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Archive for the ‘Economy’ Category

Tuesday
Feb 10,2009

So what was Ken Clarke MP doing coming away from Lord Peter Mandelson’s office in the House of Lords yesterday evening with a big smile on his face?

Monday
Feb 2,2009

The weather problems have made it difficult for many members of the House of Lords to get in today – those travelling long distances have not been able to find trains or – even if there were trains – get to their stations in some rural areas.  As a result, attendance is sparse and we are at a critical stage in consideration of the Banking Bill:  the Bill is in Report – the stage when traditionally most of the key votes on amendments take place.

The Bill provides a statutory framework for Government intervention in failing banks and changes the objectives of the Bank of England so as to place an obligation on it to promote financial stability.   it is clearly a vital piece of his year’s legistative programme for the Government.

There have been two votes so far today: the first was won by the Government with a margin of twenty; and the second has just resulted in a tied vote (84 content; 84 not content) so the Tory amendment was not passed and in effect the Government won.  So as the temperature drops below freezing outside, the Whips are rushing round trying to make sure that no Labour Peer who has made it in tries to go home early.

Meanwhile, the pathway in front of the House of Lords entrance is an ice-rink because of – I am told – a dispute between Westminster City Council and Parliamentary authorities as to who is responsible for gritting it.

Friday
Jan 9,2009

Last night was the annual dinner presided over by the Lord Mayor of London for the Governing Bodies of London.  The Lord Mayor is not, of course, Boris Johnson, who is the elected Mayor for all of London (not just the square mile administered by the Corporation of London).  This dinner packed several hundred of the capital’s politicians and administrators into an intimate dining room in the Mansion House, the Lord Mayor’s official residence.

The occasion importantly provides a platform for the elected Mayor to set out his views on the state of London and there was a bravura performance by Mayor Johnson, responding to a sober speech from the Lord Mayor on what is needed for London to survive the economic situation.  Essential the message was “times are tough” but “we are going to get through it”.  The package humorously presented (I suspect the audience would have been disappointed if Mayor Johnson’s style had been as straitlaced as the Lord Mayor’s) essentially boiled down to avoiding the over-regulation of bankers, some apprenticeships in tunnelling (building a “cloaca maxima” under the Thames), the new Routemaster (restoring every Londoner’s inalienable right to injure themselves jumping on and off a moving bus), the rent-a-cycle scheme (even if it’s wrong, we’re still going to do it), and a freeze on the Mayor’s precept on London Council Tax.

It was entertaining stuff, but on the day when the Bank of England had cut interest rates to their lowest level since the Bank was established in 1694 it all felt a bit light on substance.

Mayor Johnson was in many ways upstaged by Merrick Cockell, the Chair of London Councils (the umbrella body for the London Boroughs, which was known as the Association of London Government when I chaired it).  His speech set out what the Boroughs are and will do to help Londoners ride out the economic downturn and set out how the Boroughs, the Greater London Authority and central government should work together to deliver the most effective policies to enable London – the economic driver of the UK economy – to emerge stronger at the end of the current period and so best deliver a kick-start to the rest of the UK.

Merrick Cockell also got the best laugh of the evening, comparing the  GLA and London Councils with (among other things) Rod Hull and Emu with Mayor Johnson cast in the role of Emu

Strangely, Mayor Johnson referred to a couple of London Assembly members by name in his speech.  He highlighted the referral by Len Duvall of remarks made by the Mayor to the Standards Board (if the Conservatives are so confident that the issue is now going to go away following the decision to set up a “timely and proportionate” inquiry why mention it?) and he also made some remarks about how nice the Mansion House was and the sort of building appropriate for the style and status of an Assembly Member like Caroline Pidgeon – now what did he mean by singling her out?

The most shocking thing about Mayor Johnson’s performance was, however, his attitude to London itself.  He rightly said that 200 years ago London was the greatest city in the world.  Apparently, now, however, it is only “one of the greatest cities in the world” – can’t we expect a more upbeat attitude from our elected Mayor?

