At the end of last week, I reported that Andrew Lansley was planning to change the status of the new local HealthWatch organisation so that patient representation could be put out to competitive tender.

The Department of Health has form on this: the organisations acting as “hosts” for Local Involvement Networks were selected following a competitive tendering process in 2007 and bids were sought from throughout the European Union and here, so I am told, is the text of the advert in the Uzbechistan Times:

John Naughton in today’s Observer has an interesting article on the proposed new EU data protection directive and the way in which Facebook is getting “its retaliation in first”.  The proposed “right to be forgotten” is likely to conflict with Facebook’s newish “timeline” facility.  And the retaliation?  This is how John Naughton puts it:

“The day before the commission made its announcement, Facebook’s chief operating officer, Sheryl Sandberg, gave a speech to a technology conference in Munich. Her menacing subtext was neatly summarised by the New York Times thus: “Concerned about privacy? Maybe you should be concerned about the economy instead.” Translation: mess with us, Eurotrash, and we’ll screw you.

Sandberg’s speech was revealing because it exposes the line of argument that Google, Facebook, et al will use to undermine public authorities that seek to control their freedom to exploit their users’ identities and abuse their privacy. The argument is that internet companies create lots of jobs and are good for the economy and European governments shouldn’t stand in their way.”

Apparently, to back this argument Facebook referred to a report that they had commissioned from Deloitte which concluded that Facebook had  indirectly helped create 232,000 jobs in Europe in 2011 and enabled more than $32bn in revenues.

John Naughton is sceptical pointing out that Facebook itself only has about 3,000 employees world-wide and he continues:

“Inspection of the “report” confirms one’s suspicion that you couldn’t make this stuff up. Or, rather, only an international consulting firm could make it up. Interestingly, Deloitte itself appears to be ambivalent about it. “The information contained in the report”, it cautions, “has been obtained from Facebook Inc and third party sources that are clearly referenced in the appropriate sections of the report. Deloitte has neither sought to corroborate this information nor to review its overall reasonableness. Further, any results from the analysis contained in the report are reliant on the information available at the time of writing the report and should not be relied upon in subsequent periods.” (Emphasis added.)

Accordingly, continues Deloitte, “no representation or warranty, express or implied, is given and no responsibility or liability is or will be accepted by or on behalf of Deloitte or by any of its partners, employees or agents or any other person as to the accuracy, completeness or correctness of the information contained in this document or any oral information made available and any such liability is expressly disclaimed”.”

Although Deloitte is normally regarded as a respectable organisation, these caveats plus the rather tendentious conclusions should raise alarm bells.

Or as John Naughton puts it:

“The sole purpose of “reports” such as this is to impress or intimidate politicians and regulators, many of whom still seem unaware of the extent to which international consulting firms are used by corporations to lend an aura of empirical respectability to hogwash.”

Yet reports like this with sensational conclusions seem a particular feature of commentary on the internet.

And especially so in respect of information security, last year the UK Government published figures saying UK cyber crime was costing £27 billion per year and not to be out-done Symantec suggested that the global figure was $388 billion.  The reality is that all these figures are unverifiable – and whilst I am quite clear that cyber-crime is a very serious problem for the world economy these estimates are, to use John Naughton’s word, “hogwash”.

Spurious precision – whether it is Symantec’s $388 billion or Facebook’s 232,000 jobs in Europe – should always be treated with caution.

I am hearing a most bizarre rumour – even by the standards of bizarreness fostered by the Health and Social Care Bill.

Apparently, Ministers have instructed civil servants to draft an amendment to the Health and Social Care Bill (which begins its Report Stage in the House of Lords on 8th February) to change the status of the proposed new local HealthWatch organisations.  These are the local structures that are being set up to protect the interests of patients in the brave new world of the “reformed” health service after the Bill is passed.  (I have already warned that the proposals for HealthWatch are flawed.)

I am told that under this amendment, local HealthWatch organisations will no longer be “statutory bodies” but will instead become “bodies carrying out statutory functions”.  This sounds – as, of course, it is meant to – like a trivial semantic point and the amendment will no doubt be presented as a technical change of no significance.

The reality is very different.

In fact, the change of status is important.  It implies a downgrading of local HealthWatch organisations and they will need all the clout they can muster if they are to be effective.  Some of that clout would come from being a statutory body in their own right.

But the real reason behind this change is that the local councils who are to set up the local HealthWatch organisations will now be required to put out to commercial tender the work of HealthWatch.  (You cannot tender for a statutory body, but you can tender for a body to carry out statutory functions.)  And as each individual HealthWatch organisation will have a budget above the level at which EU competition rules kick in, the tender will have to be advertised across the European Union in the Official Journal, so that firms and organisations from anywhere in Europe can compete to provide local consumer representation services.

