The focus of that Eddie Mair interview was the question of Boris Johnson’s fitness for further office. There was no real discussion of how well he has actually done in his current job as Mayor of London.
In the earnest spirit of inquiry I recently tabled a question in the House of Lords:
“To ask Her Majesty’s Government what representations they have received from the Mayor of London in the last year on (1) health services in London, (2) housing provision in London, and (3) the impact of changes in welfare benefits on the people of London.[HL5797]”
The response I got was as follows:
“The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): The Department of Health has held a number of discussions over the last year with the Greater London Authority, London Councils and the Local Government Association about the London Health Improvement Board. We recognise that there is potential for delivering health improvement services on a city-wide basis in London. The London Health Improvement Board has been meeting since July 2011.
The Localism Act conferred on the Mayor of London responsibility for housing, economic development and Olympic legacy in London, in addition to existing responsibilities over transport, planning and the police. Therefore, the mayor is responsible for housing and regeneration policy in London. The Department for Communities and Local Government has regular conversations with the Mayor of London and the Greater London Authority regarding housing provision in London. Over the last year these conversations have focused on a broad range of issues, such as funding and delivery of affordable housing, increasing investment in the private rented sector, getting surplus public sector land back into use and dealing with homelessness and rough sleeping.”
The answer is notable in what it does not say.
There is no indication that the Mayor has spoken up on behalf of Londoners about the state of London’s NHS and the piecemeal closure of services that is taking place all over the capital. I doubt whether the remit of the London Health Improvement Board covers the configuration of health services in London and I have asked another question to clarify this.
And there was no mention whatsoever in the answer (despite its specific inclusion in the question) of any representations made by the Mayor on the impact of changes in welfare benefits on the people of London.
Boris Johnson has made plenty of public statements about not being nasty to bankers and the iniquities of high tax rates but apparently has little to say about the cuts in welfare and housing benefits that hundreds of thousands of Londoners will face in the next few weeks.
I wanted to seek further clarification from the Government by asking:
“Further to WA 5797, does the absence to a reference to representations from the Mayor of London in respect of changes in welfare benefits on the people of London mean that there were no such representations”
but have been told that that would be against the rules.
Instead, I have asked again what representations the Government has had from the Mayor specifically on the subject of impact of changes to welfare benefits on the people of London.
I await the answer, but I expect I know it already: Boris Johnson is more concerned about the very wealthy and about big bonus bankers than those who have to rely on what is left of our social security system.
In Lords’ Question Time today I asked:
“Her Majesty’s Government what is their policy on the deployment of autonomous weapon systems by United Kingdom Armed Forces.”
The response was – in my view – a helpful one:
“The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever):
My Lords, the United Kingdom does not have fully autonomous weapon systems. Such systems are not yet in existence and are not likely to be for many years, if at all. There are currently a limited number of naval defensive systems that could operate in automatic mode, although there would always be naval personnel involved in setting the parameters of any such operation. I must emphasise that any type of weapon system would be used only in strict adherence with international humanitarian law.”
Subsequent exchanges amplified the point further:
“Lord Harris of Haringey:
My Lords, I am grateful to the Minister for that reply. Is it the view of Her Majesty’s Government that there is a world of difference between a drone operated remotely from several hundred or thousands of miles away and one that is automatic and involves no human intervention before it discharges? In that context, will he tell us a bit more about the Mantis development by BAE Systems, which I understand is supported and funded by the UK’s Ministry of Defence, which the BAE Systems website describes as,
“Able to fly by itself, able to think for itself”?
Lord Astor of Hever:
My Lords, I agree with the noble Lord. As I said in the original Answer, the UK complies fully with its obligations under national and international law, and that applies to autonomous weapon systems. However, although technological advances are likely to increase the level of automation in some systems, just as in non-military equipment, such as cars, the MoD currently has no intention of developing systems that operate without human intervention.
As for Mantis, the MoD initiated a jointly funded advanced concept technology demonstrator in 2008, which led to flight trials in 2009. The MoD has no current involvement in BAE Systems’ Mantis advanced concept technology demonstrator.