Tuesday
Jan 6,2009

Those who know me will be aware that I am not exactly a fitness fanatic (My exercise philosophy is “no pain, no pain”.), but I do like to go for a swim every so often.  For the last few years, however, I have always avoided going in January so as to avoid the crush of those who have bought gym memberships as part of a New Year’s resolution drive for fitness – by February or March most have stopped using their memberships (but the business model of the fitness club’s, of course, requires a year’s subscription …).  Today, because an appointment had been unexpectedly cancelled, I thought I would risk it.  The place I go to was virtually deserted with only one person there whom I had not seen before.   Clearly, the economic situation has focussed people’s New Year’s resolutions in a different direction this year, unless, of course, I was just lucky and everybody else had decided it was too cold …

Sunday
Jan 4,2009

In his New Year interview with The Observer today, Gordon Brown talks about creating 100,000 jobs by a programme of public works, focused on school repairs, new rail links, hospital projects, investment in eco-friendly projects and the broadband infrastructure.

This is all eminently sensible, but should really be on a much greater scale. The 100,000 jobs presumably equates to the £3 billion of public investment included in last month’s PBR statement. I argued then that the balance was wrong with too great an emphasis on boosting consumer spending by cutting VAT.
Nothing that has happened since alters my view.
Yes, there has been a splurge of High Street buying – mainly of imported goods (this will no doubt help maintain world employment levels, but won’t do a lot in the UK and will further push down the value of the £ against the € and the $). Interestingly, elsewhere in The Observer, the excellent Bill Keegan (delightfully appointed a CBE in the New Year honours) points out that much of this High Street spending may have been overseas visitors capitalising on the low exchange rate.
Instead, we should be treating the economic situation as an opportunity to invest in the UK’s long-term future. The Government should set a series of infrastructure objectives to be achieved over the next four or five years and put in place the resources and mechanisms for these objectives to be met. For example, local councils could be tasked to achieve better insulation and energy efficiency in the housing stock in their areas, a major programme to further improve school buildings and health care facilities should be instituted, every home, every school and every NHS facility should be cabled and enabled to have high speed broadband access with public wi-fi access in every town centre etc..
The opportunity should be taken to improve skills and equip young people (and indeed any adult) with the training needed to achieve their aspirations in the modern world.
No doubt this is ambitious, but – as Barack Obama has preached about ‘The Audacity of Hope’ – perhaps in the UK a Labour Government should dare to put that hope into practice.

Sunday
Dec 21,2008

Advice from The Sunday Times is never dispassionate – particularly for a Labour Prime Minister.
So when it asks ‘Will Gordon Brown find the nerve to strike early?’ and call a General Election next Summer, the Prime Minister’s reaction should be to put a tentative circle round 6th May 2010 on his calendar.
Worryingly Charlie Whelan, who in his spare time is the political officer of my union, UNITE, has told the Strathspey and Badenoch Herald (sic) that an election in June 2009 would be ideal. He was, of course, Gordon Brown’s press secretary in the 1990s and his contribution to this debate is rewarded in the Sunday Times by a page two picture of him brandishing a large fish (still I suppose that’s better than a Miliband-esque banana).
Despite Whelan’s support, an election next year would be a mistake.
The Labour Party and the Government have clawed their way back in the polls on the basis of their sound and decisive response to the world economic crisis. (However, the Tories remain ahead despite their confused and inconsistent response to the financial situation.) An early election would be portrayed as an opportunistic distraction from the task of tackling the problems facing the country.

Monday
Nov 24,2008

The Chancellor’s announcement today with his Pre-Budget Report for 2008 provides the bold stimulus the economy needs to help the country through the global financial crisis.  Although more than £500 billion will be added to the National Debt by 2015, there is no doubt in my mind that if these measures were not taken the longer term costs to the economy and to society would be far greater.

