Political Economy

Seven score and eight years ago a man spoke to dedicate the cemetery on a battlefield which had seen over 46,000 casualties including nearly 8,000 killed.

He pointed out that the living could not dedicate that place since the dead had already consecrated the ground with their blood. The living, rather, had to dedicate themselves to the unfinished work for which the dead had died.

That work was to ensure “. . . that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.”

The man was Abraham Lincoln, President of the United States of America and the battlefield was that of Gettysburg, the key battle in a civil war that saw a total of over 210,000 killed in action so that his nation “. . . shall have a new birth of freedom”.

Lincoln was not the first person to enunciate such a  belief. In 1830 the Senator Daniel Webster in a speech described the federal government of the USA as “made for the people, made by the people, and answerable to the people,”

So freedom is protected by the correct form of government and Lincoln tells us how to distinguish such a government from others. Do we, the People of England, have such protection for our Freedom? The answer is not difficult to deduce.

Government of the People

Government “Of the People” is government “Made by the People”. It is government hewn from the people and it has in all times and in all places been a government that People have had to fight for.  In January 2007 a poll for Newsnight showed that 61% of the People of England wanted a devolved Parliament for England. In April 2010 an ICM poll showed that 68% of the People of England wanted a devolved Parliament for England.

Do we, the country where parliaments were invented. have a Parliament for England? No! Have the political elite in England said we will get such a Parliament? No! Do we have “Government of the People of England”? No!

Government by the People

“Government by the People” is the people governing themselves via the election of a representative that will do what the people want. Do we have such representatives? No! Why not? There are many reasons. The first and most important reason is that Edmund Burke, MP for Bristol, said in 1774 in a speech to the electors that he could vote in the House as he chose and not as they wanted, a vote mark-you that had been given him by those electors. Burke was hardly an objective observer in this and as a piece of self-serving claptrap this one has been religiously parroted by MPs ever since. Burke did not believe in democracy and is claimed as a founder of modern Conservatism.

Secondly few MPs actually have the integrity to vote according to their own opinions. Instead they hand their vote over to their party in return for a continuing flow of cash, perquisites and honours! Thirdly most MPs are not voted into office by a majority of those who vote. To get 40% of the vote is considered good and this of course usually represents less than 30% of the electorate.

Do we, in England, have MPs who represent their voters? No! Have the political elite in England said we will get such MPs? No! De we have “Government by the People of England”? No!

Government for the People

And so we come to the final act. I have already shown that in England we do not have “Government of the People”. I have shown that in England we do not have “Government by the People”. Do we have “Government of the People, by the People” in England? No!

So, do we have “Government for the People of England”?

In 1975 when the referendum on remaining in the Common Market was held I listened carefully, as did many, to the views expressed. We were told we needed to remain in the Market because of  trade despite the fact that we had a trade deficit with them of £2bn. Well now the Market is a Union and we have a trade deficit with the rest of the Union of £36bn. This deficit is equivalent to exporting some 1,000,000 jobs to Europe.

In the 13 years of Labour government from 1997 some 1.67 million jobs were created in the UK but 1.6 million of those jobs went to people with no prior connection to the UK. It appears therefore that the UK government has provided 2.6 million jobs to the world. The jobs that remain are increasingly part-time, minimum wage and unskilled. Recent data has shown the trend has continued and will continue, particularly since the coalition government has set no restrictions on the so-called Mode 4 immigration. This is where a company from another country is allowed to set up in the UK and bring in all its labour from its own country. These workers will be paid minimum wages plus a tax free living allowance. The Tory party will of course be the grateful recipients of political donations from these “UK” companies. UK workers will receive only the dole that has been much reduced by the Tories.

Will MPs work to protect and grow the number of meaningful jobs open to us? No! Will the political elite in Westminster allow us in England to get the jobs we need to lead satisfying and creative lives? No! Is this “Government for the People”? No!

A broken Democracy

In England we do not have “Government of the People”. We do not have “Government by the People”.  We do not have “Government for the People”. We live in a broken democracy where our freedom is compromised and not, as the Prime Minister would have us believe, a broken society where our property is compromised. Indeed the Prime Minister is currently driving this broken democracy deeper and further than anyone before.