Lord Lee of Trafford:
Does my noble friend agree with the comments of a senior RAF officer who said very recently that come 2020 the Royal Air Force would be something like 50% manned aircraft and 50% UAE or drones?
Lord Astor of Hever:
My Lords, remotely piloted aircraft systems are likely to form part of the future force mix, as they may offer advantages in endurance and range. However, the dynamic complexity of fighter-versus-fighter-type missions does not favour remote control. Therefore, a wholly unmanned force is unlikely to be achievable or desirable in future. Studies suggest a likely combat air force mix of two-thirds manned and one-third remotely piloted in around the 2030 timeframe.
There is a perception that unmanned technology is shrouded in secrecy. Although the rules of engagement for unmanned aerial vehicles are the same as those for manned aircraft, there is surely a case for the United Kingdom taking the lead by considering having a code on the context and limitations of usage of UAVs to clarify the rules, given the significance and spread of this technology. Is this a point that the Government are considering or will consider?
Lord Astor of Hever:
My Lords, I shall certainly take that question back to my department and get back to the noble Lord. We always make sure that equipment is used appropriately. Even after a weapon system is declared lawful, its use will still be subject to stringent rules of engagement governing its employment in the context and specific circumstances of the operation in question. Those rules of engagement as well as addressing legal issues can, as a matter of policy, be more restrictive than the applicable law. ….
Lord West of Spithead:
My Lords, the Minister slightly confused me with one of his answers. Will he confirm that for anti-missile, close range anti-aircraft, and anti-torpedo reaction systems, there is considerable merit in going for an autonomous system, even if it has a manual override? From what he said it sounds as though we are not continuing to develop that capability. Is that correct?
Lord Astor of Hever:
My Lords, in essence, an automatic system reacts to a limited number of external stimuli in the same way each time, just as automatic transmission changes gears when a car gets to a certain speed. Fully autonomous systems rely on a certain level of artificial intelligence for making high-level decisions from a very complex environmental input, the result of which might not be fully predictable at a very detailed level. However, let us be absolutely clear that the operation of weapons systems will always—always—be under human control.”
There are a few politicians who are so well-known that they are referred to a almost universally by their first names. Maggie Thatcher was one; John Major and David Cameron are not. It seems to be a requirement for those who become Mayor of London – think of the Ken and Boris show.
Jeremy Hunt clearly thinks he is part of that select band. His introduction to the Government’s response to the Francis Report on the events at Mid-Staffordshire Hospital is signed with a rather inappropriate flourish simply by him as “Jeremy”.
Perhaps this is intended as a subtle signal that he is available either as a replacement for the Prime Minister or as the next Conservative Mayoral candidate……
This morning the Public Accounts Committee published a coruscating report on the continuing problems that HM Revenue and Customs have in answering the telephone.
On Saturday thousands marched through North London to protest at changes in the services offered by the Whittington Hospital.
What links these two events?
The answer is a former car parts company, Unipart, that now sells its services in promoting “efficiency” to public bodies.
Unipart advises the Whittington Hospital on how to cut its costs and shed staff. One of the major proposals management there is implementing is to change the way in which the public can “interface with” the Hospital.
Excessive delays in answering the phone by HMRC are serious, but they are not usually life-threatening.
Answering telephone calls from patients and their relatives in a hospital may be.
The danger is efficiency proposals that work well in an industrial setting may not be suited to a public service on which the lives and well-being of people depend.
Today’s guilty pleas at the Old Bailey are a timely reminder that the homegrown terrorist threat has not gone away. Three men (Richard Dart, Jahangir Alom and Imran Mahmood) had been charged with:
“engaging in preparation for acts of terrorism by travelling to Pakistan for training between July 2010 and July 2012 and by “advising and counselling” acts of terrorism by providing information about how to go to the country for the same purpose.”
It is notable that Dart (a white convert to Islam who moved from Dorset to London) had been employed for a short period as a security guard for the BBC and that Alom (whose wife has already been sentenced for terrorist offences) is a former Police Community Support Officer. Both had therefore been – for a period at least – in security-related occupations.