I hate to think what these multiple tendering operations will cost and I fail to see how it is likely to lead to better quality local patient representation.

If this were some new health and safety requirement or some equal opportunities expectation, no doubt the newspapers would be wheeling out the “This is political correctness gone mad” headlines.

In fact, this is another example of the Health Secretary’s privatisation-mania, so all together now:

“THIS IS PRIVATISATION GONE MAD.“

Just in case LibDems in London were in any doubt about Tory triumphalism, the LibDem role as (very) junior partners in the coalition and what the Government’s stance on Europe is all about James Cleverly AM, Leader of the Tory Group on the London Assembly, has spelt it out:

“The Indi is running a story about a potential “rift” between Clegg and Cameron over Europe and the veto.  This is such a non-story, Clegg’s position on Europe is well known.  Cameron’s position on Europe has been made clear and is much more in tune with the wishes of the British people.

David Cameron is the Prime Minister and his position is both right and popular.  Nick Clegg is not Prime Minister and his position is wrong and unpopular.  Bets please on whose views will win out.”

Squelch!

At some point, the LibDems are going to realise that their post-General Election sell-out to the Tories is getting them nowhere …..

Michael White, the Guardian’s veteran Assistant Editor, has an article today assessing the shape of UK politics over the year ahead.  Although sometimes verbose (a problem I am well aware that I suffer from myself), he is usually extremely perceptive.  Today’s article is therefore well worth reading and I agree with many of his conclusions.

However, there is one line in it that is total nonsense.  After pointing out the threat that reinvigorated Boris Johnson would present to David Cameron if re-elected to the London Mayorality in May, he goes on to say:

“If Ken beats Boris he will make Miliband’s task harder.”

The reality is the exact opposite.  So much so that David Cameron has recognised that his number one priority in 2012 is to ensure that London’s City Hall must remain in Conservative hands.  Not the economy; not the growing housing crisis; not Europe and the Eurozone; but London.  That is the Prime Minister’s priority for the coming year.

Why?  He knows that a Ken Livingstone victory in May would be an essential first step for the Labour Party to win a General Election in 2015.

He also knows that Ken Livingstone’s flair for articulating the impact of Tory policies on the people of London would resonate with millions elsewhere in the country.

The Prime Minister’s grasp on history is probably a little shaky, so he may not be aware that a Labour-run London County Council in the 1930s laid the groundwork for the victorious and reforming Labour Government of 1945: trialling and showcasing how the power of Government can be harnessed to boost the chances of the vast majority of the population.

However, Cameron’s instincts will tell him that a Labour Mayor in City Hall would demonstrate that there  is an alternative to a Conservative-led Government more concerned with the interests of a privileged minority than the rest of society.  (A Conservative trait also shown by Mayor Johnson and his penchant for meeting bankers and representatives of the financial services in preference to other interests in London.)

So if Cameron is so desperate for Ken Livingstone not to be elected in May, it follows that Ed Miliband is, if anything, even keener to see the Conservatives turned out of City Hall in four months time.  This is where Michael White is wrong and dwelling in a 1980s past.  Ken Livingstone has more positive and supportive relations with the national Labour leadership than ever before.

A Livingstone victory will be a boost for Ed Miliband and the Labour Party.  It will be a sign that the people of London have rejected not only a Conservative Mayor but also those Conservative policies being pursued by his friends holding national office.

I have only just caught up with a speech made in the Moses Room (an alternative Lords Chamber for hosting smaller debates) last Thursday by Lord John Eatwell which sets out cogently what is wrong with the Government’s response to the economic situation and sets out a clear alternative vision.

He was responding to a motion from Lord Lamont of Lerwick on ”the economic situation of the United Kingdom, including the impact of the eurozone crisis on the United Kingdom and other non-eurozone members.”

He said:

“My Lords, like other noble Lords I am grateful to the noble Lord, Lord Lamont, for securing this debate, even though the topic has widened from that he initially intended. I also wish to congratulate the noble Lord, Lord Wolfson of Aspley Guise, on his witty maiden speech.

Despite appearances to the contrary, the debate has not been about economics. Instead, as the noble Lord, Lord Ashdown, pointed out, it has been about politics-the political choices made by Governments in the eurozone, most notably the Government of Germany, and the choices made by Her Majesty’s Government. Indeed, the common theme that has run through much of the debate has been the severe austerity that Germany demands of the rest of the eurozone and the similar economic misery that the coalition is inflicting on Britain. It is now clear that the eurozone embodies fundamental design flaws. These have been addressed by the noble Lords, Lord Lamont, Lord Alderdice and Lord Higgins, my noble friend Lord Myners and the noble Baroness, Lady Wheatcroft. A successful monetary union requires a powerful and active central
bank, an all-Union bond market managed by a central treasury function, some means of balancing the economic benefit between the most successful and least successful parts of the Union, easy migration and, it is hoped, some sort of all-Union employment policy. This is a reasonable description of the United States of America, with the employment policy being provided by the military.

