Michael Meacher MP

Ken Clarke’s attack on the Michael Howard/New Labour bang ‘em up culture is welcome.   With currently 85,000 prisoners behind bars, by far the highest rate of detention of any country in Europe, he is right to demand alternatives.   Prison does take violent men out of circulation so as to protect the public for a time, but it is not a deterrent (i.e. not a punishment sufficient to prevent a large majority from re-criminalising after release) and it fails drastically in rehabilitation – the main effect of prison experience is to intensify criminality.

It’s obvious that prison is not a suitable repository for most prisoners.   Half of the men and three-quarters of the women have no qualifications.   Two-thirds are innumerate and half are illiterate.   Two-thirds were unemployed and one-third homeless when they were detained.   Three-quarters are either mentally ill or mentally unstable (compared with 5% in the wider population).   Over half suffered from alcohol excess or drug abuse.   And economically the system is counter-productive: it costs over £40,000 per prison place per year (over £3.2bn), while the cost of re-offending (which 60% even of short-term offenders do) is put at £11bn a year.   So what should be done? (more…)

We have already been told that more than a third of the £32bn extra cuts unveiled in the Budget a week ago will come from welfare.   Yesterday’s Commons debate began to reveal how deeply unjust is some of the thinking behind that.   In addition to ‘on yer bike’ to wherever 200-300 miles away there may be (temporary or impermanent) work, the question of where you’ll move to in view of the 4 million on the Council/housing association waiting lists was solved by IDS telling us it would be into “under-occupied” Council homes when the current occupiers transfer to smaller properties.

Then there’s the drastic cuts planned in DLA and Incapacity Benefit entitlement after pilot schemes suggested half were fit to do some work.   Everyone agrees that anyone genuinely capable of work should do so.   But what if there aren’t jobs available when unemployment is already 2.45m and likely to rise soon to over 3m?   What if there’s a mismatch within the locality or region beween work skills and job availability?   Can we be sure of the skill and judgement of those assessing whether someone is capable of work, as opposed to doctors paid by DWP who are not independent or bounty-seekers under some private scheme that pays bonuses for targets reached in work placements? (more…)

The G20 was a pretty listless affair (unlike the concurrent Bloomfontein debacle), with world leaders opting to go their own way, the deficit hawks in the ascendant, and no significant change agreed at all.   International settlement of the world’s most pressing problems is becoming ever weaker – nothing relevant decided at Copenhagen on climate change, nor on the Doha round of trade talks, nor at Basel III on capital reserves for the banks.   Now   Toronto adds to the vacuous list of politicos’ photo opportunities.

The obvious reason of course is self-interest.   The US where recovery is stalling is cautious about belt-tightening, Europe and especially UK  and Germany emphasise the risk of sovereign debt crisis more than a double-dip recession, while Asia whose banks were more resilient carp at paying any  bank levy because other countries’ banks were reckless.   But there is another aspect to this too which is more disturbing. (more…)

The latest study of the impact of the Budget by the Fabian Society, published today, using a plausible quantitative model of the effects of public service cuts, confirms what we suspected, namely that the poorest tenth in the population will be hit much harder – 6 times harder – than the richest tenth.   This is in no way a fair Budget and we’re not all in it together.

But that’s not the only bit of the Budget that’s being ripped up – as well as Nick Clegg’s reputation over the VAT increase.   The whole narrative of the Budget is falling apart: (more…)

When it is said, as it often is, that where America goes, Europe (and particularly the UK) will follow soon, it is worrisome that we do not have our own self-confidence and our distinctive vision.   When it is said about the funding of politics, it is deeply disturbing.

