AUTUMN LEAVES AND GREEN ECONOMIC SHOOTS

 

 

 

The last leaves are falling from the trees but George Osborne will be pointing to the green shoots on Thursday in his Autumn Statement.

 

If there is going to be a turning point for this awkward coalition government, this should be it. Apart from that sunny day in the Downing Street rose garden when the two posh boys (as I called them at the time) did the coalition deal, we have lived through unremitting economic gloom. Business investment dried up, the banks went into their shell, wages were frozen, interest rates went to zero. Only inflation seemed to go up.

 

Now at last the economic indicators are looking up and the North of England will be hoping for some sensible decisions from George Osborne to help our part of the world. Although places like Liverpool have shown more resilience than in the past, the North has suffered under the ConLibs particularly in the haemorrhaging of public sector jobs and the popular squeeze on benefits.

 

Unemployment has actually been slightly rising this autumn in the North West and the squeeze on living standards continues as the controversy continues over zero hours contracts. Youth and graduate unemployment remains a real problem in the North and the shortage of new houses remains.

 

So why might this be a turning point for the government. Simply because it looks as if the Chancellor will have all the economic indicators pointing in the right direction for the election in 2015. The news on headline growth and the deficit will be good. Economists are forecasting the following growth figures: 2013 1.6%, 2014 2.3%, 2015 2.5%.

 

Its expected George Osborne will revise down unemployment and inflation figures. There may even be expectations of real wage growth. We’ll then have to wait to see if there is aresponse in terms of business investment.

 

The Chancellor is likely to make much of new figures showing a reduction in public borrowing forecasts, perhaps down to £80bn by 2015/16.

 

Sweeteners for the voters will follow the already announced free school meals and marriage tax breaks. Petrol prices are likely to be held down again and personal tax allowances are likely to rise.

 

The headline measure is likely to be the transfer of “the green crap” that the Prime Minister referred to from energy bills to general taxation.

 

So will Labour be blown out of the water by all this. Ed Balls can no longer entertain us with his flat lining gestures in the Commons. Well not entirely, the living wage issue has been well handled by Mr Ed. The real wage gap from peak remains substantial and GDP per capita in 2015 will be way below the last good Labour year of 2008. Then there is the psychological issue that the Tories fear. If people think the economic pressure is off may they feel they can vote Labour again and get away from all that nasty Tory economic rigour?

 

The Lib Dems will remain associated with Budgets and Autumn Statements right up to the election but we will increasingly hear from them the message that they prevented even more vicious cuts from the Tories and lifted millions out of paying tax which, they claim, was not a Conservative priority.

 

After his statement, the Chancellor will pray that the polls will start turning like the economic indicators. Realistically all the Tories can hope for is to be the largest party in 2015. However if the voters want to punish them for three years of misery and forget Gordon Brown’s administration, then they will hand over a repaired economy to Mr Ed.

 

 

 

FIVE YEARS OF AUSTERITY AND THE CON LIB DEM COALITION

 

 

 

We’d better get used to it. A continuing economic squeeze administered by a Conservative-Lib Dem coalition. The only difference after the General Election will be that the Tories will hold most of their cards with the Lib Dems reduced to about 30 MPs.

 

The Chancellor was in confident mood on Wednesday.

He shouldn’t have been. In the rose garden days three years ago the Coalition didn’t expect to still be making cuts in 2015-16. Nevertheless George, or Geoff Osborne if you prefer, has managed to convince not only the British people but the Labour Party that there is no alternative.

 

Labour are in serious trouble. They have broadly signed up to the cuts strategy. Having lagged behind public opinion on the need for benefit reform, they are now lurching to the right to such an extent that we are not sure that basic pensions would be safe in their hands.

 

George Osborne was devastating when he used Gordon Brown’s old formula for mocking the Opposition. The Chancellor told MPs he had received representations to include pensions in the welfare cap, but had resisted them. Chris Leslie, one of Ed Balls’ Shadow Treasury sidekicks wasn’t even prepared to attack plans to make people wait seven days for benefits when the TUC were warning it could mean kids going without food.

 

Labour are in this position largely because of Ed Balls.

I’m afraid the Shadow Chancellor has to go. He is associated in the public mind with the Brown days and people still blame that administration, and not the current one, for the mess. It may be unfair three years into the Coalition, but it is a fact.

 

Alistair Darling should be the Shadow Chancellor. He is currently heading up the Better Together campaign against the Scot Nats, but he could do that part time because Scotland isn’t going to vote for independence.

Darling has a reassuring manner in contrast to the bruiser Balls. More importantly he was honest about the economic troubles ahead which nearly led to his sacking by Brown.

 

Even with Darling as Shadow Chancellor it is going to be difficult for Labour to become the largest party in 2015. Economic green shoots are appearing and house prices are rising. Public support for benefit reform and a smaller public sector has grown during the austerity years. This doesn’t mean that millions of people aren’t suffering but the majority back the Coalition and Labour is not going to be a socialist champion.

 

The Coalition shows no sign of breaking up as the election approaches. These cuts are for 2015. The Lib Dems could have made far more trouble about being committed to them for the year after the election. They didn’t and Chief Secretary Danny Alexander (a Lib Dem) received fulsome praise from George Osborne.

 

Osborne and Alexander have pulled off another trick. Amid all the cuts there is real commitment to northern infrastructure projects like rail spending in Leeds, fast track permits to frack for gas in Lancashire and the new Mersey crossing.

 

The biggest black mark for the Chancellor is the woeful failure to properly fund the Single Local Growth Fund. Lord Heseltine had urged Local Enterprise Partnerships to be allowed to bid for £49bn from the fund. It was given just £2bn a year.

 

For that you shall be called Geoffrey, Mr Chancellor!

