Britain expected to avoid triple dip recession

Britain expected to avoid triple dip recession

George Osborn may allow himself a pat on the back, as it is expected this week the UK will avoid a triple dip recession.  Senior ministers are quietly confident that figures will reveal growth in the UK economy for the first quarter of the year, even if it is minimal growth.  City economists predict 0.1% growth, not anything to shout about but importantly for the Chancellor the Economy will avoid a triple dip recession.  In recent years, Britain has seen a damaging series of recessions in 2008, 2009 and the beginning of last year, if the economy was too slid into a triple dip recession it would have been hugely damaging for the Chancellor.

Ministers are starting to believe that the worst is over and this may be the beginning of a sustained economic recovery.  Positive growth figures would be a huge relief for the Chancellor after a week in which he has faced increasing pressure from the IMF and the UK’s credit rating has been downgraded by Fitch.  Nevertheless, even the downgrade had a silver lining in which the Chancellor was warned that the UK would face a further downgrade if they relaxed efforts to reduce the deficit.

The Chancellor still won’t be able to rest easy and Labour will not see such anaemic levels of growth as positive.  In fact Ed Balls will still be able to attack the Chancellors flat lining economy and the fact that the UK’s predicted growth for the year has been slashed to 0.7%.  In all honesty, growth figures of 0.1% would be nothing to get excited about but they would allow the Chancellor to rest a little easier knowing the economy will not be heading for a triple dip recession and that his economic plan may be starting to produce sustainable growth by 2015.  There are no guarantees yet but maybe George Osborne’s economic plan will actually work.     

Will Ed Risk Increasing Spending?

Will Ed Risk Increasing Spending?

Rumours are circling that Labour could reject austerity at the next election and increase government spending in an attempt to restart the economy.  This could see Ed Miliband reverse conservative cuts and offer the electorate a radical choice in 2015, one thing is certain if Miliband does end up rejecting austerity the 2015 election will offer the electorate the starkest choice since 1983.  It will soon be time for Labour to start unveiling some policies and most importantly setting out its spending plans this is going to be a tough decision for Miliband as not matter what he chooses he will face criticism.  

If Miliband accepts austerity he risks being branded a hypocrite and losing plenty of support, this is mainly down to the fact that under his leadership Labour have been strong critics of every coalition cut.  If Miliband says, Labour won’t reverse the cuts and will stick to Conservative spending plans it will likely win Labour some economic credibility.  However Labour has gained plenty of support from opponents of the cuts, it is reasonable to say that most of Labours new found support since 2010 has come from people who oppose the cuts.  It is likely that Labour will be unsuccessful with their plan to win over former Lib Dem supporters if they start to support cuts and can’t promise to reverse austerity.  So surely  Labour should promise to increase spending and roll back austerity, but in reality this option is just as dangerous for Labour.  Labour is already trailing when it comes to opinion polls on economic competence and on their ability to make tough decisions, if Labour comes out against austerity then further questions will be raised about their economic competence.  Conservatives will also be able to level blistering attacks at Labour reminding the electorate of how Labour ran the economy into the ground and their new plan is to bankrupt Britain again.  If Labour chose to reject austerity, they face the prospect of a 1992 re-run, there are questions about whether Labours leader is fit to be Prime Minister, and there are big question marks on Labours Economic competence.

Miliband is in an unenviable position he risks losing support no matter which way he goes,  the best thing he can do is chose the route he has the most belief in because come 2015 he will have to explain his economic plan and protect it from opposition attacks.  There is no point of Miliband winning the election if he does not win it on a platform he believes in at the end of the day if Ed Miliband becomes Prime Minister he does not want to implement the same policies as the Conservatives.  If he does choose to go against austerity and offer the electorate a real choice the next election will be a fascinating battle of ideas and which will probably increase turnout, which has fallen since 97 with a slight bounce in 2010.  However, I believe whatever Labour decide to do the Conservatives will win the next election with a small majority, as Labour will lose some of its new found support to the Lib Dems and UKIP’s vote will collapse in favour of the Conservatives.  Furthermore, if the economy picks up before 2015 it will be a Conservative landslide. 

An argument for longer school day and shorter holidays

An argument for longer school day and shorter holidays

Michael Gove has recently unveiled in a speech that he would like a longer school day and a shorter holidays.  Although this plan may sound radical, is not as radical as it may first  sound in fact many academies already implement these policies, and Gove says our current system was designed around an agricultural economy in which children would help with with the harvest during their school holidays.  Whether or not this is true matters very little, as school timetable reform is practical and can offer a stack of benefits to students and parents. 