Is it possible to fix the problem, to regain our freedom by instituting “Government of the People, by the People, for the People”? The answer is yes, but only if the a range of policies like the following are adopted. It cannot be fixed by adopting one or two of these policies, such as creating an elected upper chamber or adopting a parliament for England. It cannot be fixed by adopting policies but implementing them in such a way that they will not work. For example Cameron’s promise to make it possible for voters to recall their MP is going to be implemented by creating a committee of MPs to decide if one of them should be “thrown to the wolves”! Such a committee will only be used to punish an MP who has annoyed the party leaders!

So here is the list:

Government of the People

• A devolved Parliament for England with a government and First Minister.
• A smaller House of Commons and elected Upper Chamber to take on the role of a federal Parliament responsible for reserved matters.

Government by the People

• Power for the voters to recall a sitting MP for re-election
• Devolving additional responsibilities to the County level and its elected Mayor.
• Increased use of the referendum so that voters can decide what is done.
• Reform of the voting system to ensure that 50% is required for election

Government for the People

• A referendum on leaving the EU
• An end to mass immigration
• An immigration system that ensures that jobs are not taken from the People of England and that immigration is run effectively.
• Protection for companies from takeover and closure by foreign companies

A Party that Will

There is one political party that does have all of these policies, and more. It is the only party that has as one of its objectives the institution of “Government of the People, by the People, for the People.” That party is the English Democrats.

The Price of Freedom

Now here is the rub. It is your freedom and your government that I have been talking about. The good news is that you can do something about it. The price is your time and your interest. If you are concerned that your freedom is compromised then join the English Democrats, donate to their funds and get active in any way you can. There are a wide range of opportunities such as forming a county or constituency branch, or joining one if it already exists, leafleting, letter writing, standing in elections, writing articles or blogs, helping to run facebook, twitter and web sites. The list is almost endless.

Its Your Freedom. You Do Something About It.

GHTime Code(s):              nc nc nc nc nc 

Increase taxes say many. But tax take averages 35% – 37% of GDP whatever is done. Tax Freedom Day http://www.adamsmith.org/tax-freedom-day/ has varied little over the last 40 years

Harold Wilson                 1969       29th May

Margaret Thatcher         1979        29th May

Tony Blair                        1999        25th May

Gordon Brown                2009       14th May

(but 25th June if based on government spending – the worst since 1984.)

This time round tax receipts have plummeted.  As of August 2009 VAT was down 13%, income tax down 12.5%, corporation tax down 49%.  Taxes in total were down 9.2%.

The data for government surplus/deficits since 1947 from the Office for National Statistics is as follows:

 

For 30 years up until 1974 government budgets were in balance, taking one year with another. For the last 36 years the balance has oscillated widely but has been in deficit for 28 of those years. The truth of the matter is that government budgeting has been out of control for all those years and that as a result  we have become a nation of debt junkies. We have no business making fun of the Mediterranean countries over their foolish policies because we were doing exactly the same thing. We have been saved only by not being in the euro.

Gordon Brown as Chancellor said he was going to stick to the golden rule of public finance. This is that the budget will be in deficit, made up with borrowing, during a recession and during periods of growth it will be in surplus so that the borrowing taken out during the recession can be repaid. This refers to current expenditure not capital expenditure on things like roads, schools, hospitals and so on. That sort of expenditure should be be paid for initially by borrowing that is repaid by the taxpayers who benefit from it over its useful life.

In early 2010 I estimated that government expenditure had been too high by £90 bn in the good times. These were times when we should have been running with surpluses to pay off the borrowing  of more than £150 bn incurred in prior years, but were instead running with substantial deficits.

In 2010 the government deficit was £85 bn (excluding financial interventions such as support for the banks). Government net borrowing, that included capital expenditure,  (excluding financial interventions) was £147 bn. Approximately one in four pounds the government spends is borrowed. Based on past trends it could soon be one in three unless something is done.