 

 

 

CHANCELLOR AT THE CROSSROADS

 

 THE CHANCELLOR’S NOT FOR TURNING?

 

 

Ted Heath remains a hate figure for many Tories. Two reasons for this are well known. He took us into Europe and he conducted the longest sulk in political history when he was deposed by Margaret Thatcher. The third, less publicised reason, was the economic U turn he performed midway through his government in the early seventies.

 

In 1970 Heath came to power with a right wing agenda to deregulate and make a transfer from direct to indirect taxation. Rising unemployment knocked him off course and his Chancellor Anthony Barber reflated the economy. The resulting inflation was controlled by an incomes policy which led to the miners strike, the three day week and the Conservatives lost the 1974 election.

 

When Margaret Thatcher faced a similar economic crisis early in her premiership, she was not for turning and became a heroine of her party. Such a status is never likely to be available to David Cameron and George Osborne but next week they do face a similar situation. The cries to modify the austerity and borrow our way out are deafening. Labour point out that as the economy flat lines we are borrowing more anyway.

 

I don’t expect the Chancellor to ease up. The Budget is likely to include fuel duty relief and more spending on infrastructure but I expect a broadly neutral budget as ministers cross their fingers and hope that the economic course on which they are set, works.

 

There are economic indicators which support the Chancellor’s approach, the mortgage market is easing, business start ups are growing and unemployment is down.

 

It is worth reflecting on that last point. It is one of the outstanding features of this recession. In Heath and Thatcher’s time, unemployment rocketed up as the economy slumped. Why hasn’t it happened this time. It is partly because the figures mask the fact that a lot of people are part time or under employed. Workers have been prepared to suffer wage freezes and reduced hours to keep their jobs. The trade unions, once able to bring down governments, are whispering from the sidelines. Sad but true, strikes are not really an option in the 21st century.

 

HUHNE PAYS PRYCE, NICHOLSON DOES NOT.

 

One of the many reasons why people are turned off from politics is that the great and the good generally don’t pay with their jobs when things go wrong.

 

If a brickie builds a dodgy wall and it falls down he gets sacked. If a car mechanic does a shoddy job on your vehicle; same fate.

 

But when it comes to police officers failing to pick up on complaints about Jimmy Savile or health disasters like Mid Staffs, none of the people at the top lose their jobs.

 

The glaring example is Sir David Nicholson, head of the strategic health authority which covered Mid Staffs. Now head of the whole NHS for England, he has defied repeated calls to resign.

 

Just occasionally justice is served as we saw this week with Chris Huhne and Vicky Pryce, but this does not detract from the need for people who take high salaries to walk the plank if things go wrong.

GEORGE AND THE BATTLING GRANNIES

You’ve got to hand it to the toff from Tatton, he doesn’t lack political courage.

At one stroke George Osborne has knocked the walking stick out of the hands of pensioners and rewarded his millionaire friends with a massive tax cut.

And yet for all the controversy the income tax cut and the age related tax allowance freeze will create, the Chancellor gave a confident performance. The signal was given out that the government’s determination to bring down the deficit was on course and the Coalition was holding together.

The ludicrously leaked budget was all about Tories and Lib Dems showing how much influence they had on the decision making process. Both parties got prizes. The Tories cut the 50p rate, the Lib Dems are now close to their pledge that people earning less than £10,000 should not pay income tax.

Osborne must now pray for growth and that the newly enriched millionaires will not only “stay and pay” but will invest to help the recovery. We must remember the government has only just begun the cuts agenda. There is the prospect of a further £10bn cut in welfare benefits.

The Chancellor ran up the white flag on the 50p rate effectively saying that private sector accountants had outwitted Treasury officials who draft our tax laws. We’ll see how effective the government’s pledge is to clamp down on aggressive tax avoidance.

He must also hope there will not be a big backlash over the “granny tax”. There is an argument that the golden generation born into the welfare state after the war, enjoying full employment and retiring on good company pensions should share the burden with the young suffering from tuition fees, unemployment and the prospect of retiring at 70 on average salary pensions.

The problem for politicians is that the old vote and the young don’t. The scrapping of the age related allowance is going to hit soon-to-retire couples really hard.

Labour still isn’t trusted on the economy but Ed Miliband did well in the House of Commons when he invited Tory MPs to acknowledge they would personally benefit from the income tax cut.

 

BUDGET IN THE NORTH WEST

The Chancellor’s announcement of investment in the Preston-Blackpool, Manchester-Bradford and Manchester-Sheffield rail lines is welcome. The links between Manchester and South Yorkshire are particularly bad. The full commitment to the vital Northern Hub at Piccadilly Station is still awaited though.

Manchester has done well, getting £150m over five years from the Treasury in return for promised economic growth through tax increment financing. The city is also to be part of the government’s superfast broadband project.

Surprisingly Liverpool wasn’t  included, another blow after the city’s failure in its bid for the Green Investment Bank.

 

VIV BINGHAM OBE

The funeral was held yesterday of one of the finest Liberals the North West has produced.

Although he never made it to parliament, Viv Bingham served the party at every level from fighting hopeless seats to becoming Party President.

A principled man, he was sometimes a thorn in the side of his party leaders particularly on the issue of nuclear weapons. He was a confirmed unilateralist.

But overwhelmingly people responded to his friendship and warm hearted personality.

Over thirty years he fought a range of seats from Heywood and Royton and Hazel Grove to West Derbyshire and Stalybridge and Hyde.

The highlight of his career was his year as President of the Liberal Party 1981-82.

Viv brought all his diplomatic skills to bear in his party’s sometimes difficult relations with the newly formed Social Democratic Party.

The many tributes in recent days are eloquent testament to the passing of a true Liberal.