Just go BoJo! (Including homage to Bernard Levin)

For some time I have considered Boris Johnson to be arrogant, amoral, asinine, blundering, brash, bombastic, contemptible, contemptuous, callous, conniving, cavalier, deceitful, dissembling, disloyal, damnable, degraded, discreditable, egotistical, execrable, equivocating, flagitious, felonious, fraudulent, greedy, grasping, grandstanding, hopeless, hoggish, incorrigible, incompetent, insidious, insincere, juvenile, knavish, lascivious, lying, lazy, mendacious, nasty, nefarious, narcissistic, oafish, overweening, perfidious, piggish, predatory, rapacious, roguish, rascally, sneaky, shifty, swinish, self-obsessed, treacherous, two-faced, unreliable, utterly unscrupulous and unfit for office. His announcement this week has merely reinforced my view.

Boris has finally come out and admitted what everyone assumed would be the case, that he wants to become an MP once more. But don’t worry London – he will serve out his term as Mayor. Obviously he feels that representing millions of Londoners and running a £15bn budget is something that can be done on the side. So, Boris will sort out policing issues over a panini. Then, instead of whiling away spare time on tindr, design a decent cycling infrastructure in the loo. His barmy bubble lift scheme certainly seems like an idea that plopped out after a heavy night on the sauce. Then again, maybe this is unkind – he has often given the impression of serving only in his spare time up till now anyway.

He will supposedly be serving Londoners and his new constituents simultaneously but the reality is that he is only interested in serving himself and his overweening ambition. His actions show contempt for those who have elected him and whatever constituency he parachutes into. The sheer arrogance of his belief that he can adequately do both jobs part time when his mayoralty has been a melange of mediocrity, marked primarily by his remarkable talents for self-promotion, is mind-boggling.

His tenure has seen massive hikes in bus fares (despite promises to “bear down on fares), which disproportionately affect the poor. He has performed a volte-face from his 2008 opposition to ticket office closures, now proudly announcing the closure of all ticket office and the resultant mass job losses, all necessary in order to prevent fare hikes. His opposition to tube fare hikes would be welcome were it not for the fact that he has overseen above-inflation fare increases every year he has been in office. Perhaps most pertinently, in London’s over-heating property market his planning policy has failed. The continuing decline in affordable housing in the capital is, in part, a result of his laissez-faire approach.

Despite this record Boris remains popular, a state that has long puzzled me. His Bullingdon buffoonery, pretending to be a cheerful cheeseboard Charlie, seems to be such an obvious shtick. This calculated blimpishness serving primarily to distract from his connivances while he weasels his way closer to power.

This popularity has led to an orgasmic outpouring from the right wing press hailing the return of their joker in the pack. The Telegraph thinks his “stardust” can single-handedly neutralise UKIP. The Mail and the Express tried to outdo each other in fawning obsequiousness, the Express proclaiming him to be on his “way to greatness”, a conclusion with which, despite his unconvincing self-effacement, Boris no doubt agrees.

I am sure that there will eventually be a scrape that Boris is unable to extricate himself from with a “Golly, gosh, cripes”. Hopefully, that day will come before he is in a position of even greater importance.

In the meantime, if you agree that the position of Mayor of London is one that should be full-time I would urge you to sign this petition: https://www.change.org/en-GB/petitions/boris-johnson-stand-down-as-mayor-of-london

The DRIP effect of pernicious legislation

This evening I will be putting a resolution to my local Labour party that any legislation such as Data Retention and Investigatory Powers Act (“DRIP”) should always be subject to proper parliamentary scrutiny and debate. Whilst I accept that surveillance can be a vital tool in tackling terrorism and crime it should not be used indiscriminately. Surveillance needs to be more accountable if it is to maintain public confidence. One step to attain such accountability would be to require surveillance to be legally authorised by a judge.

I was dumbfounded by the lack of transparency and debate that accompanied this legislation which was rushed from announcement to enshrinement in 8 days, or roughly half the time it takes to circumnavigate Eric Pickles. There is staggering arrogance in a bill that places private individuals under greater scrutiny being passed through parliament with none. The fact that this bill requires some level of technical expertise has been ignored in this ‘emergency’.

The government’s definition of emergency would lead to constant hysteria if generally applied anywhere else in life. There was no pressing need identified that made this an emergency. The government has known since April that the European Court of Justice had rejected mass data collection as incompatible with our right to a private life and the protection of personal data.