One of the strongest arguments for these reforms is to help working parents, your average full time employee will work 9 till 5 but the school day starts at 8 and finishes at 3:30. This can lead to parents having to look for after school care or having to work part time or not at all.  Increasing the length of the school day would save parents child care costs, and getting a young child to and from school will be less of a hurdle for parents who want to work.   This is mainly a benefit for parents off young children as this is less of a problem for parents of older children who are more capable of getting themselves to and from school.  Importantly the reforms would also have a positive effect on the education of the child, after all this is the most important aspect of any sort of education reforms.  A longer school day could be used in several different ways to benefit a child, one suggestion is to use the extra time to make sure students can get at least one hour of PE a day.  This would help tackle the countries childhood obesity problem and relieve pressure on the NHS by giving children a daily dose of exercise, and installing an exercise ethic in children.  Extra time in the school day could be employed to help older children with their studies by making it an enforced study period, or use it for support sessions to help struggling students or use it for other extra-curricular activities. With the new reforms schools could provide all sorts of extra-curricular activities in the additional time rather than an extra lesson, however schools could increase their lesson length from 1 hour to 70 minutes.  This additional 10 minutes in each lesson can facilitate late students, allow students time to unpack, and give teachers time to settle the class down while still having a full hour of teaching.   Some of the academies that already run longer days put forward the argument that longer 9 till 5 days better prepare children for the world of work.  This is because it’s as long as a day of work so when students go to work they will not face the additional challenge of longer days.  Longer school days will face opposition from both students and teachers that does not however make it a bad idea as almost every reform to education faces opposition.  As for shorter holidays I think there may be much more resistant than a longer day, the argument for shorter holidays is that children's academic performance dips if they spend too much time away for school, so if they had shorter holidays then they would not suffer this dip.  However if holidays are to short students particularly younger ones are likely to suffer a dip in performance due to fatigue.  Again childcare costs are an argument for shorter holidays as parents can rarely schedule their holidays to coincide with their child’s school holiday which means childcare costs, shorter holidays are unlikely to solve this problem but they will reduce it.  Personally I like the idea of longer school days, but although I can see an argument for shorter holidays I would rather see half-term holidays removed and keep the main holidays the same length.       

 One of the best things about academies is the freedom they enjoy; they are testing grounds for new ideas to improve education.  The department of education needs to cherry pick the best reforms and apply them to local authority controlled schools, this would improve the every school in the state sector.  It is important that local authority schools are not neglected due  to the rise of academies and that the department of education actively helps them to compete with academies and try to make them an attractive choice for parents to send their children.  The whole idea of academies was for greater competition in education.  So it is important that they are not just competing with each other but are also forced to compete with local authority controlled schools and that local authority schools are not left behind to become relics of the old education system.    

Scotland should be wary of going it alone

Scotland should be wary of going it alone

Scotland shares a complex web of economic links with the rest of the UK.  If Scotland happens to vote for independence in next year’s referendum there will be huge economic and social consequences as these links gradually come apart.  One of consequence would be Scotland would need a new currency, a debate in the lords earlier this week showed that the rest of the UK would not be willing to share a currency with an independent Scotland.  The key reason for that is it would give the new nation some control of monetary policy, Lords said it would be unacceptable to have members on the Bank Of England’s monetary policy committee who represent the interests of a foreign country.  This is quite right as an independent Scotland could end up going in a very different direction to the rest of the UK leaving them with very different interests to us, so it would be an act of lunacy to allow an independent Scotland to have any influence of the rest of the UK’s monetary policy.  Currency will be a big question for an independent Scotland, and if they join the EU as they intend to they will in all likelihood end up joining the euro and does anyone in Scotland really want that?

Another big problem for a newly independent Scotland is their share of the national debt, anyone who thinks the new nation would be free from its share of the national debt is living in a fantasy world.  This debt will be around £93 billion, which totals up to 63% of Scotland’s GDP, Scotland would also have to take on its share of future liabilities such as public sector pensions which would push Scottish national debt to around £185 billion which amounts to 123% of Scotland GDP.  Another point to make on an independent Scotland’s Debt is that they will have no record of servicing their debts so it is unlikely they will be able to borrow at a low interest rate.  Scotland’s new economy is also going to be hugely reliant on oil, and the price of oil is famously volatile so it is unlikely to provide Scotland with a stable income.  Scotland would also be expected to lose a quarter of a million jobs in the defence sector.