My noble friend Lord Desai was right to point to problems in the bond market as far as short-term financial stability is concerned, for it is the existence of an all-Union bond market that is crucial. Given that the eurozone economy is the largest in the world, any major bond fund must have significant exposure to the euro, just as it must have exposure to the US dollar and, to a lesser extent, to sterling. This can be obtained by holding any eurozone sovereign bond. Moreover, the exposure can be maintained by switching between different sovereign bonds with no foreign exchange risk whatever. Hence the huge flows between eurozone sovereigns that have produced wild gyrations in interest rates over the past few months as uncertainty and rumour have fuelled massive capital flight. The point was made by the noble Lords, Lord Wolfson and Lord Flight: it is like walking along a rocky path carrying a large amount of water in a shallow pan.

Compare this with the situation in the US. The state of California, which represents 13 per cent of the US economy, is bankrupt. This has no impact on the US Treasury bond market at all. Similar problems in Greece, which represents 2 per cent of the eurozone economy, have produced a wave of destructive contagion. The creation of a eurobond market equivalent to the market of the US Treasury-no bailout, no austerity, no ECB as lender of last resort-will bring durable financial stability. Of course, creating a eurobond market is a formidable political problem, but it is not impossible to imagine that this could be solved. It is not necessary to have a United States of Europe, as the noble Lord, Lord Lawson, claims. It is conceivable to have a powerful central bank, a central bond market funding a monetary union with a centre that is still politically weak relative to powerful member states. Indeed, that is a description of the most stable monetary union in the world, the Confederation of Switzerland. Clear identification of the design flaws of the eurozone that have resulted in such appalling financial instability should finally dispose of the illiterate comparisons often made between Britain’s fiscal problems and those of the eurozone members.

Are the Government right to argue, as they do over and over again, that their austerity policy is necessary to maintain the confidence of the bond markets and keep UK interest rates low? Perhaps it is, but only because of their own political folly. The Government have repeated this mantra so often that the markets probably believe it by now, and in believing the Government’s pro-cuts propaganda, they demand a redoubling of austerity. We have financial stability, but it is the stability of the grave. We are repeating Japan’s lost decade in an economy that is much poorer and much more unequal. I warned at the time of the Budget that the Government’s austerity policy risked creating a vicious cycle in which expenditure cuts and tax rises would lead to lower growth, which in turn
would lead to falling tax revenues and rising costs of recession. This in turn has led to yet further higher deficits, and so on in a downward spiral. But there is another twist in the tail that I had not fully appreciated until I read the OBR report.

The austerity programme also reduces the medium-term productive potential of the economy and hence reduces the possible future growth rate that is supposed to restore the nation’s finances, so now we have two mutually reinforcing engines of economic decline-the merry-go-round of cuts that do nothing to cut the deficit, and the recession-induced fall in growth potential that is making the deficit bigger too. And what is the Government’s response? It is more of the same. That is not my verdict. As the noble Lord, Lord Hollick, pointed out, it is the verdict of the OBR. Reviewing the plethora of schemes to turn the economy around, the OBR concludes:

“We have not made any material adjustments to our economy forecast on the basis of these policy announcements”.

In other words, the OBR concludes that the Government’s much spun “growth strategy” will achieve a net result of precisely nothing. However, I believe that the OBR is being overly optimistic.

First, the OBR persists in being excessively optimistic about where future demand will come from. In March, it predicted that private sector investment would grow this year by 6.7 per cent. Now, eight months on, it admits that investment has fallen. In March, it predicted that investment next year would grow by 8.9 per cent, and it still thinks that that is almost achievable. It says that investment in 2015 will be roaring along at 12.6 per cent growth a year, up from the 8 per cent it predicted in March. Where do these fantasy figures come from? Where is the incentive to invest when household incomes are going to be as low in 2014 as they were in 2002? It does not matter if interest rates are low: if there is no demand, there is no reason to invest.

