2.25%. Any recovery from such a deep recession should have seen growth rates well in excess of this.

“Instead the revised data give us 1.1% growth in 2011, 0.5% in 2012, 1.5% in 2013. Only by 2014 had we got near the long term average growth rate. This is still an absolutely terrible performance for a recovery.”

Prof Wren-Lewis goes on to suggest that Peston might be saying as much himself if the Tory Government were not “breathing down the BBC’s neck”. The point that BBC political coverage is being distorted by Tory influence is a very good one, as anybody who has seen Question Time recently will know.

In fairness to Peston, he does point out that any extra economic growth did not translate into higher tax revenues for the government. Where did that money go (if it doesn’t exist only in the minds of ONS statisticians and Mr Peston)?

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Revealed: Cameron’s lies over Euro bill

– Verbal malfunction: “I’m not going to pay that bill on 1 December. If people think I are- I’m going to- They’ve got another thing coming.” Cameron can’t even announce his complaint properly.

David Cameron has lied and lied again about the £1.7 billion bill from the European Union, it has been revealed.

An investigation by Full Fact has shown that the UK has been taking part in an exercise to revise the way payments are calculated since at least May this year, meaning that discussions on the subject must have been taking place previously.

The Treasury must have known about these discussions, meaning George Osborne would have been aware of them – and this means that Cameron himself should have been told. If he had not, then his government has not been doing its job properly. He says he knew nothing until he was presented with the invoice this week.

Not only that, the amount does not reflect any increase in the size of the UK economy during the current Parliament, but – humiliatingly for Cameron – during the period of the last Labour government. He reckoned it was based on his own government’s (dubious) economic recovery.

The report states: “EU law requires that member states measure the size of their economy according to EU standards. The UK hasn’t been fully compliant with these standards, so statisticians at the ONS have spent the last year revising old estimates of the size of the UK economy. Some, though not all, of these changes have had a generally upward impact on the figures the EU uses to determine the UK’s contribution to its budget.

“The resulting increase in the estimated size of the UK economy relative to other nations – specifically between 2002 and 2009 – is what’s caused the EU to ask for more money. If the Commission had known the size of the UK economy at the time, it would have charged us more, so the £1.7 billion represents the ‘back payments’ following the counting changes.”

There is some good news for Cameron, though. As the bill is for ‘back payments’, it seems likely to reduce in future years – no matter how the economy has performed under his government. His claim that the bill is because his government has turned the economy around is simply balderdash.

And it seems the largest factor in the increased bill has been changes in measuring the contribution of the not-for-profit sector – mainly charities and universities. As universities are currently experiencing a fall in income as their intake from foreign countries drops off due to “unwelcoming” government policies, it seems reasonable to expect that the UK’s contribution will fall.

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The best way forward now is for Cameron to accept the advice of Denmark’s prime minister, Helle Thorning-Schmidt, that he should swallow his pride and pay up.

There’s no reason the UK cannot amortise the amount over a period of time. If it does so in an agreed manner, it may avoid having to pay punitive 2.5-per-cent-per-month interest payments.

But then, Cameron has proven to be an economic idiot and may not understand this.

That’s what happens when you’re born into money; you end up with no idea of its value.

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Tories and the police – it’s like an acrimonious divorce

Confrontational: Theresa May has made an enemy of the police. They'll be taking solace from the thought that one day they might be asked to arrest her. [Image: Daily Telegraph]

Confrontational: Theresa May has made an enemy of the police. They’ll be taking solace from the thought that one day they might be asked to arrest her. [Image: Daily Telegraph]

Does anybody remember when the police were the Conservatives’ best friends? This was back in the days of the Thatcher government, when she needed them as political weapons against the unions.

She gave them generous pay and pension deals, let them move out of the communities they policed (providing a certain amount of anonymity – people no longer knew their local Bobby personally), and put them in patrol cars rather than on the beat. In return, she was able to rely on their loyalty.

The same cannot be said today. Current Home Secretary Theresa May wants you to think the police service is out of control.

In fact, it isn’t. The problem for Ms May, whose position on human rights makes it clear that she wants to be able to use the force as a tool of repression, is that our constables have found better ways of upholding the law.

This is why May’s tough talk on reforming the police rings hollow. She wants to break the power of the Police Federation, our constabularies’ trade union – but her attack is on terms which it is already working to reform.

She has demanded that the Federation must act on the 36 recommendations of the Normington Report on Police Federation Reform in what appears to be a bid to make it seem controversial.

But the report was commissioned by the Federation itself, not by the Home Office. It acknowledges problems with the organisation that may affect the wider role of the police and makes 36 recommendations for reform – whether the Home Secretary demands it or not.

One is left with the feeling that Ms May is desperate to make an impression. She has been very keen to point out that crime has fallen since she became Home Secretary – but this is part of a trend since Labour took office in the mid-1990s. Labour brought in neighbourhood policing, police community support officers, antisocial behaviour laws, improved technology and (more controversially) the DNA database. These resulted from Labour politicians working together with the police, not imposing ideas on them from above; they brought the police back into the community.