However, the SNP deny these claims and say that if Scotland voted to stay in the UK it would be responsible for over two trillion pounds worth of debt, which is 145% of Scottish GDP.  They also went on to say that talk about job losses in defence are ridicules.  The part about the defence jobs may be true, but once when it comes to Scotland and debt the SNP are once again twisting the facts.  It is true that Scotland is responsible for over two trillion pounds worth of debt and that is 145% of the Scottish economy.  However, they share the burden of this debt with the rest of the UK and it amounts to only 85% of the UK’s GDP which is significantly smaller than 145%.  So once again, the SNP are playing fast and loose with the facts.  A final point to make is that Scotland’s spending is heavily subsidised by the rest of the UK plus it is likely it will borrow money at a much higher interest rate than it currently does and its economy is largely reliant on the public sector.  So it is not unthinkable that it will run large deficits if it goes independent and this would further increase its debt burden.  

For Labour to be taken seriously they need credible policies

For Labour to be taken seriously they need credible policies

Since Thatcher’s death on Monday, the left has been split, between those who have remained silent and respectful and those yobs how have gone out to celebrate.  Thatcher managed to win 3 general elections and this was down to two main reasons, the first being she understood the majority of British people and the second being that Labour were so left wing their policies were laughable.  Although the Labour party currently lead in the polls, they may once again become the party of protest again if they don’t come up with some credible policies.

Today I read an interesting article about what Britain could have been like had Thatcher lost in 79, the conclusion was we would have been like Cuba without sunshine, and worse cars.  I am not saying this articles conclusion is accurate, but it illustrates how out of touch Labour became in the 80’s.  When a party is out of touch, they fail to produce policy that can win election, such as Labours old policy of nuclear disarmament.  In the 2000’s the Conservatives also suffered from out of touch syndrome, when the vast majority of people cared about greater public sector investment the Conservatives wanted tax cuts which would have reduced investment in our public sector.  They also put too great an emphasis on the anti EU policies which most people cared very little about.  

The modern day Labour party is falling into the same traps as the 1980’s Labour party and the 2000’s Conservative party.  Their policy to tackle the deficit is currently to protest about everything the coalition is doing and offer no alternative.  Labour are currently only in the lead due to anger about the cuts but come 2015 if they have no alternative they will struggle.  Another problem with Labour is they are focusing in on things people don’t really care about, like the fact most Conservative front benchers are millionaires.  This attack is ineffective mainly because when was the last time the majority of a governing party front bench was not made up of rather rich people, plus the Labour front bench is not exactly earning minimum wage.  The other problem with Labour is that they continually focus in on the cut to the top rate of tax, they forget it is still higher than it was for the majority of the time Labour was in government, plus the raise of the tax allowance is giving everyone else a massive tax cut.  Both these things can be used to attack Labour with at the next election.  To conclude the point I am trying to make is that if Labour fail to come out with some credible policy and continue being the party of protest, they will not win the next election.

Margaret Thatcher a tribute to the Iron Lady

Margaret Thatcher a tribute to the Iron Lady

Margaret Thatcher was a truly inspirational woman no matter where you are on the Political spectrum you must respect this woman.  The story of the UK’s first and so for only female Prime Minister was an inspirational one.  She was no Tory toff she achieved everything she did through her core principles of hard work and determination, which she learnt from her father and served her well throughout her life.  As a woman she made it to the very top of a world ran by men when women were a rare breed in parliament and not only did she make it to Number 10, she stayed there longer than any post war Prime Minister.

Her list of achievements is long, some are divisive others are achievements in everyone’s eyes.  She revived the country after the winter of discontent and turned it from the sick man of Europe to an economic powerhouse.  She stood up to for British interests in Europe winning our famous rebate and showed her strength when dealing with both Argentina over the Falklands.  However, her crowning achievement on the international stage was to ensure a peaceful end to the cold war.

Thatcher was a once in a lifetime politician who changed not just the landscape of the UK but the landscape of the world.  Thatcher is the reason so many others and I are conservatives and although today Britain lost its Iron Lady her ideas will live on and so will the impact of her policies.