It has just been estimated that spending in the current US Congressional elections will exceed $3.7bn (£2.5bn).   In one State alone, California, $100m (£69m) has already been spendt by two multi-millionaires in the race for the Republican nomination – that’s before the real battle starts against the Democratic candidate.   Such huge sums of money are spent, not only on saturation TV coverage with personal attack advertising, but also on chartered jets, hotels, political consultants (charging up to $90,000 a month), and vote delivery.   Is this where we’re heading? (more…)

The implications of the change in the US High Command in Afghanistan go a lot deeper than the sacking of a general for mutinous behaviour.   Obama had already excessively delayed his endorsement of the Afghan surge strategy because he never believed in it, but could find no politically and militarily viable alternative to replace it with.   He felt trapped by its inevitability, but McChrystal and his aides now overplaying their hand against the ‘wimps in the White House’ offers him his best opportunity to re-write the strategy.   First signs are that he intends to take it.

What the McChrystal incident has really exposed is the increasing dominance of US militarism in both American politics and society.   George Bush defined himself as a war President, propagated the Long War doctrine of the unending worldwide struggle against terror, and demanded unquestioning patriotism as the price for achieving US global hegemony. (more…)

Osborne’s constant repetition that the Budget was fair, even “progressive”, reveals not that it was (the IFS and all other analysts show conclusively that it was not), but rather how exceedingly anxious he is that we should be conned into thinking it was.   He’s trying to learn the lessons of the Geoffrey Howe budget of 1981 which contained (till then) the biggest spending cuts since the Second World War, but made no pretence of fairness or proportionality, and provoked a huge political backlash.   Four factors however are working strongly against Osborne.

One is that a stark austerity programme now in the UK will not be compensated for, as it was in 1947 and 1981, by an expansionary international economy inviting a surge in private investment and exports.   Britain’s manufacturing industry has suffered a long-term decline, the US recovery is fading, and the Eurozone which normally takes half of all UK exports is still gripped in crisis and flat.

The second factor is simply that Osborne’s claim is downright wrong, on several counts: (more…)

This is a Budget full of untruths, half-truths and misleading statements.   It is not true, as Osborne repeatedly said, that it was unavoidable – the better option of deficit-cutting economic growth was discarded.   It is not true that the balance between spending cuts and tax increases had to be 80-20 (or more precisely 77-23%) – it could easily and better have been 60-40 or even 50-50 provided the tax increases were focused on the very rich.

Nor is it true that this is a ‘fair Budget’ as Osborne keeps strenuously asserting since the VAT increase to 20% is a regressive tax which will really hurt poor households, while the new impositions on the rich – the very modest increase in CGT to only 28% (not 40%) and the bank levy raising £2bn – are just peanuts for the super-rich.   Whereas hundreds of thousands of public sector workers, the victims of the financial crash, will lose both their jobs and their incomes, the bankers and the hyper-rich who were the architects of the financial crash will lose neither their jobs nor their incomes nor their wealth.   Is this what Cameron/Osborne mean by our being all in it together? (more…)

This is one of those watershed budgets where the governing party tries, not simply to make budgetary adjustments to the nation’s finances, but to change profoundly the ideological underpinnings of the State itself.   But the whole project is built on a string of fundamental myths which give an almost surrealistic atmosphere to today’s proceedings.   Here are the main myths.

1  The financial crash and economic downturn have been caused by Big Government, not by the markets,

2  The budget deficit is out of control, and if not brought rapidly under control it will lead to disaster like the Greek collapse,

3  Excessive public spending is the central cause of the problem, and needs to be drastically cut back,

4  If the public sector is cut back to a much smaller size, the suppressed private sector will emerge to fill the space as the engine of sustainable expansion,

5  Balanced budgets are the right way to run the economy, like balanced household budgets, and the only way to produce stable prices,

6  The precedent of other countries, like Canada, show that harsh cuts, however painful, are the quickest and most effective way to generate strong growth thereafter.

These ideas have been insidiously and relentlessly imprinted on the nation’s consciousness over the last weeks and months to lay the foundations for today’s measures.   Yet every one of these prescriptions is utterly wrong.   This is why. (more…)

There are 3 key criteria for judging tomorrow’s Budget.   One is the composition of measures for reducing the £155bn deficit.   The emphasis of pre-Budget leaking has been heavily on public spending cuts, much more moderately (20% as opposed to 80%) on tax increases, and no reference at all to economic growth.   You wouldn’t guess it from the PR softening-up process, but the latter is actually the most important of the three options.   Here’s why. (more…)

As the Budget approaches, the first evidence of the approaching cataclysm has already been delivered deadpan by a struggling Danny Alexander in the Commons 3 days ago.   But the scale of it has not sunk in.   Twelve projects were chopped with a total lifetime cost of £1.9bn, plus a further dozen suspended with a total lifetime cost of £8.5bn.

