A giant leap is needed

The indispensable John McDonnell whom I had the pleasure of attending a meeting with several days ago writes: “Since Ed Miliband was elected Leader, the Labour left has exercised iron discipline. To defend him from the plotting of the residual Blairites in the Shadow Cabinet, there have been no serious public criticisms of him launched by the left. But at this key stage, when the Party’s election manifesto is being constructed and the direction of our campaign for the next eight months is being finalised, a simple corrective warning from the left to the leadership is needed.

The economic crisis exposed the absolute bankruptcy of the neoliberalism embraced by New Labour under Blair, Brown and Mandelson. Unregulated markets,  profiteering, mass privatisations, top down centralised government and the slavish courtship of the super rich and City of London didn’t just bankrupt the economy. They came close to ideologically bankrupting the Labour Party.

The lessons learned from this economic and political crisis have brought the Labour Party back to the agenda advocated by the left throughout the dark days of New Labour triumphalism. At last Labour has returned to addressing the real issues affecting the lives of the people we seek to represent – to a politics that reflects what people believe a Labour Party should be about.

However, a combination of rearguard Blairite obduracy in the Shadow Cabinet and insecure hesitation from Ed Miliband risks exposing this hoped for return of Real Labour to be mere tokenism. In every policy area Miliband has taken a step in the right direction – but only a small step when a giant leap is needed.

» Our people want a decent home and the Party is now committed to a mass construction programme – but house building takes time and in the meantime the only alternative for many families is paying high rents in the private sector. That’s why we need a commitment not just to building more homes – but building council houses with rents people can afford and rent controls in the private sector.

» Our people want a decent job with decent wages. Marginal increases in the minimum wage and tax cuts for employers for paying a Living Wage simply subsidise
low wage paying employers. That’s why we need the minimum wage replaced with a
Living Wage – to start at £10 an hour with no differential for young workers.

» Overwhelmingly our people support the principles of the NHS and oppose its privatisation. Andy Burnham has committed Labour to scrapping the Tories’ NHS privatisation legislation – but that won’t be enough to save the NHS from the vultures bleeding it dry right now. That’s why we need a clear commitment to bring back all the NHS services privatised under the Coalition.

» Privatisation overall has increasingly been exposed for the rip-off it is. Consistently the policy of bringing rail back into public ownership has secured 80% plus support in opinion polls. Yet Ed Balls has refused to allow Labour to commit to anything more than allowing a public sector bid for individual franchises as they are re-tendered. This is setting up the public sector to fail as privatisers undercut it with loss leaders or foreign government subsidies. Bringing rail back into public ownership would send a signature message to the electorate about Labour’s determination in office.

» Iain Duncan Smith’s so called welfare reforms have plunged millions into poverty with cuts in benefits, a grotesquely unfair sanctions regime and the modern form of
slavery called workfare. Calum’s List revealed the tragic circumstances in which people have taken their lives when faced with the brutally harsh regime under Atos’
Work Capability Assessments. For fear of provoking the gutter media Labour has promised only reform of the system when the whole system needs scrapping.

» Although young people are still staying on in higher education, tuition fees are saddling them with debt for a large part of their lives and many who in the past have
studied part time to complete their education or enhance their skills can no longer afford to. Labour fiddling around at the margins of student finance won’t tackle
the debt crisis that is hitting our young people. Abolishing tuition fees would be
the single most effective signal to this generation that Labour cares about it.

» The economic crisis has been used as the excuse for employers to intensify the
exploitation of workers with zero-hours contracts, cuts in health and safety and more restrictions on workers’ access to justice at work. There are six million trade union members waiting to hear from Labour whose side the Party is on. Outlawing zero-hours contracts, restoring basic trade union rights and giving workers a say in the decision-making of their companies would give trade union members a real reason for voting for a Labour government.

It’s policies like these that are capable of bringing together the electoral coalition that can win us the next election. It’s the role of the left to force them onto Labour’s agenda both at Conference and in every policy discussion at every level of the Party in the coming weeks and months.” (http://labourbriefing1.wordpress.com/2014/10/09/dont-take-the-left-for-granted/) see also – (http://www.labourleft.co.uk/ed-milibands-leadership-or-what-do-you-really-want-by-bevclack-magsnews/) and here – (http://www.labourleft.co.uk/100-labour-party-policies-that-ed-milibands-labour-says-will-implement-if-it-was-elected-to-government-by-laboureoin/)

 

 

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Manufacturing suffers another setback on Osborne’s watch

Tony Burke reports: “This week’s figures from the British Chambers of Commerce (BCC) show another slowdown in UK manufacturing and again demonstrate that George Osborne’s recovery is built on less than solid foundations.