The three convictions involved travel to Pakistan for training in terrorist techniques but as NBC News has recently reported:
“A new al-Qaida “guidebook” for extremists aims to incite homegrown “lone wolves” into carrying out small-scale terrorist attacks …. using materials as easily obtainable as motor or cooking oil, sugar and matches to trigger massive traffic accidents, devastating fires and deadly explosions.
Titled the “Lone Mujahid Pocketbook” and published by in the spring edition of al-Qaida in the Arabian Peninsula’s “Inspire” online propaganda magazine, the guidebook uses a breezy style that borrows from social media speak and rap lyrics to encourage Islamic extremists in the West to commit acts of violence.
“R U dreamin’ of wagin’ jihadi attacks against kuffar?” is asks, using a derogatory Arabic term for non-Muslims. “Have u been lookin’ 4 a way to join the mujahideen in frontlines, but you haven’t found any? Well there’s no need to travel abroad, coz the frontline has come to you.”
Among other things, it offers detailed instructions for torching parked cars, causing vehicular accidents by pouring motor oil on highway curves, starting forest fires, “making a bomb in the kitchen of your Mom” and using a pickup truck with blades welded on the front “as a mowing machine, not to mow grass but (to) mow down the enemies of Allah.””
So the threat has not gone away and the current tactic involves self-trained (and possibly self-radicalised) lone wolf type activists.
There is a debate going on in the House of Lords today on the economy. It was intended as platform for the new Treasury Minister, Lord Deighton, to strut his stuff.
However instead Labour’s Lord John Eatwell eviscerated the Government’s economic policy and its (lack of) growth policy:
My Lords, it is a particular pleasure for me to welcome the noble Lord, Lord Deighton, to the Dispatch Box and to congratulate him on his appointment to the Treasury team. It is always a special delight to see one’s former pupils do so well. When I marked his economic essays back in the mid-1970s, I never imagined—nor do I suppose did he—that we would find ourselves in this situation. I think it is appropriate to report that his essays were typically examples of excellent economic analysis, and I hope and believe that he will put those skills to good use in re-educating the Treasury. It certainly needs it.
Today, he has been placed in an extraordinarily difficult position. It is rather difficult to defend the Government’s growth record when there is none—growth, that is. The latest figures are truly awful, with no growth at all in 2012, despite the heroic efforts of the noble Lord, Lord Deighton, and his team at the Olympics.
Taking the longer view, since the Government’s spending review in the fourth quarter of 2010, when it might be said that coalition policies replaced Labour policies, the UK economy has grown by just 0.4% over that entire period. Over the same period, the USA has grown by 4.2%, Germany by 3.6% and France by 1.5%. Accordingly, while the UK economy is now still over 3% below its pre-crisis peak, the USA is 2.5% above and Germany is 2% above.
The question before us today is: in the situation in which we find ourselves, what is to be done? How can we get Britain back on to a secure growth path? Should we follow the recommendations of the Chancellor of the Exchequer that we stick with austerity, accepting his declaration that “Britain is on the right path”? Let us call this plan A. Or should we adopt plan B, following the advice of Adam Posen, former member of the Monetary Policy Committee, and particularly of Olivier Blanchard, chief economist of the IMF, who said last week,
“if things look bad at the beginning of 2013—which they do—then there should be a reassessment of fiscal policy … We think that slower fiscal consolidation in some form may well be appropriate”.
That is the IMF view on Britain.
The answer to our question, “What do we do?”—the fundamental issue in this debate—rests on a consideration of three issues. First, how did the Government get into this mess and are they tackling it in the best way? Secondly, what is necessary to restore the UK economy to growth? Thirdly, what is there to prevent us following this path of restoration?
So, first, how did we get into this mess? As the noble Lord said, the Government inherited the terrible economic consequences of the international financial crisis—everyone agrees about that. These consequences were and are particularly severe for a country as dependent on financial services as we are. But then the crucial question is: in the past two and a half years, have the coalition’s policies made things better or worse?