In part DRIP serves as a legal fig-leaf for corporate entities that are already complying with intercept warrants for much of the information requested by government (see here for fuller explanation: http://jackofkent.com/2014/07/why-drip-matters/). Indeed, it seems that the legal departments of e-mail providers are being given more weight than the individuals who are to be the subjects of this surveillance.

The right to privacy is a qualified right and can be limited in the interests of national security or the prevention of crime. However, the balance is one that requires careful monitoring. The fallacy of the argument that I have nothing to hide and so I have nothing to fear is that it always accords primacy to other interests than the right to privacy.

The nothing to hide argument is false in several ways. For example, we have often seen the potential for abuse or misuse of surveillance powers.  Doreen Lawrence and the De Menezes family had nothing to hide – does that make their being spied on harmless or acceptable? Others to have been subjected to unwarranted intrusion in their private life have been powerful organisations such as Amnesty International, charities like UNICEF, unions, and prominent individuals in the Labour Party like the Shadow Justice Secretary Sadiq Khan. If those with power can be so abused we need to think of how it could impact those with none.

All these abuses occurred under what I would consider relatively benign governments. It does not take an enormous leap of imagination to consider less benign forces abusing these powers. A government pursuing a more aggressive stance against trade unions, political activists and charities is not hard to contemplate. We have seen this government criticise charities such as the Joseph Rowntree Foundation and Oxfam for having the gumption to highlight some of the consequences of their iniquitous policies.

Data abuse need not even arise from malign intent. We have seen cases of poor data handling resulting in wrongful arrest, such as Khaled El Masri.  (http://www.theguardian.com/commentisfree/2012/dec/13/european-court-human-rights-cia-abuse-khaled-elmasri) It seems plausible to me that the more ubiquitous the data the more likely it is that these errors will occur.

There is also the obvious potential for this information to spread beyond the confines of government, either through memory sticks being left in the pub, or the government selling “anonymised” data.  

In order to play to the nothing to hide crowd the government has called upon the perennial bogeymen of terrorism and paedophilia to stifle debate. The impending paedogeddon is yet again being used to keep unruly civil libertarians in line. This red-top thinking must be avoided in government. Anything that fundamentally disrupts the balance between the individual’s right to privacy and national security must be very carefully examined and the onus must surely fall on the state to demonstrate why further impingements of our liberty are necessary. This has assuredly not happened with DRIP.

The prodigal blog returns

I return to my blog after a self-imposed hiatus. A combination of moving house, having another baby and running as a Labour candidate in the local elections meant that I have been, like a donkey on a Spanish clock tower, somewhat on the edge.

 

Running for council was a great experience. It was a pleasant surprise that the majority of people were happy to talk to me about local issues or national politics, and whilst I got told to eff off on occasion it happened less than if I had stayed at home with my wife.

 

However, despite this, with a 32% turnout in my ward (St Mary’s Park, Battersea) it is obvious that there is a lot of work to do to engage people sufficiently to vote in local elections. If 2 out of 3 voters cannot see enough a reason to vote then local democracy looks rather anaemic.

 

There are several factors causing this. In part there is an issue with people not realising the full effect that decisions taken at town hall can have on their lives. Whilst successive governments have steadily emasculated local government the council remains important. Schools, roads and social care all come, to some extent, within local government’s remit.

 

There is also a significant ‘plague on all your houses’ contingent. Quite a lot of people tend to think that politicians are all the same. This feeling is related to a problem with the professionalization of politics and political discussion in the media veering between the banal and infantile bickering. There is a danger of the mainstream parties being seen as two idiots arguing in the corner and not noticing that everyone else has drifted off home (or to an after party at Nigel Farage’s house with Godfrey Bloom playing the bongos).

 

Locally in Wandsworth we have also had many ears of Tory administration which has led some to believe that there is little to no point in voting. The fact that our candidate lost by a handful of votes in the ward of Queenstown should show that every vote does count.

 

Related to all these points is a general ennui, the (partly understandable) cynicism expressed by Russell Brand that nothing will really change. This increasingly pervasive, and ultimately quite dangerous, disassociation with democracy is what we need to tackle. I was told on numerous occasions that whilst I seemed alright they did not think “politicians” were interested in normal people. How can we overcome this?

 

I think that in the long-term it is through a much greater engagement with the community at every level. It is this sort of continuing micro-politics that is the essence of Tip O’Neill’s assertion that all politics is local. Through continuing engagement people will see the real effects that politics has on their lives.