Four years on from Osborne’s promised ‘March of The Makers’, the re-balancing of the economy has proved to be a failure – with the UK still over-reliant for growth on inflated house prices and low paid, low-skilled jobs in the service sector.

The BCC survey warns that any economic recovery will stall unless the UK’s export performance improves; and experts are predicting that figures later this month from the ONS will show that economic growth slowed between July and September, following 0.9 per cent growth in the second quarter.

The BCC says that that manufacturing growth at the beginning of 2014 has petered out, with companies now running below full capacity and the strong pound making UK manufactured goods more expensive in the world economy.

The survey of 7,000 UK companies also found that manufacturers experienced a slowdown in sales growth at home and abroad in the third quarter.

A balance of +16 per cent of manufacturers reported a rise in export sales, down from +30 per cent in the second quarter. It was the lowest balance since the fourth quarter of 2012. Growth in domestic manufacturing orders is also down on the second quarter.

Unite has been campaigning for an industrial strategy based on investment in manufacturing, re-shoring of the supply chain, the development of a strategic investment bank, the procurement of UK manufactured goods, continued EU membership and a new skills eco system.

Next month Unite will launch its Charter for UK Engineering – ‘Engineering Excellence’. Labour needs to heed the call the charter makes for long-term investment in UK engineering and the creation of decent, skilled jobs to grow the economy.

And it is not just the unions arguing for a strong manufacturing strategy. In a recent poll by the Engineering Employers Federation, ordinary voters said they wanted to see a resurgence of UK industry. In the poll four out of five voters (85 per cent) said they wanted a government which promotes a stronger UK manufacturing base, with 62 per cent believing it will give the country more economic security.

That is why Labour must ensure that an interventionist manufacturing strategy, with decent employment at its heart, is spelt out in the party’s General Election manifesto.” (http://leftfootforward.org/2014/10/manufacturing-suffers-another-setback-on-osbornes-watch/)

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Housing

Labour people used to insult and take Harold Wilson to task in total disbelief that he was failing to build half a million council houses a year. And now look at us. The next election can be won on the issue of housing, (combined with other decisions) which has been neglected since the disastrous ‘right to buy’ outcomes of the 80s. Where is the leadership? It makes one sympathise with Andrew Mackinlay’s article in today’s Mail On Sunday. But neither Darling nor Johnson have made a challenge to Miliband, so what is the point of the piece other than personal catharsis? We need strong policies on housing outlined, and fast, not bitter and pointless in-fighting.

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Until next time

A brilliant few days in Stroud has been had with family & friends, however briefly. I saw Pie Corbett with Adam Horovitz reading poems live for Laurie Lee’s centenary which was utterly amazing. Made it to ‘up the workers’ night at the pub for the classic £4.50 pie & mash with Uley beers a plenty. It was good to see the Kurdistan flag up as well as the Union flag flying strong. I also went to an absolutely inspirational Labour & Trade Union meeting with John McDonnell MP and Jeremy Corbyn MP alongside David Drew. Great stuff. Until next time x

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Labour must expose the fallacy of Osborne’s ‘recovery’

Robert Skidelsky writes: “Where has the conference silly season left the debate on economic policy? George Osborne claims to have routed his critics: fiscal austerity has produced recovery. Labour, seemingly amazed that recovery has happened, has promised that a Labour government will continue to cut the deficit, albeit a little more slowly. The Liberal Democrats would join them in the slower lane. The main point of difference seems to be that “Labour cuts” will be fairer than “Tory cuts”.

The budget outcomes tell a different story. Osborne will have failed by a wide margin to meet his deficit-reduction targets in this parliament. The deficit is now likely to be more than £70bn in March 2015, when it should have been zero. This is a prima facie indication that the theory linking fiscal tightening with recovery was wrong.

The theory was that cutting government spending would cause the economy to grow. The growth of the economy would increase government revenue sufficiently to balance the budget over five years. The still-gaping hole in the budget is the result of the economy’s failure to grow to plan since 2010.

But still, Osborne’s defenders argue, the economy has finally started to grow. Is that not proof that austerity has finally started to work? This is a good example of the post hoc, ergo propter hoc – “after this, therefore because of this” – fallacy.