So what could be done? Try putting up taxes? The Laffer curve, proposed by Art Laffer says that as taxes increase a point is reached where actual tax take starts to decline rather than continue to increase. Tax increases made by the coalition and Labour are about £30bn so they will not mend the problem although it should alleviate it. More tax however is likely to be counter-productive.

Growth is unlikely to get above 1.5% which means that unemployment could continue to rise.

One solution could be an enterprise led recovery with lower taxes paid for by lower spending.

• In 2000, three years into the Labour administration, the government spent £343 billion. In 2010-2011 it planed to spend £653bn: nearly twice as much.
• If it had only grown in line with inflation since 2000, government spending would be £407bn – £246bn less than this year’s proposal.
• That’s enough to wipe out the deficit, abolish VAT entirely, cut corporation tax to match Ireland’s 12.5%, abolish Council Tax, and still have some spare.

Labour has suggested that the correct approach is to make the cuts at a lower pace. But this will mean a greater level of borrowing for longer, a greater level of total public debt as a result and the need to run surpluses for longer to pay down some of these borrowings in preparation for the next recession. But the economy is cyclical and the next recession will come around again, perhaps by 2017, perhaps sooner. The current high level of cuts are designed to bring the economy back into balance by 2014 leaving only three years to pay back some of the borrowing before the likely date of the next recession. That is simply not enough time. Public sector net debt at the end of April 2011 was £910 bn or 6o.1% of GDP (gross domestic product, a measure of the total value of output of the economy). In 1998 it was 39%! This is likely to rise to £1,200bn or more over the next 3 years.

What else could be done? Well part of the problem is that it is an English problem. The devolved assemblies in Scotland, Wales and Northern Ireland have been shielded to a large extent from the cuts by the English taxpayer. A fairer division of the burden could lead to a savings to England of £10bn or more.

The Taxpayers Alliance estimated that the actual cash cost of the European Union is between £20bn – £40bn, which is in effect all paid for by England. Leaving the EU would lead to savings of this level and in total the two measures could amount to £30bn – £50bn.

These saving of around £40bn would not be reached immediately and would be unlikely to exceed £50bn, or less than 5% of total borrowing over the next 5 years. The truth of the matter is that we cannot afford government expenditure of more than about £550bn at present.

If we want to get back to the heady days of expenditure at £650bn we will need GDP, in current prices, of £1750bn which is 17% higher than at present. Even at an average of 2% real rate of growth in the economy this will take 8 years, and by then we will back into the next recession. Perhaps we need to pay attention to a saying of our mothers  that “you have to cut your cloth to suit your pocket”!

But can we get back to where we were? In addition to the tax rises we have had and the large cuts in government expenditure, and things the government is not talking about like a fairer division of expenditure between England and the other countries and leaving the EU, we would still need a sustained period of 3% per annum real growth in the economy from 2012 to 2017. With that, some real efficiencies in public spending and some luck, particularly with regard to the start of  the next recession we could make it.

How best do you think can we engender this growth?

GHTime Code(s): nc nc nc nc 

The battle is raging  fiercely. The usual tools of generalisation, casuistics, feeble and sometimes misleading statistics, are being brought into play.

Riding in to help the beleaguered coalition is, believe it or not, the Guardian newspaper! Simon Jenkins has pointed out that if George Osborne gets what he wants total public spending, in real terms, will be £640bn in 2015 compared to £665bn today. Even more telling is that after New Labour’s first term on office it was only £449bn.

The out of control spending tendencies of Gordon Brown are certainly evident. One has to wonder how New Labour politicians were ever able to mistake his incompetent handling of the economy for ‘genius’. Perhaps I should have titled this piece “Clothes! What Clothes?”.

Also exposed is the blustering of the trade unions, most of whose members enjoy feather-bedded public appointments where they earn on average, including pensions, some £136 a week more than the private sector.

Whilst in the past few years he private sector has suffered job losses of 884,000  the public sector has actually added 194,000 jobs! Were just the new, and unneeded, 194,000 jobs to go the loss of the union dues that these people pay would seriously damage the pay and bonuses of the union bosses. And therin lies, I feel, the main driver for all this harrumping.