 

I enjoyed talking to local residents that I would not necessarily meet in other circumstances. It was a privilege to be able to help some people and a source of pride when we achieved something, no matter how small, for local residents. I hope that these small acts can help to restore a little faith in the machinery of local politics. These conversations and local involvement can make our communities better and show that politics matters.

 

It was enlightening to see the real and pernicious effects of inequality. In the past I have been guilty of looking at issues through a theoretical and ideological prism. Seeing these things as they are actually being lived by people brings home the casual cruelty of poor policy such as the Bedroom tax.

 

Many of the conversations I had in our local estates arose from the effects of years of disregard by the council. Some are in desperate need of regeneration with barely functioning lifts and dirty stairwells. This environment provides fertile ground for anti-social behaviour, which self-perpetuates. If the stairs are strewn with rubbish the likelihood of fly-tipping grows. The worse-kept the stairs the more likely it seems you will find people taking hard drugs there. This erosion of pride in the public realm has negative effects on us all.

 

These problems are compounded by the fact that these places are the ones bearing the brunt of the worst aspects of austerity and they suffer disproportionately at the hand of the council’s cuts.

 

It is through tackling these issues that we can re-engage communities even if the change can be infuriatingly gradual at times. Local residents want to make their areas better. This energy is there to be harnessed and can help bring about real and effective change in our communities. My hope is that we as a party can help these people and make a valuable contribution to our local life. If we do this then people will have a real and compelling reason to get out and vote.

Blue-rinse budget

The budget presented by George Osborne this week was as concerned with politics as economics. Ironically, given Osborne’s professed loathing for him, I think it also had much in common with Gordon Brown’s later budgets. Remaining (supposedly) fiscally neutral whilst shifting monies around in a way that benefits your target voters – a fiscal carousel with some sweeties thrown to one side and pebbles to the other.

 

The political motivations for the budget are, like so much Tory posturing of late, compelled by their fear of the UKIP threat. The reforms to pensions and ISA’s are squarely aimed at the Home Counties grey vote. This key Tory demographic is the vote that they fear is being lost to the Farage’s golf club bonhomie and supposed straight-talking.

 

The pension reform is a massive decision. I am sympathetic to the argument that people should be allowed more freedom and choice in how they deal with their own affairs in retirement. The annuity market at present is also not working in the way one would wish.

 

My concern stems from several things. Firstly, governments’ track record in pension reform is about as successful as Grant Shapps’ tweets. The fact that this policy has been rushed out for the budget is rather worrying given that it has extremely long-lasting implications for the public finances. This is clearly a policy that should have been subject to the utmost scrutiny as opposed to scribbled on the back of Osborne’s fag packet.

 

Secondly, it must be borne in mind that there is a difference between a pension and savings. The state has offered favourable tax treatment to promote pensions as it means the person saving for their pension will not have to be overly reliant on the state in their dotage. The liberalisation of pension access does raise some questions over this incentive and what happens if the person who accesses their pension early is left, for whatever reason, reliant on the state?

 

Thirdly, without proper regulation there could be a lot of room for many sharks in this brave new world and people could lose catastrophically. It is worth remembering the grotesque mis-selling scandal that arose from previous pension reform.

 

It seems the government has rushed out a policy for headlines when it should have been more thoughtfully implemented. The decision is underpinned by a belief that personal choice is always beneficial – this assumption should have received greater scrutiny than appears to be the case. Choice can be beneficial but only within the right framework and I remain far from convinced that sufficient work has gone into developing the framework for this far-reaching decision.  

 

The liberalisation of ISA’s is also fundamentally not a bad thing. To encourage savings at a time when the household savings ratio continues to dwindle is reasonable. My concerns here are the fact that it flies in the face of previous policies. This suggests it is not borne of entirely pure motives. More importantly, it is ultimately irrelevant to the vast majority of people who are not in a position to utilise this offer. It is like granting people permission to fly to the moon – it would be nice but is meaningless to most people. The government would be better off focussing resources on policies for the majority.

 

It would argue that raising the personal allowance is the way in which it is helping ordinary people. This is partially true. The raising of the allowance beyond this point does not affect the lowest earners. The lowest paid 5 million workers earn less than £10,000. To truly alleviate the tax burden on the low paid the national insurance threshold should be raised.

 

What is perhaps most worrying though is the chancellor’s willingness to engage in a grand form of temporal teeming and lading. He is handing out actual tax cuts happening now that are being opaquely funded by unspecified future spending cuts. This makes it likely that the cuts when they come are going to have to be even deeper and more painful than anything that has happened as yet. The social ramifications of this could be enormous. If one adds to the mix asset price comedowns as the Bank of England unwinds quantitative easing then the overall picture remains troubling.