There is no reputable theory that says that cutting public spending in a slump will induce a recovery. In fact, theory tells you the opposite. A slump comes about because, for one reason or another, the private sector is spending less than it was. If the government reduces its spending at the same time, this will make the slump worse, not better.

There is one possible exception: if wealth-holders believe that the government needs to cut its deficit – because otherwise, say, Britain would “go the way of Greece” – then the announcement of a credible deficit-reduction plan might increase their confidence in the future and cause them to increase their spending.

However, one would need to argue that such confidence-boosting effects would fully offset the demand-destroying effects of actual and anticipated cuts in public spending. The empirical evidence is that they do not, and for good reason: there are many more people whose spending would be reduced by the cuts than those whose “confidence” would be boosted by them.

But still, is not the recovery of the economy sufficient vindication of Osbornism, even if the mechanism of recovery is not quite as he depicts it?

Certainly not. The most important point to understand is that all economies recover from a slump sooner or later. After a lapse of time, the rundown of existing capital stock, together with disinvestment in working capital and surplus stocks, will make new investment more profitable; a Pigou or “real balance” effect will come into play as wealth-holders benefit from the fall in prices (or inflation rate) and start buying depreciated assets and consumption goods. These are the “automatic” recovery forces. John Maynard Keynes himself never denied they existed. His argument was that after the kind of shock we have experienced, they would be too slow and too weak to produce a quick or full recovery.

In addition to these “automatic” forces, a deliberate economic stimulus in the form of quantitative easing (QE) made the slump of 2008-09 shallower than it would have been, and helped the subsequent recovery in 2013-14. The Funding for Lending scheme, introduced in 2012, has also helped. It is QE, not confidence in government finance, that has kept the cost of government borrowing down to near zero.

Despite these automatic and deliberate offsets to fiscal austerity, the recovery has been the slowest on record. It has taken six years for the UK to regain pre-recession levels of output. Osborne’s supporters argue that, given the damage to the banking system, no quicker recovery could have come about. What this amounts to saying is that the “automatic” recovery forces were weaker than one might have hoped. But this was no argument for weakening them further by fiscal contraction, rather for offsetting the banking weakness by fiscal expansion.

Thus the coalition’s policy is doubly damned. It has prolonged the recession and promoted a lopsided and unbalanced recovery which promises another collapse in the not-distant future.

It is still open to Labour (and the Lib Dem sceptics within the coalition) to attack Osborne’s policy on these lines.

Instead of vying with him in his cutting zeal, confining its criticism to the “fairness” of the actual measures proposed, Labour should be arguing two things. First, it should point out that the policy of balancing the budget by Osborne cuts has not balanced it at all, and holds out little hope of balancing it in 2017-18, since the £38bn of extra cuts he needs to do hit the source of future government revenues.

Second, it should argue that the budget should be balanced by investing in the economy. Now is an ideal time for the state to build new housing; renew infrastructure; prevent, mitigate, and adapt to climate change; equip schools and hospitals with broadband; and reverse cuts to local authorities’ capital spending. It should promise that every pound saved from cutting current spending on public services will be added to the capital of Vince Cable’s Green Investment Bank. This would boost its capital from £4bn to £41bn over five years, and in addition, it would immediately be allowed to borrow.

Will Labour do this? Probably not: it is too scared to offer an alternative narrative based on principle and good theory. Thus the debate is not properly joined, and Labour will pay the electoral price.” (http://www.theguardian.com/commentisfree/2014/oct/09/labour-george-osborne-recovery-coalition-cuts?CMP=twt_gu)

 

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Notes From The Sex Manual

My good friend the genius poet Alex Wonk has released his hilarious old book ‘How To Make Girls Cum- Notes From The Sex Manual’ on amazon. It is currently 3rd in the smut charts. Enjoy ! – (http://www.amazon.co.uk/gp/product/B00O8EUNME)

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Let’s get on with it

Rob Lyons is right to cheer on the much needed generation of our own power: “To transform society, we need cheap, abundant power. Let’s get on with it. After years of dithering, negotiations and reviews, it finally looks like a new nuclear power plant will be built in the UK – the first since Sizewell B on England’s east coast started generating power in 1995. But the news is cause for relief, not celebration.