Margaret Thatcher 

13 October 1925 – 8 April 2013

Osborne is right about Philpott, the system is broken

Osborne is right about Philpott, the system is broken

George Osborne passed comment on the Mick Philpott case yesterday, when he said a debate was needed about whether the state should “subsidise lifestyles like that.”  He was referring to Mick Philpotts 17 children, which he was using as cash cows.  Moving away from Mick Philpott and concentrating on the core message of Osborne’s message, what should the state subsidise?   Our current Welfare system has morphed into something that would be unrecognisable to William Beveridge.

Beveridge’s view on the welfare state was that “the state in organising security should not stifle incentive, opportunity, responsibility; in establishing a national minimum it should leave room and encouragement for voluntary action by the individual to provide more than that minimum for himself and his family.”  The key to the welfare state was that it was the minimum standard of living, it was never a high standard of living.  It was only supposed to be a safety net to prevent people going without food or losing their house.  It was also based on contributions, today the idea of contributing to one’s own benefits has been lost, for example a school leaver who has put very little in can claim as much as someone who has worked for 20 years.  Also the current system totally fails to promote responsibility it actually promotes irresponsibility, it is easier for young people to get a council house if they have a child it does not matter whether they can afford it or not.  I don’t think it is a coincidence that the UK has such a high level of underage pregnancy, you get money for having the child and when it comes to leaving home you are placed at the top of the housing list.  Also the child benefit despite recent reform is not fit for purpose, how many children should the state support?  1?  2?  6?  There should be a cut of point for child benefit such as you will receive child benefit for your first two children and that is it, the state should not actively encourage people to have more children than they can afford.  The benefit cap is trying to tackle the problem of welfare restricting opportunity but whether it will be successful it is too early to tell,  what we do know though is that for some people it is better to be on benefits that get a low paid job.  These people are not leaches they are victims of a broken system after all would any rational minded person go to work to earn less than they could by not working?  However the benefits system should never be a hurdle to someone getting a job you should always be better off in work or the system is failing after all it is only supposed to be a minimum standard of living.

To conclude Mick Philpott’s are rare in our welfare system but that does not mean that the system is not broken or that it has not lost touch with its founding principles, this was what George Osborne’s message when he made his comments about Mick Philpott's state funded lifestyle.  We currently have an opportunity to reform welfare, some reforms have already been implemented.  But there is still more to be done to reconnect welfare with its founding principles and break Britain’s culture of dependency.    

Welfare is not dead

Welfare is not dead

The picture above shows yesterday’s Daily Mirror front page, and if you like me had enough free time yesterday to read the left wing news, look at left wing blogs and laugh at left wing tweets.  You would know there was a hell of a lot of scaremongering about the death of the NHS and the welfare state in general.  I am not going to deal with NHS reform other than to say health care is still free who cares who provides it as long as it is to a high standard.  My point being is that I was frustrated with the level of misinformation floating around about the new reforms and thought I would blog about a few details of the new welfare reforms.

I will start with the bedroom tax, first thing to note about the bedroom tax is it is not a tax as it is not taking any of your own money away.  It is just taking away on average £14 of a person’s housing benefit if they have a spare room, it is also called the spare room subsidy not the bedroom tax (mainly because it is not a tax).  Also the rule has applied in the private sector for about 20 years , if you receive housing benefit for a private sector property the government does not pay for spare rooms.  In my opinion it is only logical the same should apply for public sector properties as a matter of fairness.  Also people can claim up to £400 in housing benefit, even if you factor in the spare room subsidy housing benefit is still very generous in this country.

Moving on to the universal credit, forget about the cap for a moment and just focus on the administrative cost of benefits.  Before universal credit for every one pound of benefit, it cost the government £4 in administrative costs, the universal credit will deal with these extra costs.  I am aware however very few people if any have complained about the savings in administrative costs and most of the complaints have been aimed at the benefit cap.  The cap for a couple will be £500 per week and the cap for a single adult will be £350 per week.   The cap is very close to what a person working on minimum wage would earn and to be honest why should someone out of work be able to earn more than someone in work.

The changes will be hard on some claimants but our welfare system needs reform to break the culture of dependency and replace it with a culture of responsibility.  The state welfare system is only supposed to be a safety net not a comfort blanket.  The financial crisis was caused by governments, financial institutions, and individuals living beyond their means, it has forced everyone to cut back.  Now those who claim benefit will no longer be able to live beyond their means while the state picks up the tab, the new reforms will force those claiming benefits to face the hard choices just like your average working family.  After all is it fair that benefits rise faster than public sector wages?  Is it fair that we have a welfare system that promotes irresponsibility?  Is it fair to trap people in a web of welfare?  I personally would say no.