Theresa May’s work includes her time-wasting vanity project to elect ‘police and crime commissioners’, and her time-wasting project to replace the Serious Organised Crime Agency with the almost-identical National Crime Agency.

She has taken a leaf from the Liberal Democrat book by claiming credit for changes that had nothing to do with her, suggesting that police reform only began when she became Home Secretary in 2010.

Is it this attitude to history that informs Michael Gove’s attempts to revise our attitude towards the First World War, as was reported widely a few months ago? If so, it is an approach that is doomed to failure and derision, as Mr Gove learned to his cost. Ms May deserves no better.

There is much that is wrong with the police service – and most of that is due to interference from Conservative governments.

Thankfully, with the service and the Police Federation already working to resolve these issues, all Ms May can do is grumble from the sidelines where she belongs.

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From the DWP to the economy – the Coalition’s growing credibility chasm

All the wrong things for all the wrong reasons: The evidence shows no good reason for George Osborne's economic austerity policies - other than, possibly, an intention to rob this nation of everything possible before 2015.

All the wrong choices for all the wrong reasons: The evidence fails to support George Osborne’s economic austerity policies – the only likely explanation seems to be an intention to rob this nation of everything possible before 2015.

The more we learn of the Tory-led Coalition’s policies, the wider the gap grows between what it is doing and what it should be doing.

Look at the sham psychometric tests, exposed by fellow blogger Steve Walker in a series of articles on his Skwawkbox site. It is now firmly established that the DWP – aided by the Cabinet office ‘nudge unit’ – set out to pressgang put-upon benefit claimants into taking part in a crude piece of neuro-linguistic programming – no matter what answers you provided, the test always pushed out a ridiculously upbeat appraisal of your character and then tried to get you to act according to this verdict in your jobsearching activities. The theory is that this will make a jobseeker more confident and finding a job easier. The problem is that it’s quite utterly ludicrous.

If you haven’t already, you can read the Skwawkbox exposure of this particular caper on that site – there are plenty of links to it from this one. The reason it is mentioned here is that it provides a useful set of questions with which to analyse any government activity: First, is the theory behind this activity sound? Second, if that theory is being used to support a particular course of action, is that action justifiable?

So let’s turn once again to George Osborne’s reasons for pursuing economic austerity, as described in the letter Vox Political received from the UK Treasury last month.

Firstly, the letter warns against the perils of losing market confidence. By this, we can see that it means we should fear any downward revision of our credit rating by the credit agencies, as “a one percentage point increase in government bond yields would add around £8.1 billion to annual debt interest payments by 2017-18”.

What’s being said is that a drop in our credit rating would mean the people and organisations that have invested in UK government debt (by buying our bonds) might move their funds to others, meaning the government could be faced with an interest rate rise, leading to increased difficulty in borrowing.

But we know that this isn’t true. The UK’s credit rating was downgraded only a few months ago. Did interest rates rise? Was our ability to borrow hindered at all? No. There’s a reason for that.

As Professor Malcolm Sawyer notes in Fiscal Austerity: The ‘cure’ which makes the patient worse (Centre for Labour and Social Studies, May 2012), “It is well-known that a government can always service debt provided that it is denominated in its own currency. At the limit the UK government can ‘print the money’ in order to service the debt: this would not take form of literally ‘printing money’ but rather the Central Bank being a willing purchaser of government debt in exchange for money.” This is what is happening at the moment. Our debt is in UK pounds, and we can always service it. Our creditors know that, so they remain happy to continue financing it.

This means that the Treasury’s next point, that “any loss of investor confidence in the UK’s fiscal position would not only affect the UK, but also the global economy” is also meaningless. There won’t be a loss of investor confidence, so there won’t be an effect on the global economy.

We move on – to the Chancellor’s claim that fiscal austerity is required to prevent the slowing of economic growth that happens when the national debt hits 90 per cent of gross domestic product (or thereabouts).

You’ll recall that my letter to the Chancellor was prompted by the revelation that the academic paper on which he relied most often, by Reinhart and Rogoff, had been proved to be mistaken. The Treasury’s response pulled out a series of references to other academic works suggesting a fiscal cliff similar to the Reinhart-Rogoff model, off which we would drop if the national debt passed an arbitrary level around 85-90 per cent of GDP. These were published by the International Monetary Fund, which we know isn’t quite as keen on austerity as it used to be; the Organisation for Economic Co-operation and Development, which this blog marked out as “schizoid” only a few days ago; and others.

Obviously I haven’t had time to look up eight academic works to support any opposing theory I may wish to create – and I think I would be foolish to try. I don’t have any grounding in economics beyond what I’ve been able to pick up by following the national and international debates.