The new plant, to be built on the site of two existing stations at Hinkley Point, will cost nearly £25 billion to build and won’t start generating power until well into the 2020s. The plant’s operators, EDF, have been guaranteed a price for electricity that is roughly double the current price, a guarantee that will last at least 35 years. Even now, having got the go-ahead from the EU, Hinkley Point C may be blocked by objections from other EU countries over excessive state aid. But even this much-delayed and wildly expensive power station is still a step forward. Maybe next time, the UK government will learn to negotiate a better deal. If it can’t, Hinkley Point could be the start and end of the nuclear revival.

The pressing need for new nuclear power stations was confirmed earlier this week, when it was reported that cracks had been found in two of the 3,000 graphite bricks in the core of one of the reactors at the Hunterston B nuclear power plant in Scotland. The news has led to suggestions that Britain’s ageing gas-cooled nuclear reactors, which have had as many career revivals as Bruce Forsyth, may not keep going as long as hoped, possibly exacerbating a supply crunch. But it’s the cracks in UK energy policy that we should really be worried about.

Britain is already facing an uncomfortable few years where peak energy demand will be only marginally smaller than peak energy supply. For the past few years, and for some time to come, Britain will be closing power stations rapidly. Some are nuclear power stations that are coming to the end of their lives, but others are fossil-fuel stations that are being closed because they don’t meet emissions standards. The EU’s Large Combustion Plant Directive (LCPD) means coal- and oil-fired power stations must strict meet (non-carbon) pollution standards. Many of these plants could have been upgraded, but in any event, the UK has already committed to producing 15 per cent of allenergy requirements from renewable sources by 2020 – which in effect means30 per cent of electricity will need to come from renewables. The result is that many older coal and gas stations would be out of business even if what came from their chimneys was scrubbed clean.

One consequence of all these commitments and plant closures is that, this coming winter, the gap between peak demand and peak generation will be small. By next winter, the gap will be as little as four per cent. Given that currently four power stations are out of action, the risk of shortfalls is substantial. However, the lights are unlikely to go out in our homes thanks to a series of emergency measures, which include the ability to bring mothballed coal and gas plants back online, and paying companies to not use electricity – a facility for which National Grid will have to pay those firms fairly handsomely. Moreover, the UK government is investing in more connectors with continental Europe so that shortfalls can be made up with French nuclear power, for example.

The problem has been years of indecision on the part of politicians, combined with an excessive obsession with climate change. The three fundamental requirements of an energy system are that the power is reliable, abundant and as cheap as possible. However, environmental concerns have muddied the waters.

A simple way to square the circle on climate change would have been to push for a mix of energy supply including a new wave of nuclear power stations, combined with increased use of gas and renewables. But for years, building new nuclear stations was ruled out on environmental grounds. (In Scotland, the SNP government is still committed to blocking new nuclear plants.) Eventually, kicking and screaming, new nuclear stations like the one planned at Hinkley Point, have been approved – but given the weak negotiating position that the government has with energy companies, the government has, to recycle an old quote from postwar Labour politician Nye Bevan, ‘stuffed their mouths with gold’.

In all this, realism and ambition have been absent.

Realism, in the sense that the only way in which Britain could hope to cut greenhouse-gas emissions while maintaining security of supply was to generate a substantial proportion of power from nuclear. Renewables are too expensive and too unreliable, and require backup from gas-powered stations for those times when the wind doesn’t blow and the sun doesn’t shine.

Ambition, because there seems to be little drive to produce energy cheaply and abundantly. For the economy to grow and for society to develop materially, we are going to need a lot more energy and at as low a cost as possible. Instead, planning for the future has been obsessed with producing only as much energy as necessary, with as few emissions as possible, while trying to force us to be as energy efficient as possible. While nuclear might finally be getting somewhere, the production of shale gas using fracking – which could be the simplest and cheapest way to get lower-carbon energy – is now being delayed by endless, mostly specious concerns from scaremongering protesters.

While solar and wind, in the right conditions, can and will make a useful contribution to energy supply in the future, they also have fundamental problems of unreliability that need to be solved. What we really need to do is to invest in researching technologies that could make really dramatic leaps forward in energy production. Yet the nearest thing to such an attempt right now – the ITER project to build a nuclear fusion power plant in France – has been bedevilled by delays, poor management and politicking.

Let’s put the holy trinity of cost, reliability and abundance back at the heart of energy policy, stop panicking about global warming (we can’t solve the problem overnight and we don’t need to) and start thinking long-term about revolutionising energy production – and the possibilities that could open up for society.” (http://www.spiked-online.com/newsite/article/we-need-to-generate-an-energy-revolution/15972#.VDfjrK4bpuq)

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