Secondly, the other component of the rebalancing of the economy referred to by the OBR is supposed to be net trade. Again, the OBR is being excessively optimistic. It admits that most of the beneficial impact of the devaluation of sterling has now been exhausted, and recognises that markets in Europe will be depressed for some time, and yet somehow conjures up a significant improvement in trade performance, so overall the OBR is far too optimistic. The situation is much worse than it thinks. The people for whom matters are really worse are the poorer members of our society. If the OBR’s predictions are correct-I think that they are over-optimistic-household real disposable income will fall by 4.7 per cent over the next three years. However, that is an average figure and well over 60 per cent of the population have below-average incomes. If we examine the impact of the Government’s policies on median income-that is, the level of income in the middle of the income distribution-then the fall in disposable income will be 7.5 per cent. The cuts in real income are concentrated at the bottom end. Indeed, as the IFS analysis of the Autumn Statement has shown, the measures taken this week will lead to further cuts in the real income of the bottom 30 per cent and give benefits to the top 30 per cent. Nothing is more disgraceful and distasteful than the savage pleasure that Liberal Democrats and Conservatives take in cutting support for the poorest in Britain.

There is one further chapter of this dreadful story that must be taken into account in any overall assessment of the state of the economy: that is the level of unemployment, particularly of youth unemployment. It is simply uncivilised to have more than a million young people unemployed and their lives blighted at just the time when they should be looking forward to building a future, careers, stable households and families. Yet the prolonged recession holds out that prospect not just for the 22 per cent of young people now unemployed but for thousands more. We can begin to solve these problems only if there is a return to significant rates of growth in the eurozone and in Britain. The austerity imposed on the eurozone by Mrs Merkel, and on Britain by the coalition Government, will achieve nothing but a lost decade, or more. Stable financial markets will not produce an automatic increase in business confidence. There is no confidence fairy; she was killed by the Government’s austerity rhetoric.

What is necessary is a radical rethink of economic policies and even economic institutions. We need a major increase in government investment to kick-start private sector investment. We need new funding for industry on a greatly enhanced scale-not just what the Financial Times called the “gimmicks” of the Autumn Statement. We need a realisation that demand can be boosted by redistributing income towards the poorest, because they spend every pound they get and their spending has a lower import content than that of the wealthier sections of the community. The Government must become an employer of last resort to tackle youth unemployment.

How should we pay for all this? First, we should realise that unless something radical is done, the deficit will go on rising; we will go on borrowing more as we cut more. Secondly, if there is to be quantitative easing, it should be far better directed than it is under the shotgun approach used at the moment. Thirdly, even small amounts of redistribution could have a significant effect on the rate of growth of demand.

It will be evident from what I have said that I am fearful for the prospects of the eurozone and of our economy. Of course our current economic circumstances are dreadful, but they are made by human hand and they can be unmade by human hand. The key is political: political will and political intelligence, allied to sound economic analysis. All three ingredients are notably absent from the Government’s policy.

In a few short words he set out an effective three point plan for the economy:

• A National Investment Bank to target the “quantitative easing” to where it will really make a difference - in business investment to deliver future jobs;
• A recognition that further cuts in the income of the poorest in society will have a disproportionate impact on demand; and
• The role of the Government in being an employer of last resort for young people.

It would make a real difference – a pity that the Government isn’t listening.

I’ve already asked what exactly was William Hague’s grand international conference on cyberspace for, but it is clear that my scepticism is shared by the journalists who were sent to cover it and came away disappointed or as the Daily Telegraph put it:

“So what did we learn over the course of the two-day meeting? Well, in short, almost nothing. ….

As the show limped to its finale on Wednesday, many of Mr Hague’s conclusions could have been written at any point in the last six months.

“All delegates agreed that the immediate next steps must be to take practical measures to develop shared understanding and agree common approaches and confidence-building measures,” the Foreign Secretary declared. Well, quite.”

Twice in the last forty-eight hours I have been stopped by tourists asking me to explain the significance of the Remembrance Poppy that I was wearing.

Is this a record?

In July the Foreign Secretary announced that the UK would be hosting an international conference on cyberspace.  The purpose was to bring together governments, international organisations, NGOs and businesses from around the world to “address the challenges presented by the networked world including cyber crime that threatens individuals, companies, and governments.”  William Hague said that it was “vital that cyberspace remains a safe and trusted environment in which to operate. This can only be done effectively through international cooperation, engaging both the public and private sectors. Together I hope that we can begin to build the broadest possible international consensus.”

In case you missed it this major attempt to build international consensus is taking place tomorrow and Wednesday – indeed the process of international bonding began over drinks and nibbles at the Science Museum earlier this evening.

However, looking at the programme, it is not clear what the programme offers that is going to be different from numerous similar gatherings over the last few years.  Nor is it apparent where the “broadest possible international consensus” is going to be hammered out.

But we are assured that it is going to look good …..

But this picture really does deserve a caption competition:

Printable suggestions only please.

I gather that the Total Politics Blog Awards are now in progress.  I want to make it quite clear that I will not be in the least bit affronted should you chose to vote for this blog by clicking here.