But, then, according to Dean Baker of the Center (yes, it’s American) for Economic and Policy Research: “As a general rule economists are not very good at economics.”

He writes: “Most economists are unable to conceptualize anything that someone with more standing in the profession did not already write about. This is the only reason that the Reinhart-Rogoff 90 per cent debt-to-GDP threshold was ever taken seriously to begin with.”

That prodded my curiosity to check some of the papers listed by the Treasury in support of its stance, and the three that I checked (The Real Effects of Debt, Public Debt and Growth, and How Costly Are Debt Crises?) all listed the Reinhart-Rogoff paper in their supporting references. So Mr Baker is right.

“Debt is an arbitrary number,” he continues. “The value of long-term debt fluctuates with the interest rate… The value of our debt will plummet if interest rates rise… This means that we could buy back long-term debt issued today at interest rates of less than 2.0 percent for discounts of 30-40 percent. This would sharply reduce our debt-to-GDP ratio at zero cost.

“Bonds carry a face value, meaning the amount that will be paid off when they reach maturity. This is what gets entered in our debt figure. However bonds also carry a market price, which fluctuates inversely with interest rates. The longer the term of the bond, the more its price will vary with interest rates.

“If interest rates rise, as just about everyone expects over the next three-to-five years, then the market price of the bonds we have issued in the current low interest rate environment will fall sharply. Since we count our debt at the face value of the bonds, not their market price, we could take advantage of the drop in bond prices to buy up… bonds at sharp discounts to their face value.

“The question is why would we do this, we would still pay the same interest? The answer is that the policy would make no sense for exactly this reason.

“However, if we accept the Reinhart-Rogoff 90 per cent curse, then reducing our debt in this way could make a great deal of sense. Suppose we can buy back debt with a face value of 60 per cent of GDP at two-thirds its face value, or 40 per cent of GDP. In our debt accounting we would have reduced our debt-to-GDP ratio by 20 percentage points. If this gets us below the 90 per cent threshold then suddenly we can have normal growth again.

“Yes, this is really stupid, but if you believed the Reinhart-Rogoff 90 per cent debt cliff, then you believe that we can sharply raise growth rates by buying back long-term bonds at a discount. It’s logic folks, it’s not a debatable point — think it through until you understand it.”

I found Mr Baker’s piece after asking Jonathan Portes of the National Institute for Economic and Social Research (NIESR) for his opinion on the Treasury letter. He described it as “Predictable and largely irrelevant”.

So despite my lack of economic education, we have a working theory that suggests the Treasury has built its economic castle on the sand; that its justification for austerity is unsound. What about the austerity measures themselves? Are they justifiable on any level at all?

Evidence suggests not.

Let’s go back to our other friend in this matter, Prof Malcolm Sawyer. “Fiscal austerity and cuts in public expenditure do not work – there is a limited, if any, effect on reducing the budget deficit, and any return to prosperity is severely undermined.” We can see that this is true, using the government’s own figures. It managed to cut the deficit from £150 billion to £120 billion in 2011-12, mostly by axing large projects that invested in the UK economy. How much did it cut from the deficit in 2012-13? Less than £1 billion. The benefit cuts that created much of the fuel for this blog have not helped to cut the deficit at all.

“The reduction of the budget deficit can only come from a revival of private demand which is harmed by an austerity programme,” Prof Sawyer continues. Again, we can see that this is true. Austerity measures such as benefit cuts and the axing of infrastructure investment projects means there is less money available to the people who are most likely to spend it – the working- and middle-classes, and those who are unemployed. People with less money have to spend just about everything they receive in order to cover their costs. That money passes into circulation and the economy grows, through the fiscal multiplier effect. An attempt to explain this effect appeared on this blog within the last few days. The point is that demand increases when the people who earn the least have more to spend.

Therefore we see that Prof Sawyer’s next statement, “Deficit reduction requires investment programmes and reduction of inequality to stimulate demand”, is already proved.

So the answer is to reduce the unemployment rate by creating more jobs and closing the jobs deficit, as highlighted in this blog only a few days ago; to raise incomes by significantly increasing the minimum wage and adopting the proposed ‘living wage’, as promoted in this blog frequently; and investment in infrastructure projects.

What has Osborne done, along with his economically-illiterate chums?

He has created high unemployment.

He has depressed wages.

He has cut infrastructure projects.

He has, therefore, sucked all the demand out of the economy. What effect has this had?

Economic growth has, in the single word of Shadow Chancellor Ed Balls, “flatlined”, borrowing has remained high and the national debt is continuing to rise.

In other words, this part-time Chancellor’s strategy – a plan on which we have all been asked to judge the entire Coalition government, let’s not forget – has failed. Hopelessly.

I return you to Prof Sawyer, one last time [bolding mine]: “The austerity programme is economically irrational, socially irresponsible, and lacks credibility that it can reduce the budget deficit and secure any return to prosperity. The time has come to rebuild through investment and through a major assault on inequality.”