Two cutbacks in physical assets stand out.   One is the chopping of the Sheffield Forgemasters International in order to save £80m, but at the cost of having to import foreign plant and equipment to build the new nuclear reactors on which the Government (with the Liberals again conceding) has set its heart.   The other is shutting a hospital in the North-East at Hartlepool in order to save £450m.   (more…)

Three issues have just come to light in the last couple of weeks which have an unrelated, but similarly, theme.   That is massaging of public statements which is deliberately designed to mislead, and in my view in the grossest cases should be made into a civil offence with penalties designed to deter.

First it was revealed that the scientists who drew up the key WHO guidelines advising governments to stockpile drugs in the event of a flu pandemic had previously been paid by drug companies that stood to profit. As a result Big Pharma, in particular Roche (Tamiflu) and GlaxoSmithKline (Relenza), made £4.8bn out of governments stockpiling drugs following panic predictions that didn’t come true.   The UK, where warnings were issued that 65,000 could die, spent £1bn.   The issue here is the lack of transparency in how decisions are made about pandemics and the concealment (or lack of prominence) given to a conflict of interest among scientists making the recommendations. (more…)

Previously the top banks were ‘too big to fail’; now under Osborne’s new system unveiled today the top man at the Bank of England is too dominant to fail.   But the omens aren’t good.   Mervyn King was the man who didn’t wake up quickly enough to the risks of Northern Rock’s use of the wholesale markets for mortgage funding, refused help to ailing banks because of the dangers of ‘moral hazard’, and perhaps most significantly of all laid the foundations for the financial crash through overly low interest rates which precipitated the credit bubble and excessive leveraging.

Having now watched Osborne several times at the dispatch box in the House, one sees a Chancellor far too obsessed with scoring political points rather than thoroughness of economic or financial analysis.   Winding up the FSA is a political hit against Gordon Brown’s distinctive regulatory reform in 1997, but it’s not the root of the problem.   Shifting around the institutional furniture is rarely the solution, and concentrating power in the Bank of England, as Osborne now proposes, will itself open up plenty of new problems including the potential conflict between monetary and financial stability.   Nor will it solve the following old problems either. (more…)

Ernst & Young, one of the world’s ‘Big Four’ accountancy forms, has been found to have allowed Lehman Brothers, the vast US investment bank that collapsed in September 2008, to hide $50bn (£34bn) of debt off its books in an effort to show its financial position was much stronger than it was.   This misled investors, as it was intended to do, and fundamentally distorted the market until the bank finally crashed for other reasons.

The device used was a sales programme known as Repo 105 which via the artificial sale and buy-back of deals made it look as though a company or bank hadn’t borrowed as much money as it actually had.   The trick has been described as ‘window dressing’ or an ‘accountancy gimmick’.   It may seem arcane, but the deceit is deliberately perpetrated on a scale to enrich or impoverish millions.   No burglary or larceny gets within a million miles of it. (more…)

So the new Office of Budget Responsibility (OBR) is daily earning accolades as the Government’s arms-length battering ram to hammer away at the targets the Tories have long had in their sights for shrinking the State.   Yesterday it was their announcement that the structural deficit (the part of the overall budget deficit that still remains even when the economy has returned to its trend economic growth rate of about 2.5%) was in their view much larger than previously estimated, namely about three-quarters of the current deficit or about £120bn.   That conveniently allowed Osborne to ‘justify’ much deeper spending cuts in order to eradicate it in the course of this Parliament.   If he is serious about this, and he appears to be, the cuts will be the deepest since the Second World War, deeper even than Thatcher’s.   And now it’s public pensions next in the firing line. (more…)