Speaking up

 

I realise that to be surprised by over-reactions in social media is akin to expressing shock at the rising of the sun each morning but I must admit I have been a little taken aback by some of the sentiments on my timeline in relation to the tube strikes. A lot of it centres on Bob Crow. His media image, which I think in part he plays up to, certainly allows for him to be a conveniently pugnacious caricature of a union boss.  For the media there is a vaudevillian fairground wrestling aspect to a match up of Crow v Johnson. The Black Crow v The Blonde Bombhsell. (An image I wish I hadn’t conjured as I fear my dreams will now be haunted by these two men in leotards grappling like greased pigs.)

 

It is remarkable that the situation has been allowed to deteriorate to where we are at present and to some extent this represents a failing on both sides. However, the Union is using the power that it holds to cause public inconvenience in an attempt to bring Johnson and Tfl to the table to negotiate. Given the asymmetries in power this tactic is understandable. 

 

Boris has painted the process by which the strike was called undemocratic. The irony in him saying this having been elected on a similar turnout should not be lost on people. In some of his utterances on the strike I think we have seen that once there is a scratch to the carefully cultivated veneer of amiable, Woosterish buffoonery we see his true Thatcherite colours.

 

In London Johnson has presided over cuts to the police and fire service despite election promises that this would not happen. This strike was precipitated by his desire to close all ticket offices despite previous pledges to keep them all open. The resulting loss in jobs represents a hefty chunk of the membership of the two unions on strike.  In my view they are duty bound to protect those workers interests and I do not believe this was a decision they will have entered into lightly.

 

I believe that this form of representation is vitally important in our democracy. Increasingly, as party memberships decline we need people to come together to ensure their voices are heard. Unions are a part of this. What we normally see is those with the wherewithal being able to shout the loudest and ensure their voices are heard by their representatives. The unions were established to give a voice to those who had been marginalised. This role remains but they are not the only outlet for this.

 

The other night I went to the pre-election meeting held by St Mary’s Park councillors. The topics were varied, touching on everything from dog mess (not literally) to affordable housing.  I was pleased that the council seem to be moving away from the misguided notion of removing the traffic barrier at the end of Battersea High Street thereby creating a rat run.

 

What was noticeable about this decision was that the councillors distanced themselves from the decision after vocal opposition from local residents who had attended the meeting to let their displeasure at the plan be known. The power of a small part of the local community working together was impressive.

 

For me though there was a stand out moment to the meeting. A teenager,Virgilio, from the local Surrey Lane estate, spoke to the meeting and asked for support from the councillors and the community to make sure the estate’s playpen was fit for purpose. Virgilio had come as part of the Surrey Lane People’s organization, a local community group. It was refreshing to see this group bring in local residents to this forum who may not have attended in the past.  For too long it has been too easy for local representatives to ignore these citizens’ concerns if they are not involved in the processes of local democracy such as this meeting and voting in local elections. Unions provided (and still do) a vital way for workers to make their voice heard and progress their interests. These sorts of citizens organizations can do the same for local residents in often historically marginalised communities.

 

Local politics needs more groups like this if representative democracy is going to function as it should. The more that people from all across our society feel sufficiently involved and enfranchised then the better our society will be. At the next local meeting it would be great to hear from residents of Badric Court or Totteridge House similarly speaking up for their area and making sure their issues resonate as they should with those who are supposed to represent them.

 

On the buses

As I grew intoxicated by the liberally applied Lynx of my literal bosom buddy for the bus journey to Victoria this morning I found myself wondering about the future of our bus network in London. As a result of sustained investment the buses in London are now widely used and generally provide a good and valuable service. Whilst it did not feel like it in the febrile sardine tin that is the 170 in rush hour, London as a whole is well served by its bus network. However, there is a risk that the current lack of forward planning for the buses means that olfactory assaults such as the one I suffered this morning become the norm for the London bus commute.  

The benefits of buses have already been widely noted. They reduce congestion and can thereby have environmental benefits. They are vital to the economic performance of the city and also are important in terms of social justice as they tend to serve more deprived areas more widely than other transport services.

Why then is the bus network so often overlooked in favour of more glamorous transport solutions? It is a vital component of any plan for transport in London and yet the Mayor does not appear to have any cogent plan for its development. Rather, Boris has spent £15.5 million and £6 million per annum on his cable car project. Although, in fairness, as empty, corporate sponsored vessels they do serve as an apt metaphor for so much of his tenure as Mayor.