Even in good times, with the full blast of tax revenues, stealthy or not, New Labour excesses would now be fueling a deficit in excess of £90bn. Had Gordon Brown run a budget, balanced over the economic cycle as he claimed, Britain would have had spare borrowing capacity of hundreds of £bn, easily enough to deal with the problem created by Gordo’s inadequate regulation of the banks and other financial organisations.

In other words this recession was completely avoidable. The private sector has sufferred enourmously as a result. It is now time for the bloated public sector to do the same.

Surprisingly this is one of the questions that divides those who want a Parliament for England. And yet, as a look at the arithmetic od representation shows, the answer is very simple and one on which all sides of this question can agree.

The key here are the number of elected representatives associated with national government rather than local government.  The situation will be as follows after the next election. The House of Commons will have 650 seats.

England            533 seats    82%

Scotland             59 seats       9%

Wales                 40 seats       6%

N.I.                      18 seats      3%

If we are to continue to have an Upper Chamber then the House of Lords will have to go, to be replaced by an elected chamber. A government can then choose its cabinet, ministers and so on from both elected chambers.

The task then is to decide how many MPs will be needed to carry out the much reduced level of government expenditure that will result from devolving much of the work to the English Parliament.

Wading through the statistics of government expenditure is not much fun, nor very easy but it seems safe to make the assumption that about half of the expenditure of the government is associated with devolved matters. Another requirement is that currently a governing party has to be able to provide between 140 and 150 Secretaries of States, Ministers and so on to run the business of government.  To give a reasonable choice, since not all elected MPs will be suitable, the governing party currently needs around 300 members. If this is just sufficient for a majority then there needs to be around 600 members in the House. Around half of these posts will move with devolved matters to the English Parliament. These numbers indicate that the House of Commons can reduce to half its size or 300 – 325 without causing problems. In the USA Congress and the Senate have, in total,  535 members for a voting population of around 216 million. Compare this to the 45 million voters in the UK. This would equate to a House of Commons and Upper Chamber of 112, a vastly smaller number.

It seems then that if we had a harder working Parliament we would need no more than 300 members split 200 MPs to the House of Commons and 100 Senators to the elected Upper Chamber.

How big would the English Parliament have to be? There are around 38 million voters in England. The largest constituency has around 110,000 voters. Bearing in mind that English voters would have representation through their MP and Senator it seems that an English Parliament constituency could be sized between 100,00 up to  150,000 in size. This would indicate that there could be as many as 380 constituencies or as few as 250. Given that to provide the 70 or so Ministers and parliamentary secretaries required by an English Government the majority party would need around 140 MEPs (Member of the English Parliament, sorry but the other lot wil have to rename themselves, MEuPs perhaps!)  The English Parliament would have to be at least 280 in size. On this basis a total of 300 constituencies seems generous.

The question of where these various bodies would sit is now clear. They could continue to sit at Westminster. One debating chamber could be allocated to the English Parliament whilst the other would be shared by the Commons and Senate. Since much of the work of PArliament is done in committees there is no reason why, when one house is using the committee rooms the other cannot be using the debating chamber.

Such a proposal would show a savings of 100% of the current direct costs (members expenses, staff and other costs) of  the House of Lords of around £50 million. In addition with a total of 600 MEPs, MPs and Senators there would be the saving of the current direct costs of 50 MPs and some savings of salaries if MEPs are going to be paid less than an MP as are MSP at the moment. Say a saving of another £10 million or £60 million in total. Finally the House of Lords overflow offices at 1, Millbank will no longer be required. This building could be rented, sold or converted into accommodation for members. The same conversion could be done to part of one or other of the buildings currently also used for office space, Portcullis House and the Norman Shaw Buildings

We started with 650 elected MPs and over 700 members of the House of Lords, of whom, on average, around 400 attend daily. We have ended up with 600 elected reresentatives, with more than enough space to do their work and a not unreasonable level of cost savings.