The previous Chancellor, my right honourable friend Alistair Darling, had been battling the crisis since 2008, and by the spring of 2010 he had succeeded in beginning to turn things around. Recovery was under way at a similar rate to that in the US and Germany, so that George Osborne inherited an economy growing at an annual rate in excess of 2%. He killed that recovery stone dead. He destroyed business confidence by preaching the coalition dogma of austerity and by foolish and demeaning comparisons with the plight of Greece and other eurozone countries without their own currency and exchange rate; he slashed public investment so that in the past three years the Government have spent £12.8 billion less in capital investment than Alistair Darling had planned; and, with savage glee, the coalition set about shrinking the state and impoverishing the poor. This is all justified in terms of the Tory manifesto commitment to eliminate the deficit in one Parliament—a commitment, by the way, which will not be kept, for the deficit is not falling.
Recent figures published by the Office for National Statistics show that public sector net borrowing in the first nine months of fiscal 2012-13 was about £107 billion compared with £99 billion in the same period last year—a rise of 7.3%. I repeat: the deficit is over 7% up on the equivalent period last year. So the answer to the first question is that the coalition inherited a very difficult but recovering economic situation and proceeded to make it much, much worse.
What should be done to turn the position around again and to set the economy on a new growth path or, to put the question in a more practical fashion, how can businesses be encouraged to invest? Firms invest because they are reasonably confident in the future demand for their products. Without demand, if they are shackled by a framework of fiscal discipline, as referred to by the noble Lord, it does not matter how much cheap money there is, as no one will invest. That is why monetary policy is not working. Interest rates can go no lower and the first positive announcement effect of quantitative easing has now worn off. Quantitative easing may be inflating asset prices and ruining pension funds but cheap money will not encourage investment when the Government are intent on slowing the growth of demand.
However, if there is a prospect of growing demand then, to invest, firms need finance and access to the very best skills and technologies to secure markets in a competitive world. Demand is the key to making all the measures that the noble Lord referred to as his fourth pillar work.
That is why my right honourable friend Ed Balls has proposed a temporary cut in VAT to boost family incomes, together with the boost to demand and capacity that would result from bringing forward infrastructure investment, including building thousands of affordable homes. Enhanced demand prospects would then be underpinned by a British investment bank to boost lending to small businesses, complementing fundamental regulatory reform of the banks. To sustain confidence there should be a compulsory jobs guarantee for the long-term unemployed and, further up the employment chain, investment in skills and in transformational science and technology. That is plan B.
Why cannot this be done? “Because”, cry the coalition, “it’s a policy for borrowing more when debt is the problem”, and we heard a similar statement from the noble Lord today. But hang on, at the moment, as we all know to our cost, spending cuts are resulting in a growing deficit. How can this be happening? The IMF has provided the answer and it, at least, has acknowledged its earlier mistaken commitment to austerity.
The answer lies in the relationship between changes in spending and the overall performance of the economy. This is measured by what, in the economics jargon that the noble Lord and I used to discuss, is called the multiplier. If a cut in government spending of, say, £2 billion results, for whatever reason, in a fall of output of just £1 billion, then the multiplier is a half. That is what the IMF believed the multiplier to be back in 2009. The share of taxes in output is about 40%, so if government spending is cut by £2 billion and output falls by £1 billion, tax revenues fall by about £400 million. The fall in tax revenues is much less than the cut in spending, and so the deficit falls by £1.6 billion. That was the policy that the Government thought they were implementing.
However, what if the multiplier happens to be bigger than that? Supposing that it is as large as 2.5, the cut in spending results in a fall in tax revenue of exactly the same amount. You can go on cutting taxes until the cows come home and there will be no change in the deficit at all. All that will happen is that the economy will be driven further and further into the mire of depression.
In acknowledging a previous error, the IMF estimated the multiplier to be a bit less than two, so a £2 billion cut in government spending will drive the economy down by about £4 billion and, when cuts in revenue are taken into account, the deficit will fall by only £400 million. Throw in a depressed European Union and you arrive at our current miserable situation: ever bigger cuts and a growing deficit. But the good news is that what goes down can also go up. What if government spending is increased by £2 billion and the multiplier, optimistically, is 2.5? The economy then grows by £5 billion and the increase in tax revenues pays for the extra spending; there is no extra borrowing at all. I repeat: increased spending results in no extra net borrowing. Plan B is a strategy to cut government spending. And there is more. The government cuts—particularly those disastrous cuts in government investment—not only reduce output now by cutting demand; as the OBR has pointed out, they also cut future output by reducing the real productive capacity of the economy.