Boris’ flagship move with the buses has been to introduce new routemasters at a cost of over £11 million. These buses also require a bus conductor to man them at a cost of £63,000 per annum per vehicle. To spend these sums of money and not increase the capacity of the bus network is absurd. To prioritise aesthetics over practical solutions is to place style over substance.

With an increasing population the pressures on the bus network are going to grow considerably. TfL predicts an increase of 7% in bus passenger journeys. If investment in the bus network is not carefully managed then we will find that the service will deteriorate from the current levels whereby the users of the service are largely satisfied. 

At present however subsidies are likely to be cut. This decrease in funding is likely to result in further increases in fares and examination of cost cutting measures. Fares have already risen by 57% on Boris’ watch. As the bus is generally used by those on lower incomes, with around two-thirds of all bus trips made by Londoners whose annual household income is less than £25,000 compared to one-third of all rail trips, then any fare increase predominantly falls on those least able to afford it.

Cost cutting measures could impact on the ‘concessionary’ age groups, namely school age children and adults over 65, and the availability of free travel to these groups. This would impact the important social role of buses. The intangible benefits of increasing the mobility of the elderly and the young should not be overlooked. The other obvious area in which cost cutting measures could be implemented is by maintain a downward pressure on staff costs. If this is not carefully managed it could result in problems with staff retention and impact on the quality of the service offered. 

The worry is that without a cohesive plan the ability of the bus network to meet more demand with less money is seriously damaged. This will have deleterious social and economic consequences. It is vital that the Mayor does not overlook the bus network and develops a policy that priorities expanding capacity of the bus network in the most cost efficient way. Grand gestures such as the new routemaster are a complete red herring. Sadly the signs are not promising. There are plans in place for river transport but none for the bus network. Boris’ commitment to showmanship rather than solutions could cost the capital dear.

Links:
http://londonist.com/2013/05/new-bus-for-london-cost-revealed.php

http://www.if.org.uk/wp-content/uploads/2013/05/No_Entry_final_report_definitive.pdf

http://www.bbc.co.uk/news/uk-england-london-15035471

http://www.london.gov.uk/sites/default/files/Bus%20Services%20in%20London%20Report%2C%20Transport%20Committee_0.pdf

Battersea rat run

Wandsworth Council have decided to proceed with an experimental traffic order opening up the south side of Battersea High Street to through traffic. This trial has arisen due to a petition of 22 signatures from businesses at the end of the street.

It seems likely that opening up this part of the road to traffic will create a classic rat run situation, with traffic now being able to cut through from Vicarage Crescent to Battersea Park road. The council claims that they will be taking measures to prevent a rat run but without preventing egress from Battersea High Street at this end it is difficult to see what measures can be taken.

It is currently unclear when the trial will start and on what basis the success or otherwise of the initiative will be judged.

There are several problematic issues that arise from this decision and why I think the trial should not be extended.

Firstly, the basis on which the decision was taken appears to be flawed. The assumption that increasing traffic is the way to increase business for retail outlets is often taken reflexively. However, this assumption does not necessarily correspond to reality, especially in a densely populated urban area where half the populace do not own a car. Given that no economic case was given to the council before the decision it appears it is merely based on an assumption. I would contend that it is a flawed assumption.

The retail outlets at this end of the street include several restaurants and pizza delivery outlets, a few newsagent, a green grocer, a hairdresser and a bookmaker. These types of business are predominantly reliant on local, repeat custom. The notion that allowing motor traffic to this part of the street would increase business seems weak given the nature of the businesses involved.

It is worth relating that research conducted by London Councils has shown that the number of customers arriving by car is generally over-estimated. The research also showed that people arriving by public transport or by foot visit more frequently and spend more money than motorists in town centre shops.

It is highly likely given the characteristic of the local area that the majority of the custom would come from a relatively short distance and most likely come by foot or public transport. Increasing traffic on the road could actually deter this type of custom.

The idea that increased traffic would create extra business is also weakened due to the lack of parking in the area. Where exactly is the extra custom going to park their vehicles to use these shops? With the new residential developments in the area the pressure on parking space is only likely to grow.

There are other ways in which to improve customer flow and help the local business. It is disappointing that the most banal option available is the one which has been selected. The research indicates that a more attractive street with better facilities for pedestrians and cyclists would be most beneficial. Improving access from the Battersea Park Road end of the street for pedestrians could be beneficial. Alternatively making the area next to the current barrier more attractive could be beneficial.