GHTime Code(s): nc nc 

It isn’t just David Cameron schmoozing this idea. Now POWER2010 http://www.power2010.org.uk have jumped on the bandwagon whilst engaging in a very worthwhile exercise in deliberative democracy. That deliberative democracy is not the solution to our current woes, that it is not without its problems, one being the narrow basis on which policies are selected – a scientifically chosen sample of 130 individuals (my emphasis) – is clear from my rant below. However do not let this dissuade you from going to their site and voting on what you think are the most important issues for democracy today.

One question I would like to know the answer to is who was allowed to vote on this issue. If it was just the  “scientifically’ chosen English amongst the 130 then that is one matter. However if it was everyone then the vote is invalidated straight away – The English have never been allowed to vote on devolution in Wales, Scotland or N. Ireland!

How Power 2010 could have failed to select an English Parliament as one of their issues I do not know. Over 50% of voters in England regularly support the idea in opinion polls. They do so because an English Parliament gives the people of England  a government of the English, by the English, for the English, just as the Scots, Welsh and N. Irish have for themselves.

Having a glorified Commons Committee, subject to the other nations simply because it is a committee of the House, does not provide a government of the English, by the English for the English. And what will happen after the Commons? Will the bill go through to the Lords to be adjudicated on by the Scots, Welsh, and N. Irish?

Does this proposal require that Cabinet Ministers for devolved matters (Health, Education, Transport, Justice and so on) only come from English constituencies? And will these and only these Cabinet Ministers make decisions in Cabinet about English matters, sitting on the English, yet again, sub-committee?

A clearer example of confused thinking and poorly thought out logic is difficult to find.

Currently three, 75%,  out of the four nations, having 16% of the population, have their own government. In round terms 20% of the people have 80% of the democracy! This is a clear and absolute nonsense and no clearer example of Pareto’s Principle need be given http://en.wikipedia.org/wiki/Pareto%27s_principle.

When Jack Straw (Lord Chancellor and Secretary of State for Justice in the Westminster government, that most racist of governments!) claims that the English cannot have a Parliament because they constitute 84% of the population he is not showing his ignorance of Pareto. Misquoting Pareto is a ‘cunning plan’ based on a clear assumption that the electorate are a bunch of ignorant idiots who will not recognise his statement as a misquote, but rather treat it as a clever analysis of the issue, which it is not.

Do not vote for this committee approach. It is disrespectful to the English, it makes the English less equal than the other nations, it is extremely unfair to the English and worst of all it will not work!  Better by far to have a Parliament for the English, an elected House of Lords and a House of Commons with, in total, no more elected representatives than currently are elected or debate matters. No extra cost and much greater democracy!

I suppose Power2010 will come up with the usual excuses for putting forward this idea, along the lines of “It wasn’t us gov.”, or “I was only following the rules” or “The committee we appointed made these decisions” -  (whine, whine, whinge, whinge). Shame on you! This is a disgrace!

David Cameron’s motive for putting the idea forward is clearer. He has already said that he does not want to be “Prime Minster of England”, conveniently forgetting, or perhaps never understanding, that the devolved governments are led by a First Minster and not a Prime Minster – not much respect for the English there, then. The real reason he made the remark is of course about Power. It is correct that most of the work of government occurs in the matters that are devolved; Justice, Health, Education and so on. This means that most of the key levers for getting re-elected or gaining the confidence of the electorate are in devolved matters. Given that 84% of the votes are in the 84% of the devolved English matters you can see how Cameron, Clegg and Brown (and Straw) want to keep these matters within reach of their sticky fingers, close to their greedy hearts and out of Control of the English for ever.

It might be of course that Cameron just wishes to distance himself from Bonar-Law an earlier Conservative Prime Minister, a Scot, born in 1858 in New Brunswick (the Canadian Confederation did not occur until 1867) but raised in Scotland, who referred to himself as the Prime Mister of England [The Making of the English National Identity by K. Kumar, ISBN 0521777364]. Bonar-Law became leader of the Conservative Party  after Aurthur Balfour (also a Scot) and became Prime Minister in 1922 but sadly had to resign in 1923 due to throat cancer. His was the shortest Prime Ministership of the twentieth century and he is known as the Unknown Prime Minister. A name Cameron will not want!

GHTime Code(s): 292d5