As I was saying, there is more to it than that. As the OBR has pointed out, government cuts in investment cut future output by reducing the real productive capacity of the economy. This long-term loss of output brings with it a long-term reduction in tax revenue, in addition to the medium-term effect that I have just outlined. In other words, the Government are not just failing to cut the deficit now; they are increasing deficits for years to come. By contrast, if the IMF is right, the measures proposed by my right honourable friend will be substantially self-financing in the medium term and will stimulate tax revenues in excess of spending in the longer term. This point has also been argued by the Harvard professor and former US Treasury Secretary, Larry Summers.
Before we sign up to plan B, however, another issue must be confronted. Today, any Government’s finances can be devastated by a loss of confidence in the international bond markets. The noble Lord referred to this. After a particularly violent example of sovereign bond market hysteria, James Carville, the political adviser to President Clinton, famously remarked,
“I used to think if there was reincarnation, I wanted to come back as the President or the Pope … But now I want to come back as the bond market. You can intimidate everybody”.
Well, the bond market certainly seems to have intimidated the coalition. Whenever its destructive policies are challenged, it argues that unless the vice on Britain is tightened, the financial markets will lose confidence, interest rates will rise and any prospect of recovery will be destroyed.
There are three things wrong with that argument. First, no one is suggesting a spending spree. Plan B is a cautious expansion to begin the task of building the foundations for growth. Secondly, it is austerity that is now undermining market confidence. All three of the main credit rating agencies—Standard & Poor’s, Moody’s and Fitch—have put Britain on “negative outlook”, citing concerns over the weak recovery and the public finances.
Thirdly, let us consider the experience of the United States, which lost its AAA rating last year. Would you rather have our AAA rating and zero growth or the lower US rating and 3% growth in the last quarter? I know which I would prefer.
The noble Lord, Lord Deighton, outlined in his speech a number of desirable measures that the Government can take to help to build productive capacity—the structural measures to which he devoted the majority of his speech. However, the Chancellor’s commitment to cutting demand and shrinking the state—less Bullingdon Club, more Tea Party—is eliminating any significant impact of those worthy measures. The Government’s attempt to stimulate growth has been a failure; the Government’s attempt to cut the deficit is a failure; and, if informed predictions are correct, even the Government’s attempts to preserve Britain’s AAA rating in the markets will prove to be a failure.
The coalition is now responsible for the longest slump in the British economy in the past century—longer than the great depression—yet last week George Osborne said something truly chilling. He said:
“We can either run away from these problems or we can confront them and I am determined to confront them”.
What is it in the word “failure” that George Osborne does not understand? For the sake of this country’s economy, it is time for him to run away. He is the living embodiment of plan A and must accept responsibility for its failure. Perhaps I may suggest that an excellent replacement as Chancellor would be my former pupil, the noble Lord, Lord Deighton.”
There were a series of exchanges during Question Time in the House of Lords this afternoon on the Arctic and the implications of the melting of the ice cap. The implications are substantial – and not just because of the impact on global sea levels. There is the potential opening up of a new sea route: the North West Passage sought by explorers so assiduously for centuries. There is the potentially easier access to mineral deposits and the possibility of oil drilling as the ice recedes. The ocean (and this brings with it the rights to exploitation of natural resources) itself falls within the territorial waters of a handful of countries – principally Canada, Russia and Greenland.
So what is the strategy being followed to protect UK interests (indeed have those interests even been defined)?
Alas, the answer is not to be found in today’s Hansard:
To ask Her Majesty’s Government what is their assessment of the 2012 Arctic Report Card of the National Oceanic and Atmospheric Administration of the United States showing record-low sea ice extent in the Arctic Ocean during the past year.
There were some exchanges on local government grants in House of Lords Question Time this afternoon.
The Bishop of Liverpool asked the Government “what steps they are taking to ensure that financial settlements for local government funding are fair.”