Secondly, the decision seems to run counter to the council’s public health remit. The tacit encouragement of travelling by car contradicts the council’s supposed desire to increase activity such as walking and cycling.

Nitrogen dioxide levels are already over the desired average levels on Battersea Park Road. Increasing traffic in the area would appear likely to lead to further pollution. This would be damaging to local residents. Wandsworth had 148 deaths related to poor air quality in 2008. To risk a further deterioration in the local air quality could be regarded as irresponsible.

There is also the risk of an increase in accidents due to an increase in traffic. There are many vulnerable users of this road due to there being a primary school, nursing home, church and charity building on or just off the road. Thus there is a high concentration of our most vulnerable pedestrians in the area. It seems odd for the council to prioritise the motorist over them and to increase the likelihood of accidents involving these vulnerable users of local amenities.

Finally, the decision is also at odds with the general transport policy. The high street is part of the Wandsworth Cycle network and the council has installed several stations for the bike hire scheme in the immediate area.

It is unrealistic to expect more people to cycle whilst simultaneously encouraging more motor traffic in the area. Most people cite the fear of accidents as a reason for not cycling. The act of increasing traffic in the area is therefore going to make people less likely to use the route for cycling, especially the first time, irregular users that the hire scheme is purportedly looking to encourage.

The fact that the council is prepared to spend money from ever decreasing resources on this initiative is worrying. The general trend in London is to re-prioritise our infrastructure away from the car. For Wandsworth to take this decision, even if motivated by a desire to help local businesses, seems almost wilfully perverse. The creation of a rat run here will be harmful to local residents and endanger the many vulnerable users of the road. It is far from clear that there will be any economic benefit and indeed, the allowance of traffic at this part of the road could have a detrimental effect on local businesses as it becomes more difficult for pedestrians to access the shops.

Sources:

Click to access GLA%20air%20quality%20public%20health%20guide%20for%20LB%20Wandsworth.pdf

http://www.wandsworth.gov.uk/downloads/file/8380/uupdating_and_screening_assessment_2012

http://www.londoncouncils.gov.uk/news/current/pressdetail.htm?pk=1549

http://www.livingstreets.org.uk/make-a-change/library/the-pedestrian-pound-the-business-case-for-better-streets-and-places

http://www.wandsworth.gov.uk/census

Steady as she goes?

The autumn statement gave George Osborne the opportunity to bask a while in the warm glow of improving economic performance. The aftermath has also seen an increase in pressure on his counterpart in Labour, Ed Balls. The Tories are keen to present an image of ‘steady as she goes’ in order to enable an electoral message of Labour endangering the recovery. I expect this message to be repeated mantra like in the run up to the election.

There were a few sleights of hand in the Gordon Brown style – giving a break on green levies here whilst simultaneously taking these from general taxation there but there were no give-aways beyond those trailed long before the statement.  I imagine next year will be different as we see some tax morsels dangled before the electorate. Beyond the national insurance break on youth employment there is little to applaud in this statement.

Two things have gained in clarity as a result of the statement. The first is the commitment to an ideological austerity in order to tear up the social contract that has remained broadly in place since the Second World War. This has been brilliantly elucidated upon by Will Hutton. The second is that Osborne seemingly sees no need to tackle the fundamental flaws in the foundation of the present recovery. The philosophy of steady as she goes thus becomes a rather baffling reluctance to acknowledge any weakness in our current economic model.

One issue arising from the first point is that the government is guilty, again (cf. NHS, education etc), of misstating its intentions to the public. Austerity was presented as an unfortunate and unwanted result of the economic crash. The government needed to become more like the prudent housewife and get its books in order. What we will see instead is a shredding of public expenditure if the Tories are given free rein.

The inherent weaknesses in the economic recovery and Osborne’s reluctance to tackle the issue is perhaps more surprising.  The current recovery will not benefit most people. Median incomes (as per the IFS) will continue to fall for the next couple of years. The recovery, such as it is, is based on increasing asset prices propped up by several factors including the continuation of quantitative easing, low interest rates, a housing bubble exacerbated by shortage of stock in key areas and a growth in demand fuelled by personal debt.

Private investment is still 11.6% below its pre-crash peak in 2007. This continuing slump in private investment will serve to negatively impact productivity and thus contribute to continued wage stagnation. In such circumstances any growth in demand in is likely to come from an increase in personal debt. Whilst the public worked towards deleveraging in the past few years the purse strings have loosened once more. This is exacerbated by increasing asset (particularly house) prices which further encourage this profligacy. Osborne has enacted very little to promote the investment required in order to make the country more productive. Instead he has fuelled demand with commitments such as help to buy.