However, I am a pretty much an unreconstructed Keynsian and I do wonder whether the balance is quite right.  Ideally, in my view there should have been a greater emphasis on bringing forward public investment.  What has been announced is hugely welcome and should produce a direct impact on employment.  There is no question that there will be substantial public benefits flowing from the £800 million going to school building improvements (2,000 secondary school classrooms improved, new kitchens for 300 primary schools etc) and the £775 million going to housing improvements (much of it to make homes more energy efficient).  But was there only scope for £3 billion-worth of such investments without overheating the construction industry?  There is no doubt that much of our public infrastructure would benefit from more investment and this would have been as good an opportunity as may arise for this to happen.

By contrast the reduction in VAT till the Christmas after next will give £12.5 billion back to consumers.  Now that, of course, will help those on low incomes and those newly unemployed.  However, is there not a risk that much of the effect will be to stimulate the Chinese economy as consumers go out and by electronic and other goods imported from China.  Now this may be a good thing for the world economy, but I am not sure whether it wouldn’t have been better to keep more of the stimulus within the UK.

Tuesday
Nov 18,2008

Today saw the latest in the series of meetings on the London – New York Dialogue, promoted by the Urban Land Institute.  Having been involved in many of the predecessor discussions, originally sponsored by Greater London Enterprise, over the last fifteen years or so, it was good to go along and hear how ideas are developing particularly in the light of the world economic crisis.

The opening keynote address was given by Dan Doctoroff, who was Mayor Bloomberg’s Deputy for Economic Development until the beginning of this year when he moved (interestingly) to be President of Bloomberg (his boss’s old firm).  He pointed out that this was the twelfth major economic crisis since New York became a major financial centre in the late 18th Century, and that New York (and London) had ultimately emerged strengthened from the previous eleven. 

The measure he used to assess the crisis was the number of Bloomberg Terminal installations in businesses around both cities: the total had risen by around 60% over the four years to the end of 2007, but the number had then flat-lined.  This flat-lining, however, does not imply stability – there is substantial churn in the figures with a fall-off in the large firms but plenty of new installations in smaller financial firms. As he put it: “Financial services are Darwinian” and this churn is a healthy sign for the future.

He emphasised the importance of London and New York not seeing each other as competitors but as collaborators – the word I would have used would have been symbiotic – and this led to a strong plea for stronger links between the two cities.

He characterised three factors as being required for the continued success of world financial centres like London and New York: firstly, that the cities are English-speaking (this may be something of a tautology); secondly, that they have a diverse population with “immigrant energy” (there has been a net inflow into London of around a million people from overseas in the last ten years); and thirdly, that being a forward-looking financial centre is “in the DNA”.

However, the position of London and New York is not necessarily assured.  It will be essential to maintain their infrastructure – in particular, transport, personal safety/security, and quality of life.  Neither city can afford to sacrifice any of these in the aftermath of the current crisis.  Moreover, because of the critical role both cities play in their national economies, both cities need to energise their national governments in their support (this is particularly true for London whose impact in supporting the rest of the UK economy is crucial).

I asked him how important he saw the need to maintain social cohesion and address economic inequalities in cities.  He answered that it was a vital part of maintaining a quality of life conducive to a stable future.

Two issues occurred to me.  First, Mayor Bloomberg’s vision for New York (PlaNYC), which Doctoroff had a key role in devising, with its 127 integrated initiatives affecting the environment, housing and transport is far more ambitious and cohesive than anything that has yet emerged from Mayor Johnson’s office in London. 

Second, much more needs to be done to put the case for London to have the resources necessary to maintain and improve its infrastructure.  Successive UK Governments have short-changed the capital, despite London’s key role as a driver of the UK economy.  A start could be made with the capital’s business rates.  At present, all business rates are levied  by local councils on the businesses in their area at a standard rate set by national government.  That money is not, however, for the local councils to use.  Instead, it is passed en bloc to the Treasury, who redistribute it back to local government pro rata in respect of population.  For the local authorities in London, this is a net loss each year of around £2 billion.  In essence, London’s businesses are subsidising those in the rest of the country by that amount.  Think how useful a £2 billion per annum contribution to a London Infrastructure Fund would be …..