The subsequent exchanges had the Minister assuring the House that the settlements were in fact fair despite evidence to the contrary:
“The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham):
My Lords, the Government have proposed a fair settlement for 2013-14 and 2014-15. Each local authority’s baseline funding level and the calculation of its tariff and top-up are based on figures that take account of the different needs of each area. The settlement allows local government to keep nearly £11 billion of business rates and keep the growth on that share of business rates, providing a direct financial incentive for councils to deliver growth.
The Lord Bishop of Liverpool:
My Lords, I thank the Minister for her Answer, and I assure her that my Question arises out of very genuine pastoral concern. Can the Government not think again in the interests of greater fairness and make more allowance for the highest levels of deprivation in both rural and urban areas? For example, in Liverpool there is to be a 52% cut in services over four years, which will directly impact upon services to mentally ill children, vulnerable families and the elderly housebound.
My Lords, I know that the right reverend Prelate is very involved in the discussions that are taking place about settlements and the various levels of deprivation. I believe he held a conference last week that addressed this important subject.
However, the methodology that has been used and is set out in the formula funding document, which has been out to consultation several times, takes account of deprivation and the high cost of providing services in areas that have high deprivation, where local authorities have a low ability to raise funding. Such authorities will receive more funding than authorities with a low cost of providing services and a high ability to raise funding locally.
Lord McKenzie of Luton:
My Lords, under the local government settlement for the two years ending this March, the Audit Commission reported that in the 20 most deprived areas of the country revenue spending had fallen by 14% and in the 20 least deprived by 4.4%. In the most recent settlement, the 20 most deprived authorities will have their spending power cut by an average of 8% and the least deprived by 0.7%. Can the Minister tell me what definition of fairness justifies this distribution?
My Lords, the distribution has been carried out, as it always is, against a formula which makes sure that there is fairness of distribution across the piece.”
Hardly convincing, so I tried again:
“Lord Harris of Haringey:
The Minister tells us that she is presiding over this pure system of allocating resources between local authorities which is delivering fairness. Did Ministers change the formula for distribution so as to produce a result whereby, as my noble friend from the Dispatch Box pointed out, the most deprived areas are losing the most?
My Lords, the formula has not been, as has been suggested, tinkered with; that is how it has come out. It is fair to point out that the local government settlement is not the only funding that local authorities get; there is also the new homes bonus and other contributions that local authorities can have. It is not just the settlement.”
So it wasn’t tinkering, it just happened.
Pull the other one.
As Boris Johnson prepares to use the platform of the London Government dinner at the Mansion House tonight to try and upstage David Cameron’s long-awaited speech on Europe tomorrow, unsubstantiated gossip reaches me that the Mayor is moving to reward another of those associated with the Evening Standard’s campaign in 2008 to unseat Ken Livingstone and as a result help him to win the election as London Mayor.
Veronica Wadley (then the Standard’s editor) is now the Mayor’s (paid)appointee as chair of the London Arts Council.
A little bird tells me that now the Mayor is poised to appoint Andrew Gilligan (then the Evening Standard journalist who wrote some of the articles in the Standard most damaging to Ken Livingstone) as his new (paid) advisor on cycling in London.
Interesting, if true…..
I have now had it confirmed.
A few hours after I posted about the “explosive” purchasing of the UK’s critical national infrastructure by the Chinese, there was a series of exchanges about the privatised water companies during Question Time in the House of Lords:
Does my noble friend believe that the people who privatised our utilities expected that within 10 years they would be in the hands not only of foreign administrations and foreign countries but actually of the Governments of those countries? We have denationalised here and renationalised from abroad. Surely the regulator should get a lot tougher on these people who are making absolute fools of people who have to subscribe increasing sums to the maintenance of essential services.
My noble friend makes a fair point, my Lords, but we believe in free capital markets.
My Lords, does the answer to the noble Lord, Lord Bradshaw, mean that the Government are indifferent to the extent of foreign ownership of our critical national infrastructure? Are they indifferent to the possible implications of that?
No, my Lords, we are not indifferent; we take these things very seriously. As I say, however, we believe in free access to our capital markets.
So now we know. The Government takes these matters very seriously, just so long as the national interest doesn’t get in the way of the free market.