Similarly public investment (in line with the ideological austerity) continues to be neglected. For electoral reasons the government has all but abandoned one ‘spade ready’ project in Heathrow and HS2 looks as though it will be shunted to the sidings. Beyond that the government continues to do little to invest in housing stock or the country’s general infrastructure.

With no attempt by the government to recalibrate the economy the recovery remains worryingly vulnerable to externalities. Another crisis in the Eurozone would unbalance the recovery even further for example. Continuing problems in the Middle East or a conflagration with Russia due to the situation in the Ukraine are all events that could send shockwaves worldwide and blow away the froth of the British recovery. The lack of any substantive attempt by the government to refocus the economy only serves to accentuate this issue.

Links:

http://www.ons.gov.uk/ons/rel/bus-invest/business-investment/q3-2013-provisional-results/stb-business-investment-q3-2013-provisional.html
http://www.ifs.org.uk/publications/5517
http://www.theguardian.com/commentisfree/2013/dec/08/george-osborne-spending-cuts

Forever blowing bubbles?

The past couple of weeks have seen much debate centre on the notion of ‘secular stagnation’ as outlined by Larry Summers in his speech to the IMF. Summers examined whether real interest rates needed for full employment may now be negative. When one looks at the performance from 2008 in the UK and G4 economies this would appear to be the case: (http://blogs.ft.com/gavyndavies/2013/11/17/the-implications-of-secular-stagnation/)

 

If this is the new paradigm for mature economies Summers speculates that the economy may actually need bubbles to get somewhere near full employment. Given the absence of inflationary pressures in economies that have had supposedly loose monetary policy there would seem justification to accept this viewpoint.

 

There are limits to the extent to which an economy whereby growth ultimately rests on bubbles is feasible economically and morally. An asset bubble in property is one thing (and plausibly quite socially detrimental) but a bubble in natural resources, say food or oil, would have disastrous effects on society at large and a disproportionately damaging effect on the most vulnerable members of our society. There is some debate to be had as to whether Summers is offering this theory as an observation or a normative proposition.  

 

Overall the theory looks to me fairly compelling, This being the case it is worth examining other factors related to this phenomenon.

 

The mature economies in the neo-liberal consensus period have also seen a massive increase in inequality, increases in private debt and the labour share of national earnings decreasing against capital.

 

These factors are interrelated and to some extent complementary. The growth in inequality has led to enticing poorer people to borrow more. It also sees the rich able to save more and accrue more earnings via wealth.

 

To what extent are these elements causes or symptoms of ‘secular stagnation’? It is difficult to assess. However, if one looks at some of the elements surrounding the UK’s period of growth 2003-2007 and the current promising economic indices we can certainly see support for the notion of growth powered by blowing up bubbles. The London property market seems set to float away again and the government are hoping to engineer confidence with their frankly insane commitment to Help to Buy. A delirious connection to demand side fixes to what in Britain is fundamentally a supply side problem. Personal debt levels are on the rise again. The recovery remains perilously imbalanced.

 

These factors were all, and continue to be, exacerbated by policy decisions.

The privileging of capital (wealth) against income is hard-wired into the UK tax system. The famous example of the hedge fund boss paying less tax than their cleaner due to this disparity has not led to a sufficient levelling of this playing field. Nicholas Ferguson’s comments in 2007 were deemed shocking but were still insufficient to prompt any real action to be taken. If Summers is correct and bubbles are now a feature of the western economy then this situation could worsen as capital gains more via appreciation in asset prices.

 

As such it should fall upon government to structure the tax regime in a fairer way and in a way that seeks to redress the perilous imbalance being created towards capital. One way in which this may be ameliorated would be to adopt a unitary earnings tax so all earnings whether via income or capital would be taxed at the same rate. This would be equitable, fair and encourage economic performance. Another possible solution would be to massively reduce taxation of income from work and instead raise revenues via a land value tax. This has the benefit of encouraging productive endeavour whilst discouraging land speculation. A Land value tax could be a way in which to prevent the blowing up of one form of bubble.

 

Further to this the government should examine the growth in inequality that is linked to this type of ‘bubble’ economy. The increase in inequality has seen the earnings of those at the top motor away from the sluggish growth of the median wage earner and into a different stratosphere from those at the bottom end. This group on the wage scale have seen real earnings decline to 2005 levels. (http://stats.oecd.org/). Meanwhile the average FTSE 100 CEO saw an average 10% increase from 2011 to 2012 as per the Manifest survey on executive pay.

 

There are two responses to this disparity. The first response, and I think most important, is to raise the pay of the lowest. The second is to strengthen corporate governance to tackle any excesses at the upper end of the scale.

 

We have seen the purchasing power of the normal British worker deteriorate due to prices increasing at double the rate of wages. Even in the current period we are seeing wages grow at a measly rate of 0.7%. The Economist estimates that 891,000 workers would benefit by £2,500 per annum from an increase to a living wage. Given that those at this end of the earning scale are more likely to spend their money this would have a dramatic effect on demand in the UK economy.

 

I also think that if we accept the measure of the living wage then it must fall upon us as a society to ensure our workers are paid at that level. Can we as a society really accept the notion that we pay workers below a level at which they can actually live a reasonable existence?

 

The question then becomes how to make this happen. I think a fiver year forward guidance plan to move towards a living wage would be a reasonable way to achieve this without causing too much turmoil to employers. The minimum wage commission could be tasked with reviewing employment indicators and have the power to defer it to a later date if it looked as though the move would derail employment.

 

Another way in which to ease the burden on employers would be to implement an employer’s NI tax break on employment of the young. This could be a very promising movement to reform of the labour market that was of benefit to the young and the low paid whilst not being detrimental to business.

 

The assessment posited by Larry Summers poses interesting questions for the Western economies. I have outlined my preferred response. It will be interesting to see how the UK government chooses to react, if at all.

Links:

http://www.imf.org/external/mmedia/view.aspx?vid=2821294542001

http://krugman.blogs.nytimes.com/

http://www.ft.com/cms/s/0/a2422ba6-5073-11e3-befe-00144feabdc0.html?siteedition=uk

 http://www.economist.com/blogs/freeexchange/2013/11/inequality

 

http://www.economist.com/news/britain/21589440-bad-plan-deal-britains-low-wage-recovery-all-work-and-low-pay

Time for Twenty?

As a result of writing a blog on London’s cycling infrastructure yesterday I reviewed several statistical releases about casualties arising from traffic incidents. One figure struck me and got me thinking about the issue of road safety in Wandsworth. In 2012 there were 9 fatalities on 20 mph roads as opposed to 595 deaths on roads where the limit was 30 mph. [1]  I cannot find any figures that allow me to flex these figures for miles of road that are 20 mph and 30 mph but it seems a compellingly stark statistic.

it is also worth nothing that pedestrian fatalities are disproportionately spread amongst the moe vulnerable age groups. Children and the elderly comprise 48.3% of all pedestrian fatalities and 48.7% of all serious injuries. [1]. Transport for London have produced a report which shows a 42% reduction in casualties in 20 mph zones, with the main beneficiaries of this reduction being children aged up to 15 [2]. I think that we owe these people the highest duty of care. If one believes that it then seems remiss not to tailor our speed limit to reduce the danger to them.

Wandsworth has one of the highest percentage of residents not owning a vehicle in the country (55.7%) [3]. Despite this much of our urban landscape in the borough is seemingly designed to prioritise the motor vehicle. The safety of our citizens should be paramount and yet it would appear that we as a borough have been catering more to the structural needs of others. 

To offer a local example, crossing Battersea Church Road can feel rather like playing the old computer game Frogger. The turns make it very difficult to reliably judge traffic and when best to cross. This is exacerbated for the more vulnerable pedestrians such as the elderly and those with a pram who inevitably would take longer to cross the road, and in the case of the elderly be more likely to have problems with seeing and hearing.

Wandsworth has had a trial of  20 mph in West Putney and Dover House Road and seen a drop in the casualty rate from 7 to 2.18 in West Putney and from 3.66 to 3.27 in Dover House Road. [4]. As such it has been shown that the scheme could have a beneficial impact on safety locally and the council has agreed that if 25 per cent of people living in an area give their approval then a 20 mph limit can be introduced. I hope that it is introduced in St Mary’s Park ward soon.

[1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/245387/rrcgb-2012-complete.pdf

[2] http://www.tfl.gov.uk/assets/downloads/20-mph-zones-and-road-safety-in-london.pdf

[3] http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-286262

[4] http://ww3.wandsworth.gov.uk/moderngov/documents/s28018/13-430%2020mph%20Review%20OSC%20-%20Report.pdf